Introduction to NPPA, The Drug Regulatory System in India, NPPA Activities and Responsibility's, Function and Organization of NPPA, Introduction to DPCO 2013, Salient features of DPCO 2013, Prices of Bulk Drug, Retail price of Formulations, Pricing of Scheduled Formulations, Various Schedules related to DPCO Act and Amendments.

1. Dr. Ambekar Abdul Wahid
M. Pharm, Ph. D
Department of Pharmaceutics
Dr. Vithalrao Vikhe Patil Foundation’s
College of Pharmacy
Vadgaon Gupta (Vilad Ghat) PO MIDC
Ahmednagar (MS), India
E-mail: wahidambekar@gmail.com
National Pharmaceutical Pricing Authority (NPPA)
&
Drug Price Control Order (DPCO) 2013
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2. Introduction
 Drugs play an important role in the health of both people and the
economy of a country
 People and Governments willing to spend money on drugs for many
reasons so, it must be safe, effective and of good quality and used
appropriately.
 Problems relating to drug safety and efficacy exist in many places around
the world today in developing and developed countries.
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3. Introduction (Continue…)
 This means, that development, production, importation, exportation and
subsequent distribution of drugs must be regulated to ensure that they meet
prescribed standards.
 Therefore, effective drug regulation is required to ensure the safety, efficacy
and quality of drugs as well as accuracy and appropriateness of the drugs.
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4. The drug regulation consists
1. Drug Laws
2. Drug Regulatory Agencies
3. Drug Regulatory Boards
4. Quality Control
5. Drug Information Centres etc.
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5. Drugs Regulatory System in India is governed by both Centre and State
Governments under the Drugs & Cosmetics Act, 1940.
Main Bodies
 Central Drug Standard Control Organization (CDSCO)
 Ministry of Health and Family Welfare
 Indian Council of Medical Research (ICMR)
 Ministry of Chemical and Fertilizer
 Ministry of Science and Technology
 Ministry of Commerce.
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6. Ministry of Chemical and Fertilizer
Department of Pharmaceutical Organization and Structure:
National Pharmaceutical Pricing Authority (NPPA)
Activities and Responsibilities:
 All matters relating to NPPA including its functions of price control and
monitoring.
 Responsible for development of infrastructure, manpower and skills for the
pharmaceutical sector.
 Work for the promotion and coordination of basic, applied and other research
in areas related to the pharmaceutical sector and for international co-
operation in pharmaceutical research.
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7. National Pharmaceutical Pricing Authority (NPPA)
 NPPA is an organization of the Government of India which was established to
fix/ revise the prices of controlled bulk drugs and formulations and to enforce
prices and availability of the medicines in the country, under the Drugs (Prices
Control) Order, 1995.
 The National Pharmaceutical Pricing Authority (NPPA), an independent body of
experts in the Ministry of Chemicals and Fertilizers was formed by the Govt. of
India at 1997.
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8.  Resolution published in the Gazette of India No.159 dated 29.08.97.
 Powers were delegated to the NPPA by the Govt. of India vide Gazette
Notification No. 637(E) dated 4th September, 1997
 The organization is also entrusted with the task of recovering amounts
overcharged by manufacturers for the controlled drugs from the consumers.
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National Pharmaceutical Pricing Authority (NPPA)
Continue ….

9. Functions of NPPA
To implement and enforce the provisions of the Drugs (Prices Control) Order.
To deal with all legal matters arising out of the decisions of the Authority.
To monitor the availability of drugs, identify shortages, if any, and to take
remedial steps.
To collect/maintain data on production, exports and imports, market share
of individual companies, profitability of companies etc., for bulk drugs and
formulations.
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10. To undertake and/ or sponsor relevant studies in respect of pricing of
drugs/ pharmaceuticals.
To recruit/ appoint the officers and other staff members of the Authority,
as per rules and procedures laid down by the Government.
