It is by the Drug Price Control Order of 1995 which is based on the existing Pharma Policy of 1994, which fix/revise/monitor the prices of drugs in the country. The policy specifies criteria on which price control is based. These criteria include:

·       Sales turnover

·       Market Monopoly and

·       Market Competition

As per DPCO 1995, drugs are categorized as:[1]

·       Scheduled Drugs: drugs which satisfy the criteria under price control.

·       Non-Scheduled Drugs: drugs over which there is no control on the launch price. The prices however, monitored on the monthly basis and actions are taken if there is increase in the price of the drug more than 10% in one year and certain criteria of turnover market share is satisfied.

The Drug Policy, 1994 needs to be revised to meet the challenges brought about by the competitive international pharmaceutical industry in a globalised economic environment, as much as meeting the country’s requirements for safe and quality medicines at reasonable prices. Therefore, the Government enunciates the National Pharmaceuticals Pricing Policy, 2012(NPPP-2012) which seeks to replace the Drug Policy enunciated in September, 1994 as “Modifications in Drug Policy, 1986” (Drug Policy 1994). The NPPP-2012 is in continuation of the Policy announced earlier in 1994.

The aim of the proposed policy is that Patented Drugs launched in India after 1^st January, 2005 would be subjected to price negotiations, before being given the marketing approval. The price control on patented drugs is based on the assumption that the medicines market is not a perfect market and the absence of control on the prices of patented medicines may lead to affordable prices for the masses. The other reason is the absence of an effective health insurance system to ensure access and affordability of all medicines to all.