NPPA Proposes Making Drugmakers Solely Liable for Overpricing Essential Medicines: Report

Under the existing provisions of Para 26 of the Drugs (Prices Control) Order, 2013 (DPCO 2013), no entity is permitted to sell a formulation to a consumer at a price higher than the prevailing price list or the price printed on the container label. For medicines included in the National List of Essential Medicines (NLEM), revised prices become applicable from the date on which the pricing orders are issued.

However, the implementation of revised prices has remained a concern, particularly in cases where retailers continue to sell their existing stocks at the older, higher prices even after a price reduction has taken effect.

According to the proposal under consideration, the provision that currently allows the NPPA to prosecute dealers, retailers or hospitals could be removed in cases where there is clear evidence that these entities knowingly sold medicines at prices exceeding the revised rates.

If implemented, the proposed change would place sole legal responsibility on drug manufacturers for pricing violations across the distribution chain, including instances where medicines are ultimately sold at an excessive price by retailers or hospitals. This could mean that manufacturers would remain liable for violations occurring at the downstream level, even when the actual overcharging is carried out by an entity beyond the manufacturer's direct control.

The government, however, would continue to retain its authority to recover the amount charged in excess of the permitted price. In addition to recovery of the overcharged amount, a penal interest of 15% would also continue to be imposed.

The proposed move has reportedly drawn opposition from pharmaceutical industry stakeholders, who have termed the approach unilateral, biased and unfair. Senior industry officials have raised concerns that manufacturers could be penalised for the actions of retailers, hospitals and other downstream entities that knowingly continue to sell stocks at prices that were applicable before a price revision.

Industry representatives have argued that if a retailer, hospital or other seller is aware of a reduction in the price of a medicine but deliberately continues to sell existing stock at the earlier, higher rate, responsibility for such an action should not rest entirely with the manufacturer. They contend that manufacturers may have little or no control over the price ultimately charged to consumers after the product has moved through the distribution network.

The proposed changes come against the backdrop of significant enforcement action by the NPPA in relation to drug pricing violations. Through March 2026, the regulator had filed 2,737 cases involving pricing violations. The cumulative penalties imposed in these cases stood at ₹8,447 crore, while the regulator had recovered ₹1,582 crore from manufacturers.

The broader issue of pharmaceutical price regulation has also been examined by a parliamentary committee. A recent parliamentary committee report called for a shift away from the existing market-based pricing mechanism, which is based on average retailer margins, towards a hybrid cost- and value-based pricing model. The proposed approach seeks to ensure fair pricing for novel medical interventions while also supporting the sustainability of the pharmaceutical industry.

Economic Times reports that the proposed NPPA changes could significantly alter the allocation of responsibility for medicine pricing violations, particularly in cases involving revised prices and existing stocks held by retailers, hospitals and other downstream sellers.

The recommendations come amid the continuing debate over how India can ensure access to affordable essential medicines while also maintaining a pricing framework that remains commercially sustainable for pharmaceutical manufacturers and supports the availability of innovative treatments.