Price regulation, aimed at manufacturer prices and margins, has inadvertently reduced marketing incentives, leading to decreased detailing efforts and a shift towards more profitable unregulated drugs within the same therapeutic class.

The imposition of a price ceiling was expected to increase demand while decreasing supply, potentially causing shortages. However, firms have responded by reducing detailing efforts, particularly affecting Non-MBBS physicians who rely heavily on such information, thus shifting the demand curve inwards for regulated drugs. Over time, pharmaceutical firms may discontinue production of regulated drugs in favor of unregulated alternatives within the same therapeutic class, undermining the intended benefits of price control measures.

Key Implications


Our main takeaway for regulators is to consider the entire system – patients, physicians, pharmacies, and pharmaceutical firms when implementing such regulations. If physicians are dependent on pharmaceutical reps for their information on drugs (especially primary care physicians who have to prescribe across a very broad range of therapeutic categories), cutting off this source of information may lead to inappropriate prescribing and hence could end up hurting patients.

Reducing margins for pharmacists, will likely be counterproductive as they will have lower incentives to stock those drugs. Pharmaceutical firms could redirect their marketing efforts towards more lucrative drugs and categories which in turn would raise prices for the patient, or worse, lead to exits from essential medicines by firms. Taken together, our study points to a slew of unintended consequences that may ensue due to such price regulations.

Rather than placing selective caps on molecules, the regulator may instead consider focusing on a few key categories while extending the price ceiling to all molecules in that category. Under such regulation, a firm manufacturing one branded generic will have little incentive to shift its focus to another branded generic in that category. At the same time, if these categories are considered essential, the government can provide incentives to firms to manufacture in these categories to ensure adequate supply to the patients. In this way we believe the regulator will be able to achieve its main objectives without undermining the good intentions behind them.


There is a need for increased awareness and education among physicians, especially those without formal medical degrees, regarding the efficacy and affordability of regulated drugs to ensure that patient care does not suffer due to commercial influences. Physicians should consider the financial implications for their patients when choosing between regulated and unregulated drugs, ensuring that their prescribing practices prioritize patient care over the influence of pharmaceutical detailing.


Patients and patient advocacy groups (such as ORDI – Organization for rare diseases in India) should be informed about the implications of DPCO 2013, particularly regarding drug affordability and availability. This highlights the necessity for establishing and reinforcing comprehensive patient advocacy groups within India, aiming to provide a robust support system for patient rights and access to essential medications. Moreover, these groups should spearhead efforts to educate patients on their entitlements and the options available to them for essential healthcare services and medicines. Efforts should be made to educate patients on their rights and the availability of essential medications. Patients and their representatives should engage more actively in policy discussions to ensure that regulations like DPCO 2013 truly benefit the end consumers without unintended negative consequences.

Retail Pharmacies

Retailers need to adapt their stock management practices to ensure the availability of both regulated and unregulated drugs, balancing profitability with the responsibility to provide essential medications to the community. Retailers should engage with policymakers to advocate for fair trade margins that do not disincentivize the stocking of regulated drugs, ensuring that patients have access to essential medications.