Drug price control in India: DPCO 2013, NLEM and NPPA
Why in news: On 12 October 2026, the Centre told the Supreme Court of a 30% trade-margin cap on non-scheduled cancer drugs; the Court asked why not others.
India controls medicine prices through the Drugs (Prices Control) Order, 2013, made under the Essential Commodities Act, 1955. The National Pharmaceutical Pricing Authority fixes ceiling prices for the National List of Essential Medicines and limits yearly price rises on others. On 12 October 2026, the Supreme Court questioned why the Centre's proposed 30% trade-margin cap covers only cancer drugs.
Syllabus: GS3 · Indian Economy & Growth; GS2 · Statutory & Regulatory Bodies; GS2 · Government Policies
Why this matters for UPSC
GS2 health and government policy, GS3 economy: Prelims asks which ministry runs the NPPA and the NLEM and what DPCO 2013 provides; Mains, how far price control should reach to cut out-of-pocket spending.
In short
India caps medicine prices through the Drugs (Prices Control) Order, 2013 under the Essential Commodities Act, 1955, weighing patients' affordability against medicines' availability.
Price control should follow the margin, not the list alone: cap where mark-ups exploit patients, while keeping cheap medicines worth stocking.
Why it matters
Take a family buying cancer medicines at a private pharmacy. If the medicine is on the essential list, its price cannot cross the ceiling the NPPA sets. If it is not, the shop can charge whatever MRP the company prints. In the 2026 hearings, the Supreme Court Bench said wide gaps between the price to retailer and the MRP of some cancer medicines put a heavy burden on patients. A 30% trade-margin cap shrinks that gap, which cuts what patients pay from their own pockets. The larger question is how far price control can go before companies and shops stop stocking cheap medicines.
Prelims pointers
- DPCO 2013: made under Section 3 of the Essential Commodities Act, 1955, not under the Drugs and Cosmetics Act, 1940, which governs drug quality and licensing.
- NPPA: attached office of the Department of Pharmaceuticals, Ministry of Chemicals and Fertilizers, set up in 1997; enforces the DPCO and monitors availability of drugs.
- NLEM: prepared by the Ministry of Health and Family Welfare; NLEM 2022, adopted on the Standing National Committee on Medicines' report, replaced NLEM 2015, which followed NLEM 2011.
- NLEM medicines are grouped by level of care: P (primary), S (secondary) and T (tertiary).
- Paragraph 19, DPCO 2013: in extraordinary circumstances and public interest, the Government may fix any drug's ceiling or retail price, or change it irrespective of the wholesale price index.
- Paragraph 16: ceiling prices of scheduled formulations are revised by the annual wholesale price index and notified on 1 April every year.
- Paragraph 17: a medicine omitted from the First Schedule becomes a non-scheduled formulation.
Practise a UPSC-style question
With reference to the Drugs (Prices Control) Order, 2013, consider the following statements:
1. It was issued under the Essential Commodities Act, 1955.
2. Its First Schedule consists of the National List of Essential Medicines published by the Ministry of Chemicals and Fertilizers.
3. The ceiling price of a scheduled formulation adds a 16% retailer margin to the average price to retailer.
Which of the statements given above is/are correct?
- (a) 1 and 2 only
- (b) 2 and 3 only
- (c) 1 and 3 only
- (d) 1, 2 and 3
Show the answer
Answer: (c) 1 and 3 only
1 is correct: DPCO 2013 was made under Section 3 of the Essential Commodities Act, 1955. 2 is incorrect: the National List of Essential Medicines is published by the Ministry of Health and Family Welfare, not the Ministry of Chemicals and Fertilizers. 3 is correct: Paragraph 4 adds a 16% retailer margin to the average price to retailer of brands with at least 1% market share.
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