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UPSC NPPA’S ROLE IN FIXING DRUG PRICES - English

NPPA’S ROLE IN FIXING DRUG PRICES

Why in News

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

• NPPA was constituted by the Government of India in 1997 as an attached office of the Department of Pharmaceuticals (DoP), Ministry of Chemicals & Fertilizers as an independent Regulator for pricing of drugs and to ensure availability and accessibility of medicines at affordable prices.
• It was made to fix/revise prices of controlled bulk drugs and formulations and to enforce price and availability of the medicines in the country, under the Drugs (Prices Control) Order, 1995-2013 (DPCO).
• A bulk drug — also called Active Pharmaceutical Ingredient (API) — is the chemical molecule in a medicine that lends the product the claimed therapeutic effect.

Objectives

• To implement and enforce the provisions of the Drugs (Prices Control) Order in accordance with the powers delegated to it.
• To deal with all legal matters arising out of the decisions of the NPPA.
• To monitor the availability of drugs, identify shortages 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 and undertake and/ or sponsor relevant studies in respect of pricing of drugs/ pharmaceuticals.

Working of  Pricing  Mechanism

• All medicines under the NLEM are under price regulation. NLEM list drugs are used  for all the basic treatment.
• 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.
• 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.

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