To render advice to the Central Government on changes/revisions in the
drug policy.
To render assistance to the Central Government in the parliamentary
matters relating to the drug pricing.
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Functions of NPPA (Continue….)

11. Organization
 Chairman
 Member Secretary
 Advisor (Pricing)
 Bulk Drug Pricing
 Form-I, II & VI Examination
 Policy Matters
 Customs / Excise Issue
 Right to Information Bill
Director (Formulation Division)
 Formulations Pricing
 (Form III & IV)
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12.  Availability / Shortage of bulk drugs/formulations
 Production & Import/Export of drugs & formulations
 Parlement Questions / Assurance & VIP reference.
Director (Monitoring & Enforcement Division)
 Monitoring & Enforcement of prices of bulk drugs & formulations, both
Scheduled and non-scheduled
 Form-V examination
 Inclusion / Exclusion of drugs under DPCO,1995
 R & D aspects.
 Pharma Index
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Organization (Continue….)

13. Director (Legal Division)
 Identified cases of overcharging on bulk drugs & formulations and related
issues.
 Legal matters & follow up of the pending court cases.
 Any other references on the above
Director (Admin Division)
 Establishment
 General Administration.
 Co-ordination
 Vigilance
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Organization (Continue….)

14. Introduction:
• The drug price control order (DPCO) is an order issued by the government
under the Essential Commodities Act which enables it to fix the prices of
some essential bulk drugs and their formulations.
• The origin of this control dates back to 1970 when for the first time the
government placed limits on profitability of pharmaceutical companies.
Drug Price Control Order (DPCO)
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16. Objectives
• To ensure availability, at reasonable prices of essential and life saving and
prophylactic medicines of good quality.
• Promoting the rational use of drugs in the country, to encourage cost-effective
production with economic sizes.
• DPCO Provides:
• The list of price controlled drugs.
• Procedures for fixation of prices of drugs.
• Method of implementation of prices fixed by Government.
• Penalties for contravention of provisions
• **All formulations containing the bulk drugs either in a single or combination
form fall under the price control category.
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17. The government has notified the DPCO 2013 under the Essential
Commodities Act, 1955, which will give power to the NPPA (National
Pharmaceutical Pricing Authority) to regulate prices of 348 essential drugs
along with their specified strengths and dosages under NLEM (National List of
Essential Medicines) 2011.
Main Features of the DPCO 2013:
1) The new order will bring 348 drugs & their 652 formulations under price
control.
Drug Price Control Order (DPCO) 2013
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18. 2) The new policy uses a market-based pricing mechanism against the earlier
proposed cost-plus method. The ceiling price would be calculated by taking the
simple average of prices of all brands of a drug with a market share of 1% or more.
3) Margins of wholesalers & retailers have been cut down to 8% & 16%
respectively.
4) Monitoring the M.R.P of Non-Scheduled formulation.
5) Control over Bulk Drug manufacturer.
6) Control over Formulation manufacturer
7) Drug producers will be permitted an annual increase in the retail price in sync
with the wholesale price index.
Drug Price Control Order (DPCO) 2013
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19. Which drugs come under price control?
 This order doesn’t cover patented drugs. Earlier in March this year the
Department of pharmaceuticals (DOP) had issued a draft proposal on price
negotiation of patented drugs.
 Prices of 652 formulations spanning over 27 therapeutic classes are
regulated by DPCO 2013.
 Prices of some additional anti-cancer drugs including the much talked
about Imatinib, Carboplatin, Dacarbazine, Daunorubicn, Chlorambucil,
Oxaliplatin and some anti-retroviral cocktails like Zidovudine-Lamivudine-
Nevirapine and Stavudine- Lamivudine will now be regulated by the current
order.
Drug Price Control Order (DPCO) 2013
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20. Definitions
Bulk Drugs: It means any pharmaceutical, chemical and biological or plant
product conform to pharmacopoeial standards specified in D & C Act, 1940.
