Sale Prices of Bulk Drugs
Bulk drugs (active pharmaceutical ingredients) are the raw materials used to make medicines.
Prices of bulk drugs can only be fixed or regulated by NPPA if they are included in the Schedule I list of DPCO.
Non-scheduled bulk drugs are not regulated, but their prices are monitored for unreasonable increases.
Retail Price of Formulations DPCO
The retail price of medicines is calculated using the market-based pricing formula introduced in DPCO, 2013, as opposed to the earlier cost-based pricing method.
Formula for Retail Price:
Retail Price = (Average Price of the Drug) + (16% Margin for Retailer)
NPPA calculates the average price based on the prices of all brands having at least 1% market share.
Retail Price and Ceiling Price of Scheduled Formulations
Ceiling Price:
NPPA fixes the maximum ceiling price of scheduled formulations to prevent overcharging.
Manufacturers cannot sell the drug at prices higher than the ceiling price.
Revisions of Prices:
NPPA periodically reviews and revises the ceiling prices based on inflation and market data.
Exemptions:
New drugs with patents or innovation are exempted from price control for 5 years to promote R&D.
Monitoring Non-Scheduled Drugs
For non-scheduled drugs, NPPA monitors price increases and imposes restrictions if the price increase exceeds 10% per year.