India: New Drug Pricing Policy Proposed

India’s Department of Pharmaceuticals (DoP) recently proposed a revision of the National Pharmaceuticals Pricing Policy (NPPP).

If approved, the new NPPP will change the way prices are determined for both imported and locally manufactured drugs sold in India. More specifically, the NPPP will set price controls for the 348 drugs on the National List of Essential Medicines, as designated by the Indian Ministry of Health and Family Welfare. The essential drugs list covers more than 60% of brand name and generic drugs available in the Indian market. Also included under the new price controls are combination drugs not on the National List. Combination drugs were previously excluded from the national price control policy.

Under the policy’s market based pricing scheme, a drug’s ceiling price would be determined by averaging the prices of the three top-selling brands in the drug category at the time of policy implementation. According to India’s DoP, the new pricing controls are estimated to reduce the price of top brand name drugs by about 10%.

Previously, a drug’s pricing was determined using a cost-based mechanism based on a manufacturer’s estimated cost of production. The previous version of the NPPP was issued by the DoP in 1994, and controlled the pricing of about 10-20% of drugs sold in India.