Myth vs. Facts (GS Paper 3, Indian Economy)
Why in news?
- Some media reports have highlighted that medicine prices will witness a significant hike by up to 12% from April, 2024.
- These reports further claim that more than 500 medicines will be affected by this increase in price. Such reports are false, misleading and malicious.
Scheduled and non-scheduled formulations
- As per the provisions of Drug Price Control Orders (DPCO) 2013, drugs are categorized as scheduled and non-scheduled formulations.
- The formulations which are listed in Schedule-I of DPCO 2013 are scheduled formulations and the formulations that are not specified in Schedule-I of DPCO 2013 are non-schedule formulations.
Revision of ceiling price of scheduled medicine on basis of WPI
- National Pharmaceutical Pricing Authority (NPPA) under the Department of Pharmaceuticals annually revises the ceiling prices of scheduled medicines on the basis of Wholesale Price Index (WPI).
- The scheduled medicines included in the Schedule-I of the DPCO, 2013 are essential medicines.
- During the calendar year 2023 over the corresponding period in 2022, the annual change in WPI with base year 2011-12 was (+) 0.00551% as per data published by Department for Promotion of Industry and Internal Trade (DPIIT).
- Accordingly, the Authority in its meeting held on 20.03.2024 has approved the WPI increase @ (+) 0.00551% for the scheduled medicines.
- The ceiling prices on 923 medicines are effective as on date. Based on the above mentioned WPI factor of (+) 0.00551%, there will be no change in the prevailing ceiling prices for 782 medicines and the existing ceiling prices will continue to prevail up to 31.03.2025.
- Fifty-Four (54) medicines with ceiling price ranging from Rs. 90 to Rs. 261 will have miniscule increase of Rs. 0.01(one paisa).
- As the permissible price increase is miniscule, the companies may or may not avail this increase.
- Thus, in the year FY 2024-25, there will be almost no change in the ceiling price of medicines based on WPI.
Maximum increase permissible
- The WPI increase is the maximum increase permissible as per the DPCO, 2013 and the manufacturers may or may not avail this increase, keeping in view the market dynamics.
- The companies adjust their Maximum Retail Price (MRP) depending upon the ceiling price of their medicines, as MRP (excluding GST) can be any price which is less than the ceiling price.
- The revised prices will be applicable from 1st April 2024 and the detail of revised prices is available on NPPA’s website www.nppaindia.nic.in.
Way Forward
- In case of non-scheduled formulation, a manufacturer is at liberty to fix the price.
- However, no manufacturer of non-scheduled formulation can increase the MRP by more than 10% during preceding 12 months under Para 20 of DPCO, 2013.
