Overview

In May 2013, the Department of Pharmaceuticals (DoP) of India brought 348 specific formulations (molecules or combinations of molecules) listed in the National List of Essential Medicines (NLEM; a list of 348 formulations including oral solids, liquids, infusions etc., constituted by an expert committee in 2011) under price control by the Drug Price Control Order (DPCO). The objective of the DPCO 2013 was to ensure availability of essential medicines at affordable prices for the poorer masses, while still encouraging innovation and growth in the pharmaceutical industry (DPCO, 2013).

Objective

The DPCO 2013 was primarily aimed at ensuring the availability of essential medicines at reasonable prices to the economically weaker sections of the society, while also fostering innovation and growth within the pharmaceutical sector (DPCO, 2013).

Regulatory Authority

The National Pharmaceutical Pricing Authority (NPPA) of India was empowered by this order to regulate the prices of medicines and oversee any price adjustments for non-regulated medicines, ensuring a balanced approach to pricing and availability.

Price Regulation Mechanism

• Market-Based Pricing: The price ceilings were determined based on a market-based mechanism. This involved calculating the simple average price of all brands with at least a 1% market share.
• Price Adjustments: Brands exceeding this average were directed to reduce their prices to meet or fall below the established ceiling. Conversely, brands priced below this threshold were required to maintain their pricing.
• Annual Price Increase Limit: Regulated drugs were subject to annual price increase limitations, tethered to or below India’s wholesale price index.
• Unregulated Drugs: Unregulated drugs that are not part of NLEM, were permitted a maximum annual price hike of 10%.

Retailer Margin and Company Obligations

• Retailer Margin: The DPCO 2013 set the retailer margin at 16%.
• Company Exit Policy: Companies wishing to exit a category were required to give a six-month notice, with the NPPA having the authority to mandate continued production for up to 12 months to ensure drug availability.
• Production Mandate: Companies were mandated to continue with the current production levels. 

Monitoring and Compliance 

Additional measures were instituted to monitor the production and availability of essential drugs, safeguarding against shortages and ensuring broad access.

Pharma companies need to register their manufacturing units and submit Production Batch Records (PBRs) to the CDSCO.

For detailed calculations and a comprehensive list of the drugs under this order, refer to the DPCO 2013 document.