NPPA, Telangana Authorities Investigate Algorithm-Driven Medicine Pricing by E-Pharmacies

Many consumers assume that online pharmacies offer significant discounts compared with physical chemist stores. However, regulators suspect that certain platforms may be applying advanced pricing algorithms that modify medicine prices depending on factors such as the user’s location, browsing behaviour, and local demand, creating the impression of larger discounts than actually provided.

To address the issue, the Price Monitoring and Resource Unit (PMRU) in Telangana, in coordination with the National Pharmaceutical Pricing Authority (NPPA) and the State Drug Control Administration (DCA), has started closely observing the pricing patterns of medicines sold online. The objective is to verify whether the discounts advertised by e-pharmacies are genuine or whether the original price is increased before offering a reduction.

Unlike conventional retail pharmacies where prices remain relatively stable, online platforms can change prices quickly through digital systems. Regulators are therefore examining whether certain e-pharmacies are implementing dynamic pricing mechanisms in which the cost of non-scheduled medicines may increase during periods of higher demand or in particular localities within the city.

The investigation follows complaints raised by traditional pharmacy associations, including members of the All India Organisation of Chemists and Druggists (AIOCD). These groups have alleged that some online platforms may mislead customers by advertising attractive discounts that do not actually reduce the final price paid by the consumer.

Industry observers have also pointed out that in some cases the base price of a medicine could be increased beyond the usual market rate before applying a discount of around 15–20 percent. This strategy can create the perception of a substantial price reduction, even though the final amount paid by the customer may be similar to what is charged at offline pharmacies.

To improve surveillance of medicine pricing, the NPPA has implemented the Integrated Pharmaceutical Database Management System (IPDMS 2.0), which enables state monitoring units to track medicine prices and sales data more effectively. By analysing these transactions, authorities can identify instances where the same medicine is sold at different prices across various areas of Hyderabad.

According to a recent media report by Telangana Today, officials emphasised that discounts offered by online pharmacies are acceptable only if the final selling price remains lower than the Maximum Retail Price (MRP) printed on the medicine packaging. Consumers have also been advised to verify medicine prices using the government’s “Pharma Sahi Dam” mobile application to ensure they are not being overcharged.

Authorities noted that the ongoing monitoring effort is intended to ensure transparency in online medicine sales, prevent misleading discount practices, and safeguard consumers from unfair pricing in the pharmaceutical market.