Centre Simplifies Drug Launch Process, Cuts Overcharging Liability for Pharma Companies

New Delhi: Providing significant relief to pharmaceutical manufacturers in overcharging cases, the Central Government has amended the Drugs (Prices Control) Order (DPCO), 2013 to restrict manufacturers' liability only to the quantity of stock actually found to have been sold above the notified ceiling price by distributors or retailers, provided the manufacturer can demonstrate compliance with prescribed price dissemination requirements.

The Department of Pharmaceuticals (DoP), Ministry of Chemicals and Fertilizers, notified the Drugs (Prices Control) Amendment Order, 2026 through Gazette Notification S.O. 3516(E) dated June 30, 2026, exercising powers under Section 3 of the Essential Commodities Act, 1955. The amendments came into force from the date of their publication in the Official Gazette.

The latest amendment introduces changes to several provisions of the DPCO, 2013, including paragraphs 11, 14, 15, 24 and 29, besides introducing a new Form IA for intimation of new drug launches.

One of the key amendments relates to Paragraph 14, which governs the recovery of overcharged amounts from manufacturers.

Earlier, manufacturers could face broader recovery proceedings even where only a portion of the supply chain had sold medicines above the notified ceiling price. The amended provision seeks to rationalise this liability by linking it to the actual quantity of stock involved in overcharging.

As per the Gazette notification, a new proviso has been inserted under Paragraph 14(2), stating:

"Provided that, in respect of scheduled formulations produced or available in the market before the date of notification of the ceiling price, where the manufacturer demonstrates compliance with the provisions of paragraph 24 and such other guidelines as may be issued by the Government from time to time, the liability of the manufacturer for overcharging shall be restricted to the quantity of stock traded through the distributor or retailer found to have effected such overcharging."

This means that manufacturers of scheduled formulations already available in the market before a revised ceiling price is notified can limit their financial liability, provided they are able to demonstrate that they complied with Paragraph 24 of the DPCO and any additional Government guidelines regarding dissemination of revised prices.

Paragraph 24 lays down manufacturers' obligations following a price revision. Under the amended provisions, manufacturers are required to promptly circulate revised Market Retail Price (MRP) lists to dealers and retailers, publish price reduction notices in at least two national newspapers, issue revised price lists in Forms V or VI, upload revised price notifications on the company's website, and submit batch-wise production and stock details to the Government.

By complying with these requirements, manufacturers will now be held liable only for the stock handled by those distributors or retailers who are actually found to have sold the scheduled formulation above the notified ceiling price, rather than for the entire stock circulating in the market.

Apart from providing relief in overcharging cases, the amendment also revises Paragraph 11 of the DPCO, empowering the Central Government to notify separate ceiling prices or retail prices for the same drug where there is a specified therapeutic rationale. The differentiated pricing may be based on factors such as the type of packaging, pack size, dosage compliance, content in the pack, or dosage form, including liquid, gaseous or other unit dosage forms, provided the drug conforms to standards prescribed under the Drugs and Cosmetics Act, 1940.

The notice stated,

"In paragraph 11, for sub-paragraph (3), following sub-paragraph shall be substituted, namely:— “(3) Notwithstanding anything contained in sub-paragraphs (1) and (2), in the case of any drug for which a ceiling price or retail price has been fixed, the Government may fix and notify separate ceiling price or retail price on an application made by the manufacturer or otherwise, for such drug with specified therapeutic rationale, considering the type of packaging or pack size or dosage compliance or content in the pack, namely, liquid, gaseous or any other form, in the unit dosage, as the case may be, conforming to Indian Pharmacopeia or other standards as specified in the Drugs and Cosmetics Act, 1940 (23 of 1940) and the rules made thereunder for the same drug.”

The government has also simplified the regulatory process for existing manufacturers launching new drugs. Under the amended Paragraph 15, an existing manufacturer introducing the same new drug within twelve months of the Government fixing its retail price will no longer be required to submit a fresh application for retail price approval. Instead, the manufacturer will only need to intimate the Government of the launch through the newly introduced Form IA within one month.

The notice states,

"In paragraph 15, in sub-paragraph (2), the following provisos shall be inserted, namely:— “Provided that any other existing manufacturer launching the same new drug within twelve months of retail price fixation of such new drug under this paragraph shall not be required to apply: Provided further that such a manufacturer launching the new drug shall intimate the details of the launch in Form-IA within one month of the launch.”

However, the amendment also strengthens enforcement against pricing violations. Manufacturers who fail to comply with the provisions relating to retail price fixation or launch a scheduled new drug at a price higher than the latest government-notified retail price during the preceding twelve months will be liable to deposit the overcharged amount along with applicable interest, in addition to penalties prescribed under the DPCO.

The notification further amends Paragraph 24 to strengthen transparency in implementing price revisions. Manufacturers are now required to issue price lists and supplementary price lists, wherever applicable, in Form V or Form VI to the State Drugs Controllers and the Central Government, indicating the relevant Gazette notification or price fixation order.

Another significant amendment is the insertion of a new Paragraph 29, which introduces mandatory record-retention requirements. Under the new provision, every manufacturer must maintain records relating to the sale of active pharmaceutical ingredients (APIs), bulk drugs, formulation units and packs, and any other records as directed by the Government for at least seven financial years immediately preceding the current financial year. In cases where proceedings are initiated under the DPCO, such records must be preserved until the final disposal of the proceedings.

The notice added,

"In paragraph 15, in sub-paragraph (2), the following provisos shall be inserted, namely: 'Provided that any other existing manufacturer launching the same new drug within twelve months of retail price fixation of such new drug under this paragraph shall not be required to apply: Provided further that such a manufacturer launching the new drug shall intimate the details of the launch in Form-IA within one month of the launch.”

The amendment also inserts Form IA into Schedule II of the DPCO. The newly introduced form prescribes the format for intimating the launch of a new drug and requires manufacturers to furnish details including the formulation name, manufacturer or importer details, marketing company, composition, launch date, formulation type, pack size, therapeutic category, launch price and the latest Government-notified retail price.

According to the Gazette notification, the Drugs (Prices Control) Amendment Order, 2026 came into force on the date of its publication in the Official Gazette.