Scheduled Formulation:
• Scheduled formulation shall mean formulation with same strength and
same dosage form as in the schedule.
• If Dosage form and strength of a scheduled formulation are changed, it
ceases to be a scheduled drugs
• Example: Amoxicillin Capsules 250 mg is covered under schedule
Amoxicillin Tablet 125 mg shall not be called a Scheduled Drug
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21. Non - Scheduled Formulation:
"Non-Scheduled Formulation" means a formulation, containing the molecule, the
dosage and strengths of which are not specified in the First Schedule; (Non- NLEM
Drug / Formulation)
Example: Aceclofenac, Norfloxocin, Rabeprazole
Bulk Drugs:
It means any pharmaceutical, chemical and biological or plant product conform to
pharmacopoeial standards specified in D & C Act, 1940.
Definitions (Continue….)
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22. New Drug / New Formulation:
A) NLEM (National List of Essential Medicines) Formulations with same
specified dosage and strength as combined with another NLEM Formulations
with same specified dosage and strength.
Example:
• Paracetamol 500 mg Tablet is Scheduled Formulation
• Diclofenac 50 mg Tablet is Scheduled Formulation
• New Drug = Paracetamol 500 mg + Diclofenac 50 mg Tablet is New
Drug/Formulation
Definitions (Continue….)
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23. New Drug / New Formulation:
B) NLEM (National List of Essential Medicines) Formulations with same
specified dosage and strength as combined with another Non - NLEM
Formulations.
Example:
• Paracetamol 500 mg Tablet is Scheduled Formulation.
• Aceclofenac 100 mg Tablet is Non – Scheduled Formulation.
• Paracetamol 500 mg + Aceclofenac 100 mg Tablet is New Drug.
Definitions (Continue….)
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24. C) NLEM (National List of Essential Medicines) Formulations by changing its
strength.
Example: Paracetamol 500 mg tablet is a scheduled drug
Paracetamol 325 mg tablet is a new drug
D) NLEM (National List of Essential Medicines) Formulations by changing its
dosage.
Example: Diclofenac 50 mg tablet is a scheduled drug.
Diclofenac 50 mg Ointment is a new drug.
Definitions (Continue….)
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25. Ceiling Price: Price Fixed By Government For scheduled formulation.
Drug: Substance intended to be used for or in the diagnosis, treatment, or
prevention of any disease or disorder in human or animal.
Retail Price: Retail price of drug fixed in accordance with provisions of DPCO
1995 and include ceiling price.
Definitions (Continue….)
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26. Prices of bulk drugs
Government has power to fix the maximum sale price:
A) While fixing the sale price government shall take into following
considerations:-
• Post-tax return of 14% on net worth.
• Return of 22% on capital employed.
• For new plant, return of 12% based on long term marginal cost.
• On the basic stage of production, post tax return of 18% on net worth or
26% on capital employed.
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27. B) At the time of production of drug, manufacturer fill detail in FORM-I and
give necessary information to government within 15 days.
C) Make necessary inquiry and then government fix maximum sale price of
bulk drug and noted in official gazette.
D) Government Also fix or revise the price of non-scheduled bulk drugs.
Information Required From Manufacturer to the Government:
• For the both Scheduled and Non-scheduled bulk drugs
• List of drug produced with cost in FORM 1 and FORM 2 resp.
• But for scheduled bulk drugs it should given by 30 September every year.
Prices of bulk drugs
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28. Retail Price of Formulation
Formula:
R.P = (M.C + C.C + P.M + P.C) X (1 + MAPE/100) + ED
Where, R.P = Retail Price
M.C = Material Cost
C.C = Conversion Cost
P.M = Packaging Material Cost
P.C = Packing Charges
MAPE = Maximum Allowable Post Manufacturing Expenses
ED = Excise Duty
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29. Pricing of scheduled formulation
The ceiling price of a scheduled formulation of specified strengths and
dosages as specified under the first schedule shall be calculated as under:
Step I: First the Average Price to Retailer of the scheduled formulation i.e. P(s)
shall be calculated as below:
Average Price to Retailer, P(s) = (Sum of prices to retailer of all the brands
and generic versions of the medicine having market share more than or equal
to one percent of the total market turnover) / (Total number of such brands and
generic versions of the medicine having market share more than or equal to one
percent of total market turnover on the basis of moving annual turnover for that
medicine.)
