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Indian Parliament Proposes Extending Price Caps to all Drugs

Posted 22 April 2015 | By Michael Mezher 

Indian Parliament Proposes Extending Price Caps to all Drugs

Just weeks after India's drug pricing chief was ousted, a parliamentary committee has proposed expanding price caps to all drugs.


In India, the price of drugs listed as essential medicines is capped by the National Pharmaceutical Pricing Authority (NPPA) under the country's Drug Price Control Order (DPCO). The amount these drugs can be sold for is indexed to average wholesale prices of similar products, and can only be increased once per year, as was the case earlier this month when the price of 509 products was allowed to increase by 3.84 percent.

The new proposal to cap the price of all drugs highlights the conundrum the NPPA faces. While India has a rapidly developing healthcare sector, much of its population subsists on only a few dollars per day, which puts expensive medicines out of reach for many. As a result, NPPA is wedged between a powerful industry keen on securing growth and a population clamoring for better access to healthcare products.

Injeti Srinivas, who headed NPPA for only nine months, drew the ire of industry by price extending caps to 108 drug formulations that were not listed as essential medicines. Some commentators even claimed Srinivas was ousted for being "a thorn in the side of the drug companies."

Following a series of legal challenges, the government of India revoked NPPA's ability to cap the price of non-essential medicines. A court later ruled that NPPA's order to cap the 108 additional formulations would remain valid.

The New Proposal

Now, Reuters reports, India's parliamentary standing committee on chemicals and fertilizers wants to make drugs more affordable across the country by extending price caps to cover all medicines.

It remains to be seen how industry will react to the proposal, but it is likely the government will face strong lobbying from companies and industry associations, like the Organisation of Pharmaceutical Producers of India (OPPI) and the Indian Pharmaceutical Association (IPA), which filed the aforementioned legal challenges against NPPA last year.

Other Challenges

Drug pricing is not the only challenge to improving access to medicine in India. The country has faced recent shortages of critical medicines for treating HIV/AIDS and diabetes. At the time, Kailesh Gupta, president of the All India Chemists and Distributors Federation told The Times of India that the price caps were to blame. However, some manufacturers pointed the blame at other issues such as production problems, claiming the price caps were not the cause of the shortages.

Consumers have also had to contend with pharmacies that sometimes overcharge for medicines. Beginning this year, a new law will require drug companies to label all products that are price-controlled with a red strip that states the capped price and "DPCO Scheduled Drug."

To contend with these issues, NPPA last month launched a new online system for filing complaints related to drug shortages and overcharging called Pharma Jan Samadhan. The system allows customers to file four types of complaints:

  • overpricing of scheduled medicine
  • non-availability or shortage of any medicine
  • sale of new medicine without prior price approval of NPPA
  • refusal of supply or sale of any medicine



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