Why did the Central govt. sanction a 50% hike in prices of commonly used drugs?

Highlights:

• On October 14, the National Pharmaceutical Pricing Authority of India (NPPA) raised ceiling prices for eight essential drugs, including treatments for asthma, tuberculosis, bipolar disorder, and glaucoma, by 50%.

Reason for Price Hike: “Extraordinary Circumstances” and “Public Interest”

• The Central Government cited “extraordinary circumstances” and “public interest” as reasons for the price hike, emphasizing the need to balance affordability with drug availability.
• The NPPA, which operates under the Department of Pharmaceuticals in the Union Ministry of Chemicals and Fertilizers, stated its mandate to ensure essential drugs remain accessible.
• The authority highlighted challenges such as increased costs of active pharmaceutical ingredients (APIs), production costs, and currency exchange fluctuations, which manufacturers argued made current pricing unviable.

Drug Price Control in India

Role of NPPA and Drug Price Control Order (DPCO):

• The NPPA, established in 1997, controls drug prices through the Drug Price Control Order (DPCO), issued under the Essential Commodities Act.
• The recent hike was approved following discussions on October 8, where the NPPA invoked its powers under Para 19 of the DPCO, 2013. This provision allows price revision under “extraordinary circumstances” for public interest.

Drugs with Revised Ceiling Prices:

• Revised formulations include:
  • Atropine injection (0.6 mg/ml)
  • Streptomycin powder (750 mg, 1000 mg)
  • Salbutamol tablets (2 mg, 4 mg) and solution (5 mg/ml)
  • Pilocarpine drops (2%)
  • Cefadroxil tablet (500 mg)
  • Desferrioxamine injection (500 mg)
  • Lithium tablets (300 mg)

Past Price Revisions Using Extraordinary Powers:

• The NPPA previously invoked these powers in 2019 and 2021, raising prices of 21 and 9 formulations by 50% to maintain essential drug availability.

Annual Revisions and Compliance

Annual Price Revisions Linked to Wholesale Price Index (WPI):

• Each year, beginning April 1, NPPA revises ceiling prices based on the previous year’s WPI. This process ensures compliance with the DPCO, 2013, covering both scheduled and non-scheduled drugs.

Regulatory Compliance and Enforcement

• Under the Drugs and Cosmetics Act, 1945, and associated rules, drug manufacturers must adhere to Good Manufacturing Practices (GMP) as specified in Schedule M. Non-compliance can lead to enforcement actions, including license suspensions.

Recovery from Overcharging

• During 2023-24, NPPA recovered ₹72.73 crore from companies selling drugs at prices exceeding permissible limits, reinforcing the government’s strict oversight on drug pricing.

Prelims Takeaways:

• National Pharmaceutical Pricing Authority of India (NPPA)
• Drug Price Control Order’ (DPCO)
• Good Manufacturing Practices (GMP)