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30. Step II. Thereafter, the ceiling price of the scheduled formulation i.e. P(c) shall be
calculated as below:
P(c) = P(s). (1+M/100),
Where,
P(s) = Average Price to Retailer for the same strength and dosage of the medicine
as calculated in step1 above.
M = % Margin to retailer and its value =16
Margin to retailer: While fixing a ceiling price of scheduled formulations and
retail prices of new drugs, sixteen percent of price to retailer as a margin to
retailer shall be allowed.
Pricing of scheduled formulation (Continue….)
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31. Maximum retail price:
1) The maximum retail price of scheduled formulations shall be fixed by the
manufacturers on the basis of ceiling price notified by the Government plus local
taxes wherever applicable, as under:
Maximum Retail Price = Ceiling price + Local Taxes as applicable
2) The maximum retail price of a new drug shall be fixed by the manufacturers on
the basis of retail price determined by the Government plus local taxes wherever
applicable, as under:
Maximum Retail Price = Retail Price + Local Taxes as applicable
Pricing of scheduled formulation (Continue….)
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32. Power to revise price of bulk drug and formulation:
• Government Fix or Revise Retail Price of One or more Formulation.
• As the Pre-Tax Return on Sales Turnover of Formulation then the Scheduled
and Non-scheduled Formulation.
Fixation of price under certain circumstances:
• If any Manufacturer of Bulk Drug Fails to Submit the Application For
Fixation or Revision of Price or Fails to give Information Within Specified time
period.
• Then Government Fix Price of the Bulk Drug.
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33. Power to recover overcharged amount:
• If any Manufacturer of Bulk Drug Fails to Submit the Application For Fixation
or Revision of Price or Fails to give Information Within Specified time period.
• Then Government Fix Price of the Bulk Drug.
Power To Recover Overcharged Amount:
• If any manufacturer or importer charging higher price than the price fixed by
government
• Then government may recover the overcharged amount.
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34. Control of sale prices of bulk drug and formulation:
• No person or retailer shall sale the drug/ formulation
• To any customer at increasing price specified in current price list indicated
on container label.
Sale of split quantity of formulation:
• No dealer shall sell the loose quantity of formulation
• At price exceeding pro-rata prices of formulation plus 5%.
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35. Schedules related with DPCO Act
First schedule:
First Schedule Includes 76 Bulk Drugs.
E.g. Penicillin, Ranitidine, Chloroquine etc.
Second schedule:
Different Forms Included:
Form - I :- Application For Fixation/ Revision of Price.
Form - II :- Information Related With Price of Non-scheduled Bulk Drug.
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36. Form – III :- Application for Approval/Revision of Price of Scheduled
Formulation.
FORM-IV :- Application for Approval/Revision of Price of Scheduled
Formulation imported In Finished Form.
FORM-V :- Form of Price List
FORM- VI :- Yearly Information on Turnover And Allocation of Sales And
Expense's.
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37. Third schedule :
Include,
Category A :- Large unit with turnover exceeding Rs. 6 crores per annum.
Category B :- Medium sized unit turnover between Rs. 1 crore to 6 crore per
annum.
Category C :- Other units with turnover of less than Rs. 1 crore per annum.
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38. Amendments
• Drug Price Control Order, 1970
• Drug Price Control Order, 1979
• Drug Price Control Order, 1987
• Drug Price Control Order, 1991
• Drug Price Control Order, 1995
• Drug Price Control Order, 2013
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39. Thank You
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