What Happened
- The government reaffirmed that drug prices in India are regulated under the Drugs (Prices Control) Order, 2013 (DPCO 2013), issued under the Essential Commodities Act, 1955.
- The National Pharmaceutical Pricing Authority (NPPA) under the Department of Pharmaceuticals (Ministry of Chemicals and Fertilizers) fixes ceiling prices for all formulations listed in Schedule-I of DPCO 2013 — equivalent to the National List of Essential Medicines (NLEM), 2022.
- As of March 2025, ceiling prices have been fixed for 764 formulations under NLEM 2022. In February 2026, the NPPA fixed retail prices of 20 new formulations following the 143rd Authority meeting (27 February 2026).
- Both branded and generic manufacturers of scheduled medicines must sell within the ceiling price (plus applicable GST) fixed by NPPA.
- Separately, the regulation of private hospital charges remains primarily under state jurisdiction; the central government's focus is on drug and medical device pricing rather than direct hospital fee control.
Static Topic Bridges
NPPA and DPCO 2013: India's Drug Price Control Architecture
The National Pharmaceutical Pricing Authority (NPPA) was established in 1997 under the Department of Pharmaceuticals as an independent regulatory body for drug pricing. It derives its price-control authority from the Drugs (Prices Control) Order, 2013 (DPCO 2013), issued under Section 3 of the Essential Commodities Act, 1955. The DPCO 2013 replaced the DPCO 1995 and shifted from a cost-based pricing approach to a market-based price cap system using the simple average of all medicines in a therapeutic category having at least 1% market share.
- Schedule-I of DPCO 2013 lists all "scheduled formulations" — drugs on the National List of Essential Medicines — for which NPPA fixes mandatory ceiling prices.
- Non-scheduled formulations (drugs not in NLEM) can have their prices increased by a maximum of 10% per year by manufacturers; NPPA monitors but does not fix ceilings for these.
- Under Paragraph 19 of DPCO 2013, NPPA can issue directions to fix or revise prices of any drug in "extraordinary circumstances" even if it is not in Schedule-I — this emergency power has been used for cancer drugs, COVID-19 medicines, and stents.
- Market-based ceiling price formula: Ceiling Price = Simple Average of all brands with ≥1% market share in the same therapeutic category × (1 + permitted trade margin).
- The Essential Commodities Act, 1955 (Entry 33 of Concurrent List) gives Parliament and states concurrent power to regulate supply, distribution, and pricing of essential goods including drugs.
Connection to this news: The ongoing NPPA price-fixing activity — including the February 2026 round — reflects the rolling nature of drug price regulation; as NLEM is updated and new molecules enter the market, the ceiling price list must be continuously revised.
National List of Essential Medicines (NLEM): Concept and Policy Role
The National List of Essential Medicines (NLEM) is a health policy instrument published by the Ministry of Health and Family Welfare that identifies medicines that satisfy priority healthcare needs of the majority of the population. The concept follows the WHO's Essential Medicines framework (first established 1977). India's first NLEM was published in 1996; the most recent version, NLEM 2022, was notified in September 2022 with 384 medicines.
- NLEM 2022 contains 384 medicines across 27 therapeutic categories; this is the basis for Schedule-I of DPCO 2013 and determines which drugs receive mandatory price ceilings.
- Inclusion in NLEM requires medicines to be safe, effective, and cost-effective for priority health conditions — the list is revised periodically based on disease burden, new evidence, and affordability.
- NLEM is distinct from the Essential Commodities Act list (broader coverage) and from the Emergency Use Authorisation list (for crisis situations like COVID-19).
- Jan Aushadhi Scheme (Pradhan Mantri Bhartiya Janaushadhi Pariyojana — PMBJP): Government initiative providing generic medicines at 50-90% below branded prices through dedicated Jan Aushadhi Kendras.
- As of March 2025, over 764 formulations have had ceiling prices fixed under NLEM 2022 by NPPA.
Connection to this news: The NLEM 2022 update was itself a significant event — it added several new medicines and removed some older ones, triggering a round of price re-fixing by NPPA that is still in progress in 2026.
Regulation of Private Hospitals: Centre vs. State Jurisdiction
Private hospital regulation in India falls primarily within the domain of state governments under the State List (Entry 6: Public Health, sanitation, hospitals, and dispensaries) of the Seventh Schedule. There is no central law governing the fees charged by private hospitals, though the Clinical Establishments (Registration and Regulation) Act, 2010 provides a framework for registration and standardisation of clinical establishments — but its fee-capping provisions have been adopted by relatively few states.
- The Clinical Establishments Act, 2010 empowers the National Council (constituted under the Act) to determine standards for clinical establishments and recommend rates for services; however, states must adopt the Act (it is a voluntary adoption by states).
- States such as Maharashtra, Rajasthan, and Tamil Nadu have their own hospital regulation laws with varying degrees of price control.
- During the COVID-19 pandemic, several states exercised emergency powers to cap private hospital charges for COVID-19 treatment.
- The Consumer Protection Act, 2019 provides recourse to patients for deficiency in service and unfair trade practices by private hospitals; medical negligence cases can be filed before Consumer Commissions.
- The Parliamentary Standing Committee on Health has repeatedly recommended a central framework for standardising private hospital charges, particularly for procedures covered under government insurance schemes (PMJAY — Ayushman Bharat).
Connection to this news: The distinction between centrally regulated drug prices (DPCO 2013 via Essential Commodities Act) and state-regulated private hospital charges explains why affordable medicines have a clear regulatory architecture while hospital fee regulation remains fragmented — a gap that policymakers are increasingly seeking to address.
Key Facts & Data
- DPCO 2013 — issued under Section 3 of the Essential Commodities Act, 1955; replaces DPCO 1995
- NPPA — established 1997; under Department of Pharmaceuticals, Ministry of Chemicals and Fertilizers
- NLEM 2022 — 384 medicines, 27 therapeutic categories; notified September 2022
- Ceiling prices fixed under NLEM 2022 (as of March 2025): 764 formulations
- February 2026: NPPA fixed retail prices of 20 formulations (143rd Authority meeting, 27 Feb 2026)
- Annual price increase allowed for non-scheduled formulations: maximum 10% per year
- Paragraph 19, DPCO 2013 — emergency power for NPPA to fix prices of any drug
- Clinical Establishments Act, 2010 — central framework for hospital registration; voluntary adoption by states
- Entry 6, State List — Public health, hospitals, dispensaries (state subject)
- Entry 33, Concurrent List — Essential Commodities Act powers; drug price control falls here
- Jan Aushadhi Kendras (PMBJP): generic medicines at 50-90% below MRP