307 Cases of Drug Price Violations Surface, Big Pharma To Face Heat?

The Committee, in its Eighth Report on Demands for Grants 2025-26, examined the pricing mechanisms of essential and life-saving drugs, seeking clarifications on whether the prices of such medicines had increased significantly.

Drug Pricing Regulations and Enforcement Gaps

Responding to the Committee, the Department of Pharmaceuticals explained that drug prices in India are regulated under the National Pharmaceutical Pricing Policy, 2012 (NPPP, 2012), which is enforced through the DPCO, 2013. The National Pharmaceutical Pricing Authority (NPPA) is responsible for fixing the ceiling prices of scheduled medicines listed under Schedule-I of the DPCO, which includes the National List of Essential Medicines (NLEM), 2022.

The Committee was informed that:

"Prices of scheduled medicines notified as Schedule-I of the DPCO, 2013 by the Department of Pharmaceuticals. The National List of Essential Medicines (NLEM) published by the Ministry of Health and Family Welfare is incorporated as the Schedule-I of the DPCO. Presently, NLEM, 2022 is notified as Schedule-I of DPCO, 2013 vide notification dated 11.11.2022."

Additionally, the fixation and refixation of prices under NLEM, 2022 has led to an average price reduction of 16.89%, resulting in estimated annual savings of Rs 3,788 crore to patients.

Concerns Over High Pharma Profits and Market Control

The Committee sought to determine whether leading pharmaceutical companies such as Sun Pharma, Aurobindo, Dr. Reddy’s, and Cipla were making excessive profits by pricing medicines at high rates. However, the Department stated that it does not maintain data on the profitability and revenue of pharma companies. Instead, it clarified that NPPA fixes the ceiling and retail prices of scheduled medicines based on market data:

"NPPA fixes the same in accordance with provisions of DPCO, 2013 as per market-based data by, inter alia, taking the simple average of prices to retailers of all brands and generic versions of the medicine that have a market share of more than or equal to 1% of the total market turnover on the basis of the moving annual turnover of a specified medicine."

Regarding concerns that medicines produced by these companies may be beyond the reach of the common people, the Committee was told that NPPA regulates the prices of scheduled medicines and applies the ceiling prices across all manufacturers and marketers. The report noted:

"The average price reduction due to refixation of prices under NLEM, 2022 is about 17%, leading to annual savings of approximately Rs 3,788 crore to patients."

Alleged Nexus Between Pharma Companies and Corporate Hospitals

The Committee also inquired about allegations that big pharma companies supply branded medicines to corporate hospitals at discounted rates, while patients are forced to buy the same medicines at much higher prices through prescriptions. This alleged price manipulation strategy reportedly allows both pharma companies and hospitals to make huge profits. However, the Department stated that no such report had been officially brought to its notice.

Government's Response to Pricing Violations

The Committee stressed the need for stricter regulation, especially in cases where non-scheduled formulations were found to be overpriced. It noted that NPPA has notified over 3,200 retail prices across various therapeutic categories and that manufacturers of non-scheduled formulations are not allowed to increase the MRP by more than 10% per annum.

The representative of the Department further clarified NPPA’s role, stating:

"NPPA is mandated to implement the drug price control order. Now, the field is divided into two parts. One is scheduled drugs and another is non-scheduled drugs. Scheduled drugs are the drugs basically which figure in the National List of Essential Medicines, which is issued by the Department of Health and Family Welfare. The list is adapted by the Department of Pharmaceuticals and included as a schedule to the DBCO. So, it is the responsibility of the NPPA to fix the ceiling prices of these drugs that are included in the schedule."

The Department also detailed the pricing regulation for non-scheduled drugs, stating:

"There are non-scheduled drugs that constitute about 80 per cent of the entire universe of the drugs. There, NPPA does not fix the ceiling price. The companies are free to fix the ceiling price, but the regulation comes by way of annual increase. They cannot increase the drug prices by more than 10 per cent. So, that is what NPPA enforces as far as the non-scheduled drugs are concerned."

The Committee emphasized that stricter monitoring and penalties are required to prevent overpricing and ensure affordability of essential medicines. It has called for greater transparency in pharma pricing policies and stronger oversight of market practices to safeguard patient interests.

Also Read: With Rs 3788 Crore In Savings, Govt Eyes Adding More Drugs Under NLEM