I. Introduction :
Drugs and Cosmetics Act was implemented in the Year1940 in order to regulate Import, Manufacture and supply of High standard drugs.but it did not cover the prices at which Bulk drugs and finished formulations have to be sold. As a result of which manufacturers started selling the drugs at very high prices beyond the reach of many patients. In order to ensure supply of Drugs at fair Prices, “The Drugs Price Control Order (D.P.C.O)” was first implemented in 1966 which has been subsequently amended in 1970, 1979, 1987, 1991, 1995, 2002, 2008, 2012, at 2018. The order has been passed Under Section 3 of essential commodities Act of 1955 as the Drugs have been classified and Declared as Essential Commodities by the central Government.
In the meantime “National pharmaceutical pricing Authority” (N.P.P.A) was established by the central Government on 29th Aug 1997 comprising an Independent body of experts for approving and fixing the prices of Bulk drugs and formulations including the powers to revise the prices as and when necessary.
The main objectives of this order are:
1). To ensure equal and fair distribution of Bulk Drugs to all Manufacturers.
2). To fix maximum prices at which bulk drugs and formulations (finished products) to be sold in order to prevent high profit margi.
3). To have an overall control over the prices of Bulk Drugs and retail formulations.
4). To ensure that Customers get the Drugs at a reasonable and low price.
Definitions :
1) Bulk Drugs: are defined to include any pharmaceutical chemical or an ingredient obtained in bulk, either naturally or synthetically, or a biological product including their salts, derivatives confirming to the pharmacopoeial standards as specified under second schedule of the D and C Act which is used as an ingredient in the manufacture of any “formulations”
2) Formulations :Means a “Medicine” or a “Drug” manufactured by using one or more bulk drugs along with pharmaceutical Aids, colouring, sweetening, coating agents, and additives, meant for either internal or external use in human beings or animals for diagnosis, treatment, mitigation and prevention of any diseases under Allopathic system of medicine.
3) Ceiling Price : It means the price fixed by central Government (N.P.P. A) for Bulk drugs and scheduled formulations in accordance with the provisions of Drugs price control order (D P C O).
4) Dealer : Means a person who is carrying out either an wholesale or Retail sale of drugs including purchase and sale of such drugs along with any other business including his Agent or Agents.
5) Distributor : Means a Distributor of drugs or his Agent or a stockist appointed by a Manufacturer or an Importer for stoking and selling his drugs to a ‘Dealer’ or a ‘Retailer’.
III) Prices of Bulk Drugs:
1) NPPA on behalf of Central Govt. is authorized to fix maximum price of Bulk Drugs at which they have to be sold to Manufacturers of “formulations” after taking in to account the cost of production and the following factors:-
a) A Post tax return of 14% on Net worth.
OR
b) A return of 22% on Capital invested
OR
c) Internal rate return of 12% based on long term marginal costing for New Plants and Equipments.
2) The manufacturer can opt for any one of these options while applying for getting the price of Bulk Drugs fixed by the Govt.
3) Once an option is given by the Manufacturer, it is final and if any change is required, it should be got approved by the central Govt. (NPPA) only.
4) No person / manufacturer shall sell the Bulk Drug at a price more than the price fixed by the Govt.
5) If any manufacturer wants to get the price revised, should apply to the Central Govt. (NPPA) for revision if the manufacturing cost has gone up due to various reasons and only if the Central Govt. is satisfied of the reasons, may revise the prices of bulk drugs and only after the approval of revised price the manufacturer should sell the Bulk Drug at revised prices.
6) Application in form No.1 should be submitted for revision of prices of Bulk Drugs.
7) If any manufacturer wishes to manufacture any other Bulk Drug, he should submit all the details of the drug and get permission within 15 days of commencement of manufacture of such Bulk Drug and sell at the price fixed by the Govt. (NPPA).
8) No Manufacturer / Distributor / Dealer should refuse to sell any Bulk Drug to any other manufacturer of formulations meant for sale.
III. Retail prices of Formulations.
The retail prices of formulations shall be calculated as per the following formula:-
The formulae as per DPCO 1979 is
The Manufacturers / Dealers / Distributors / Retailers / should not sell the Drug at more than the price prescribed / fixed as per the formula and approved by NPPA.
Label should be printed with the following information “ Maximum retail price not to exceed …………. Local taxes extra or Inclusive of all taxes)
Once the Retail price of formulation is calculated as mentioned above, and the price is fixed, it should be got approved by the Govt. within 15 days of marketing such a Drug.
Central Govt. has the powers to fix the maximum prices at which either a “Bulk Drug” or of a “Formulation” on its own on certain drugs taking in to account all the above factors in order to prevent the Importers, Manufacturers, Distributors and Retailer of misusing or misguiding the Govt. while marketing and selling the drugs. No Importer, Manufacturer shall sell the “New Drug” in the market without getting its price fixed by the Central Govt. (at not more than 100% margin of profit put together for Importer, Manufacturer, Distributor and Retailer). However “New Drugs” are exempted from D.P.C.O. for the first 2 years in order to encourage Invention, Manufacture, Export and sale of “New Drugs”.
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