Parliamentary panel pitches for stronger NPPA powers as govt reworks pharma policy

As the government mulls changes to pharma price regulation, a Parliamentary Panel’s recommendation keeps the industry guessing.

A parliamentary panel’s recent criticism of India’s drug price control mechanism has kept industry circles buzzing as the government plans to revise the national pharmaceutical policy soon.

The parliamentary panel on chemicals and fertilizers has sought urgent empowerment of the country’s medicine price regulator, the National Pharmaceutical Pricing Authority (NPPA), after finding the agency to be structurally inadequate to curb pricing malpractices in India’s pharmaceutical sector. It wanted the revised pharmaceutical policy currently in the making to address this regulatory gap.

The drug industry finds the recommendation troublesome, as it had persuaded the government over years of follow-ups to amend the earlier cost-based medicine price fixation system to the existing one.

In a report presented to the Lok Sabha last month, the Standing Committee on Chemicals and Fertilizers, led by Azad Kirti Jha, noted that while the existing Drugs (Prices Control) Order, 2013 (DPCO) empowers the NPPA to fix ceiling prices for drugs listed under the National List of Essential Medicines (NLEM), it fails to extend this regulatory authority to unscheduled drugs.

“As such, the NPPA is not empowered to regulate trade margins for non-NLEM drugs in cases where excessive mark-ups are evident on widely used and lifesaving medicines. This regulatory gap allows manufacturers to launch non-scheduled formulations, both branded and generic, at arbitrary price points. Although they are technically restricted from increasing the maximum retail price (MRP) by more than 10 percent annually, the absence of initial price fixation renders this control largely meaningless. This loophole needs to be corrected,” the panel observed.

The committee report also said that Price to Stockist (PTS) data remains undisclosed to the public, as the maximum retail price (MRP) cannot reveal the true extent of profiteering. Fixed-dose combination (FDC) drugs, which account for a substantial share of prescriptions in India, also remain outside the ambit of price regulation despite their widespread use and potential for irrational combinations, it pointed out.

According to the committee, the absence of a legal provision to audit drug costs under the existing law limits the ability to check whether MRPs of cancer medicines are truly justified. “The Committee finds that although the NPPA is endowed with exceptional powers to cap prices and margins, the lack of a permanent legal mechanism for trade margin control continues to weaken long-term price regulation and transparency and needs to be addressed with top priority and urgency,” the report said.

It preferred the introduction of a clear legal provision in DPCO 2013, through appropriate amendments, for the effective implementation of Trade Margin Rationalisation (TMR). It emphasized that relying only on exceptional power clauses may not be sufficient to protect public interest in the long term, and that a permanent, transparent system must be put in place at the earliest to regularly monitor MRPs and trade margins for lifesaving drugs such as anti-cancer medicines.

The committee wanted the Ministry of Chemicals and Fertilizers to take these issues into account while revising the government’s pharmaceutical policy, an exercise that is currently underway. The committee called for immediate steps to come out with a pharmaceutical policy where the thrust should be on providing both scheduled and non-scheduled formulations to people at affordable prices.

The report, titled ‘Price rise of medicines in the pharmaceutical sector impacting the lives of ordinary citizens adversely – a review’, was presented to the Lok Sabha on December 1, 2025.