Why is it in the news?

• On October 14, the National Pharmaceutical Pricing Authority (NPPA) increased the ceiling prices of eight essential drugs by 50%. These drugs include treatments for common conditions such as asthma, tuberculosis, bipolar disorder, and glaucoma.
• The Central Government cited “extraordinary circumstances” and “public interest” as the reasons for this price hike, which aims to ensure the continued availability of these essential medications.

More about the news

• The NPPA, under the Ministry of Chemicals and Fertilizers, emphasized that price regulation should not make essential drugs unavailable.
• The NPPA explained that manufacturers had requested price increases due to rising costs of active pharmaceutical ingredients, production, and exchange rate changes, which made the production and marketing of some drugs unviable.
• Moreover, some companies had also applied for discontinuation of certain formulations because of these financial pressures.
• Established in 1997, the NPPA regulates drug prices through the Drug Price Control Order (DPCO) under the Essential Commodities Act.
• In a meeting on October 8, the government invoked extraordinary powers under Para 19 of the DPCO, 2013, allowing a 50% price increase on eleven formulations of eight drugs, citing public health interest.
• These include atropine injections, streptomycin powder, salbutamol tablets, pilocarpine drops, cefadroxil tablets, desferrioxamine injections, and lithium tablets. Similar powers were invoked by the NPPA in 2019 and 2021 for price increases on other formulations.
• Para 19 of the DPCO allows the government to revise drug prices in extraordinary situations, overriding the usual annual price adjustments based on the Wholesale Price Index (WPI). The NPPA revises ceiling prices annually based on the WPI from the previous year.
• Drug pricing in India is strictly controlled, and companies found charging higher prices face penalties. In 2023-24, ₹72.73 crore was recovered from such companies.
• Additionally, under the Drugs and Cosmetics Act, 1945, manufacturers must comply with Good Manufacturing Practices (GMP) and conditions of their manufacturing licenses, covering all aspects of drug production, testing, labelling, and distribution.