Same Drug, Different Brand, Different MRP? Centre Explains Pricing Rules Under DPCO

The Centre also highlighted that multiple pricing regulations and public health initiatives have contributed to a significant reduction in out-of-pocket healthcare expenditure in India, which has declined from 62.6% in 2014-15 to 43.4% in 2022-23.

The clarification was provided recently in Parliament during the Rajya Sabha session, where the Minister of State in the Ministry of Chemicals and Fertilizers, Anupriya Patel, responded to a question regarding the regulation and rationalisation of maximum retail prices of medicines.

Rajya Sabha MP Dr. Medha Vishram Kulkarni asked whether the Government had taken note of the wide variation in MRPs of medicines containing the same salt, strength, and dosage form but marketed under different brand names, whether any study had been conducted on such price differences and their impact on patients’ out-of-pocket expenditure, whether the Government proposed to regulate and rationalise these MRPs through appropriate guidelines, and what steps had been taken to strengthen monitoring and ensure affordable access to medicines.

Replying to the questions, Anupriya Patel stated that drug prices are regulated under the Drugs (Prices Control) Order, 2013, which was promulgated based on the National Pharmaceutical Pricing Policy, 2012. The National Pharmaceutical Pricing Authority (NPPA) fixes ceiling prices for formulations listed in Schedule I of the DPCO and retail prices for new drugs as defined under the DPCO, 2013, based on market data and the provisions of the order. Manufacturers and marketers are required to sell scheduled formulations within the notified ceiling price and new drugs within the notified retail price, plus applicable GST.

The Minister explained that manufacturers are free to sell medicines at prices lower than the notified ceiling or retail price according to market dynamics. There is no restriction on manufacturers fixing different prices for the same scheduled formulation under different brand names as long as those prices remain below the ceiling price fixed by the NPPA. For non-scheduled formulations, manufacturers are allowed to fix the price but cannot increase the MRP by more than 10% during the preceding 12 months. She added that these pricing regulations, together with other government initiatives aimed at improving access to healthcare facilities, have contributed to the reduction in out-of-pocket expenditure.

Regarding monitoring and enforcement, the Minister stated that the NPPA monitors compliance with the provisions of the DPCO, 2013, and takes appropriate action in cases of overcharging and other violations. Monitoring is carried out based on references received from Price Monitoring and Resource Units established in states, State Drugs Controllers, samples purchased from the open market, reports from market databases, and complaints received through various grievance redress mechanisms. The DPCO also requires every manufacturer to print the maximum retail price on the label of every formulation, and no person is permitted to sell a medicine at a price exceeding the current notified price list or the price printed on the label of the container or pack, whichever is lower.

The Minister further informed the House that the Government has undertaken several measures to improve access to affordable medicines. Under the Pradhan Mantri Bhartiya Janaushadhi Pariyojana, quality generic medicines are supplied through more than 20,000 Janaushadhi Kendras at prices typically 50% to 80% lower than branded medicines. Under the Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB-PMJAY), health assurance coverage of Rs. 5 lakh per family per year is provided for secondary and tertiary hospitalisation, including medicines. The Free Drugs Service Initiative under the National Health Mission provides essential medicines free of cost at public health facilities from Primary Health Centres to district hospitals.

Additionally, the AMRIT (Affordable Medicines and Reliable Implants for Treatment) initiative provides medicines for cancer, cardiovascular and other diseases, implants, surgical disposables, and consumables at average discounts of up to 50% through AMRIT Pharmacy stores located in several hospitals and healthcare institutions. Financial assistance is also provided to poor patients suffering from major life-threatening diseases, including cancer, under the Rashtriya Arogya Nidhi umbrella scheme and the Health Minister’s Discretionary Grant.