Pharma News

How Drug Pricing Works in India: NPPA, DPCO, and You

India's drug pricing regime is complex. The National Pharmaceutical Pricing Authority controls prices of essential medicines, but most drugs remain unregulated. Here's what you need to know.

Arjun Krishnamurthy

Health Policy Analyst

5 min read

India's drug pricing is governed by the Drug Price Control Order (DPCO) 2013, administered by the National Pharmaceutical Pricing Authority (NPPA). The DPCO sets ceiling prices for medicines listed in the National List of Essential Medicines (NLEM) — currently around 384 formulations.

For NLEM medicines, manufacturers cannot charge more than the ceiling price set by NPPA. These prices are calculated based on the simple average of all brands with more than 1% market share. This has led to significant price reductions — cardiac stents, for example, saw prices drop by up to 85% after being brought under price control in 2017.

However, the majority of medicines sold in India — estimated at over 60,000 formulations — are not on the NLEM and therefore not subject to price control. For these, manufacturers can charge whatever the market will bear, subject only to a 10% annual price increase cap.

Trade margins are another significant factor. Retailers typically earn 20% margin, distributors 10-15%, and stockists 8-10%. These margins are added on top of the manufacturer's price, which is why the same drug can vary significantly in price between pharmacies.

As a consumer, you have the right to ask for the MRP (Maximum Retail Price) printed on the packaging — no pharmacy can charge above this. You also have the right to ask for generic alternatives. Dawaai's comparator shows you the full price range across pharmacies so you can exercise these rights effectively.

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drug pricingNPPADPCOpharmaceutical policyIndia