Govt to closely monitor price hikes of drugs outside essential list

Business Standard

25-07-2025

The national pharmaceutical pricing regulator will keep a close watch on overcharging by drug companies for medicines outside the purview of the price control list.
In an office memorandum dated July 22, the National Pharmaceutical Pricing Authority (NPPA), under the Ministry of Chemicals and Fertilisers, said, 'The Government shall monitor the maximum retail prices (MRP) of all drugs, including non-scheduled formulations, and ensure that no manufacturer increases the maximum retail price of a drug by more than ten percent of the maximum retail price during the preceding twelve months…' Business Standard has reviewed the document.
The NPPA will monitor how companies are increasing prices of non-scheduled drugs. These are medicines not under direct price control, for which the NPPA fixes ceiling prices using changes in the wholesale price index, as well as market data (average price to retailers of all brands of the medicine with a market share of 1 percent or more). The prices of scheduled drugs, which are mentioned in the National List of Essential Medicines (NLEM), are fixed every year by the NPPA.
In the case of non-scheduled drugs not part of the NLEM, companies are allowed to raise prices by 10 percent annually. The NPPA will now closely monitor whether these price hikes are in line with the limit.
If prices are raised beyond the permissible limit, the company will be required to deposit the overcharged amount along with interest, from the date of the price increase, in addition to any penalties, the memorandum warned.
Moreover, to prevent companies from launching the same medicine under different brand names at higher prices, the NPPA has directed, 'All manufacturers are hereby directed to align the prices of non-scheduled formulations launched under different brands… so that the difference in MRP is not more than ten percent.'
Any violation of this rule will invite strict action under the DPCO, 2013, and the Essential Commodities Act, 1955.
The office memorandum, signed by NPPA Deputy Director (Enforcement) Manisha Khuntia, has been sent to all drug manufacturers, industry associations, and stakeholders.
As of September 2024, the NPPA has raised a cumulative demand of Rs 9,980.6 crore from pharmaceutical companies as penalties for overcharging in 2,545 cases. Many of these cases are currently stuck in litigation.