Drug Price Control Order Act [DPCO Act]

The government of India issued the DPCO Act or Drug Price Control Order Act under the Essentials Commodities Act. The order gives the power to the government to set the prices of crucial bulk drugs used in our daily lives and their formulation.

The control order was first introduced in the 1970s. Marking it the first occasion, the government put restrictions on the profits of pharmaceutical companies. This Act consists of various drugs whose prices have to be fixed, revised, implementation procedures, penalties, and punishments to be imposed, etc.

Drug Price Control Order Act [DPCO Act] - Overview

Some pharmaceutical companies started invariably increasing the prices of their drugs to attain maximum ROI. As a result, the mundane consumer has to bear the consequences of paying higher prices. The government of India stepped in to control the increasing cost of medicines, which should fundamentally be affordable to the majority of the population.

Thus, the Indian government launched the DPCO Act to regulate the prices of drugs in the marketplace.

The Drug Price Control Order Act [DPCO Act] 2013

DPCO Act 2013 was introduced under the Essentials Commodities Act of 1955. Its primary aim was to equip NPPA with the power to regulate pieces of 348 critical drugs and their formulation and dosage under NLEM 2011. Here are some features of the Drug Price Control Order Act [DPCO Act]:

• Instead of implementing the cost-plus method, the policy will utilize a market-based pricing mechanism.
• The new order includes 348 more drugs and 652 related strengths and dosages under the drug price control act.
• Strict monitoring of the maximum retail price or MRP of the non-scheduled formulation.
• Profit margins of wholesalers are cut by 8%, and for retailers by 16%.
• Regulation of bulk drug manufacturer
• Pharma companies and other drug-producing businesses will be allowed an annual increase in the retail price according to the wholesale price index.
• Some authority over the Formulation manufacturer

The Drug Price Control Order Act [DPCO Act], if appropriately implemented under expert guidance, can benefit all profits involved. The DPCO Act should include provisions that benefit the companies' profitability without harming the customers.

FAQs on Drug Price Control Order Act [DPCO Act]

Q.1. With regards to the Drug Price Control Order Act [DPCO Act], what are Scheduled Formulation Drugs

Drug Price Control Order Act [DPCO Act] refers to drugs with the exact dosage and strength mentioned in the schedule. If any of the components are modified, the drug ceases to be a scheduled formulation drug. For example, Amoxicillin Capsules 250mg falls under this category, whereas Amoxicillin Tablet 125mg doesn't belong to their category anymore.

Q.2. Name the four objectives of the Drug Price Control Order Act [DPCO Act]

The Objectives of the Drug Price Control Order Act [DPCO Act] are-

• To allow fair competition for developing and boosting the growth of the pharmaceutical industry.
• Ensuring availability of high quality life-saving, crucial and prophylactic medicines or drugs at reasonable costs.
• Offer opportunities to companies for research-oriented drug production and innovation.
• To increase the country's employment rate and ensure financial development for all.

Q.3. What is NAPPA under Drug Price Control Order Act [DPCO Act]?

NAPPA or National Pharmaceutical Pricing Authority supervises the country's availability of medicines and drugs. The body identifies any shortages and accordingly steps to combat the drug shortage. NAPPA enforces and impends the provisions under Drug Price Control Order Act [DPCO Act].

Q.4. In the interest of the Drug Price Control Order Act [DPCO Act], what is the formula for the retail price of formulation?

The formula for a retail price of formulation in the interest of the Drug Price Control Order Act [DPCO Act] is as follows -

RP = (M.C. + C.C. + P.M. + P.C.) x (1 + MAPE/100) + E.D

Where-

• R.P- retail price
• M.C. - material cost
• C.C. - conversion cost
• P.M. - packaging material cost
• P.C. - packaging charges
• MAPE- Maximum Allowable Post-manufacturing Expenses
• E.D - excise duty