The government is planning to bring a new legislation to modify and place the Drugs Price Control Order (DPCO) separately from the ambit of the Essential Commodities Act.

However, the new legislation is unlikely to be presented in the Budget session of Parliament and the Department of Pharmaceuticals (DoP), hence, would notify the revised DPCO before the session, it is learnt. The new DPCO will lay out the retail price of over 640 packs of 348 essential medicines.

“The National Pharmaceutical Policy was already notified and to define the mechanism of price control, the DPCO will have to be modified. Later, a special legislation will be brought to take out DPCO from the ambit of the Essential Commodities Act and place it separately,” sources said.

The special legislation will thus give a regulatory framework, covering price control and monitoring of drugs by the National Pharmaceutical Pricing Authority (NPPA), based on the policy announced already. The NPPA however will implement the policy once the DPCO is notified.

The DoP also has to ensure provisions for organisational and financial support to enable the NPPA to implement the new policy in an effective and transparent manner. Hence, the policy may finally come into effect only from the next financial year.

According to the new pricing policy, prices of 348 essential drug formulations (or over 640 packs of medicines containing these drugs in various strengths and dosages) will be fixed at the arithmetic average of prices of all the drugs in that segment with a minimum of one per cent market share.

According to the existing DPCO, the pricing regulator so far used to fix prices of 74 bulk drugs, and all medicines containing one or more of these bulk drugs, based on a cost-plus formula. For all medicines, companies were allowed to increase prices by up to 10 per cent annually, and for anything beyond that they were required to seek permission from the regulator.