General Studies IIHealth

National Pharmaceutical Pricing Authority (NPPA)


National Pharmaceutical Pricing Authority (NPPA) may allow a price hike of over 10% in the drugs and devices listed under the National List of Essential Medicines (NLEM).

About National Pharmaceutical Pricing Authority:

  • The National Pharmaceutical Pricing Authority (NPPA) is a government regulatory agency that controls the prices of pharmaceutical drugs in India.
  • National Pharmaceutical Pricing Authority (NPPA) was constituted vide Government of India Resolution dated 29th August, 1997 as an attached office of the Department of Pharmaceuticals (DoP), Ministry of Chemicals and Fertilizers as an independent Regulator for pricing of drugs and to ensure availability and accessibility of medicines at affordable prices.
  • NPPA Headquarter: New Delhi, India.

Key Functions of NPPA

  • The NPPA fixes the price of drugs on the National List of Essential Medicines (NLEM) under schedule-I of Drug Price Control Orders (DPCO).
  • The NPPA is responsible for implementing and enforcing the provisions of the Drugs Price Control Order (DPCO), (1995/2013) in accordance with the powers delegated to it.
  • The NPPA monitors the availability of drugs, identifies shortages, if any, and takes remedial steps accordingly.
  • National Pharmaceutical Pricing Authority (NPPA) also renders advice to the Central Government on changes/revisions in the drug policy.
  • The NPPA also collects/maintains data on production, exports and imports, market share of individual companies, the profitability of companies etc. for bulk drugs and formulations.
  • It is also entrusted with rendering assistance to the Central Government in parliamentary matters relating to drug pricing.

How does the Pricing Mechanism work?

  • All medicines under the NLEM are under price regulation. The NLEM lists drugs used to treat fever, infection, heart disease, hypertension, anemia etc and includes commonly used medicines like paracetamol, azithromycin etc.
    • The Health Ministry prepares a list of drugs eligible for price regulation, following which the Department of Pharmaceuticals incorporates them into Schedule 1 of DPCO.
    • The Standing Committee on Affordable Medicines and Health Products (SCAMHP) will advise the drug price regulator the National Pharmaceutical Pricing Authority (NPPA) on vetting the list. The NPPA then fixes the prices of drugs in this Schedule.
  • As per the Drugs (Prices) Control Order 2013, scheduled drugs, about 15% of the pharma market, are allowed an increase by the government as per the WPI (Wholesale Price Index) while the rest 85% are allowed an automatic increase of 10% every year.
    • The annual change in prices of scheduled drugs is controlled and rarely crosses 5%.
    • Under the Drugs and Cosmetics Act 1940, the drugs are classified in schedules and regulations are laid down for their storage, display, sale, dispensing, leveling, prescribing etc.
  • The pharma lobby is now asking for at least a 10% increase for scheduled drugs too rather than going by the WPI.
    • As over the past few years, input costs have flared up. One of the reasons is that 60%-70% of the country’s medicine needs are dependent on China.

Significance of NPPA

It is important to fix the prices of certain important drugs so that they can be easily affordable and accessible to every citizen of the county and the National Pharmaceutical Pricing Authority ensures the same. It mandates that no supplier can sell a drug more than its Maximum Retail Price (MRP).  

NPPA played a very crucial role during the pandemic time in the country as many medical suppliers were selling drugs at higher prices which were unaffordable for many. Thus, this authority fixed the prices so that they could be availed easily. 

NPPA Initiatives

The National Pharmaceutical Pricing Authority (NPPA) is headquartered at New Delhi and to increase its reach across the country, NPPA has set up a Price Monitoring and Resource Unit (PMRU) in the various Indian States and Union Territories. 

These PMRU’s have been set up under the Consumer Awareness, Publicity and Price Monitoring (CAPPM) scheme. As of January 2021, there are 14 states/UTs where these PMRUs have already been set up. The pharmaceutical authority aims to set up a price monitoring unit in each and every state and union territory across India. 

States/UTs with PMRU already set up – Kerala, Odisha, Gujarat, Rajasthan, Haryana, Nagaland, Tripura, Uttar Pradesh, Punjab, Andhra Pradesh, Mizoram and Jammu & Kashmir. The latest edition in this list is Karnataka and Goa, where the PMRU was set up in 2020. 

Source: The Hindu

You can find many articles on HEALTH (part of GS II) in our website. Go through these articles share with your friends and post your views in comment section.

Leave a Reply

Open chat
Hello Dear Aspirant,
Join our whatsapp group here to get Daily Newspapers, Magazines, Monthly, Question Banks and much more..
Just ping us your Name..
See you then..!!!