Drugs (Prices Control) Order, 2013

The Drugs (Prices Control) Order, 2013 provides a legal mechanism for controlling the prices of essential medicines in India. It authorises the government, acting through the National Pharmaceutical Pricing Authority, to notify a maximum ceiling price for formulations listed in the First Schedule.

Legal basis and coverage

The Order was issued under Section 3 of the Essential Commodities Act, 1955. Ceiling-price control principally applies to scheduled formulations, meaning medicines included in the First Schedule to the Order.

• The National Pharmaceutical Pricing Authority fixes and notifies ceiling prices under powers delegated by the Central Government.
• Non-scheduled formulations are monitored separately, and their maximum retail price cannot ordinarily be increased by more than 10 per cent during the preceding 12 months.

Market-based ceiling-price formula

For a scheduled formulation, the ceiling price is based on the simple average of the prices to retailer of all brands and generic versions having at least 1 per cent market share. A retailer margin of 16 per cent is then added: ceiling price equals average price to retailer multiplied by 1.16.

• The calculation uses medicines of the same strength and dosage form covered by the scheduled formulation.
• Where the required market data are unavailable, the government may determine the price through the alternative methods provided by the Order.

Enforcement and revision

Every manufacturer must price the scheduled formulation at or below the notified ceiling price. The maximum retail price cannot exceed the ceiling price plus applicable local taxes actually paid or payable.

• Manufacturers must obtain prior price approval for a new drug as defined under the Order when it falls within price-control requirements.
• Ceiling prices are revised annually in accordance with the notified Wholesale Price Index.
• The government may recover any amount charged above the permissible price, together with interest, under the Order.