Drug price control order 2013

The government has notified the DPCO 2013 under the Essential Commodities Act, 1955, which will give power to the NPPA (National Pharmaceutical Pricing Authority (NPPA )to regulate prices of 348 essential drugs along with their specified strengths and dosages under NLEM 2011.

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Seminar on
DRUG (PRICE CONTROL) ORDER ACT, 1995
PRESENTED BY-
Tushar D. Morankar.
(T.Y.B.Pharm)
Guided By-
K.D.Mali Sir
Mr.Tushar D Morankar

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CONTENT
▪Introduction
▪History
▪Amendments
▪Objectives
▪Definitions
▪Prices of bulk drugs
▪Information required from manufacturer to the government
▪Retail price of formulation
▪Powers to fix price of scheduled formulation
Mr.Tushar D Morankar

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Cont.…….
▪Fixation of price under certain circumstances
▪Power to recover overcharged amount
▪Control of sale prices of bulk drug and formulation
▪Sale of split quantity of formulation.
▪Schedules related with DPCO Act, 1995.
▪Offences and penalties.
▪References.
Mr.Tushar D Morankar

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DRUG-
A substance intended for use in the diagnosis, cure, mitigation, treatment, or
prevention of disease.
PRICE-
The amount of money given or set as consideration for the sale of a specified thing.
CONTROL-
To exercise restraining or directing influence over.
ORDER-
An authoritative command, direction, or instruction
INTRODUCTION
Mr.Tushar D Morankar

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❖Thedrugpricecontrolorder(DPCO)isanorderissuedbythe
governmentundertheEssentialCommoditiesActwhich
enablesittofixthepricesofsomeessentialbulkdrugsand
theirformulations.
❖Theoriginofthiscontroldatesbackto1970whenforthefirst
timethegovernmentplacedlimitsonprofitabilityof
pharmaceuticalcompanies.
Continue….
Mr.Tushar D Morankar

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DPCO ACT, 2013
DPCO ACT,1995
Confirmed by Section 3 of
Essential Commodities Act, 1955.
Mr.Tushar D Morankar

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HISTORY
In 1966, parliament members felt that
manufacturers charging high rate on drugs.
To control on high drug rates,
DPCO Act 1966 was passed under Section 3 of Essential
Commodities Act 1955.
Mr.Tushar D Morankar

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DPCO Act, 1966 replaced by DPCO Act, 1970.
In 1974, Hathi Committee was formed and submitted it’s reports in 1975.
DPCO Act, 1970 replaced by DPCO Act, 1987.
DPCO Act, 1987 replaced by DPCO Act, 1995.
Finally DPCO Act, 1995 replaced by DPCO Act, 2013.
Mr.Tushar D Morankar

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AMMENDMENTS
▪Drug Price Control Order, 1970
▪Drug Price Control Order, 1979
▪Drug Price Control Order, 1987
▪Drug Price Control Order, 1991
▪Drug Price Control Order, 1995
▪Drug Price Control Order, 2013
Mr.Tushar D Morankar

10. 10Mr.Tushar D Morankar
https://youtu.be/TGT2ZU3b9I4

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OBJECTIVES
✓To Achieve Adequate Production
✓To regulate Equal Distribution
✓To Maintain and Increase SupplyOf Bulk Drugs
✓To make at Fair Prices.
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DPCO2013
ThegovernmenthasnotifiedtheDPCO2013undertheEssentialCommodities
Act,1955,whichwillgivepowertotheNPPA(NationalPharmaceuticalPricing
Authority(NPPA)toregulatepricesof348essentialdrugsalongwiththeirspecified
strengthsanddosagesunderNLEM2011.
✓Main Features of the DPCO 2013
•Theneworderwillbring348drugs&their652formulationsunderprice
control.
•Thenewpolicyusesamarket-basedpricingmechanismagainsttheearlier
proposedcost-plusmethod.Theceilingpricewouldbecalculatedbytakingthe
simpleaverageofpricesofallbrandsofadrugwithamarketshareof1%or
more.
Mr.Tushar D Morankar
https://youtu.be/LPVbeP5YLiI

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•Margins of wholesalers & retailers have been cut down to
8% & 16% respectively.
•Monitoring the M.R.P of Non-Scheduled formulation.
•Control over Bulk Drug manufacturer.
•Control over Formulation manufacturer
•Drug producers will be permitted an annual increase in
the retail price in sync with the wholesale price index.
Mr.Tushar D Morankar

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ToimplementandenforcetheprovisionsoftheDrugs(PricesControl)Order
inaccordancewiththepowersdelegatedtoit.
TodealwithalllegalmattersarisingoutofthedecisionsoftheAuthority.
Tomonitortheavailabilityofdrugs,identifyshortages,ifany,andtotake
remedialsteps.
Tocollect/maintaindataonproduction,exportsandimports,marketshareof
individualcompanies,profitabilityofcompaniesetc,forbulkdrugsand
formulations.
Toundertakeand/orsponsorrelevantstudiesinrespectofpricingofdrugs/
pharmaceuticals.
Torecruit/appointtheofficersandotherstaffmembersoftheAuthority,asper
rulesandprocedureslaiddownbytheGovernment.
TorenderadvicetotheCentralGovernmentonchanges/revisionsinthedrug
policy.
TorenderassistancetotheCentralGovernmentintheparliamentarymatters
relatingtothedrugpricing
FUNCTIONS….
Mr.Tushar D Morankar

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DPCO 1995 DPCO 2013
ItisgovernedbyEssentialcommoditiesact
1955
Itisgovernedbynationalpharmaceutical
pricingauthority,basedonnationallistof
essentialmedicines
Pricesofonly74drugswereregulatedby
thisact
Pricesof652drugsareregulatedbythisact
Ifoncethepricesarefixed,theycan’tbe
changedaspertheact
Basedonsimpleaverageprice(SAP)the
highestpricescanbelowereddependingon
themargins
Ceilingandnon-ceilingpricesofdrugsare
notSpecified
Ceilingandnon-ceilingpricesofdrugsare
specified
ThisactfacilitatesWin–Winsituationfor
thegovernment,butnotfortheIndustries
Thepricesofthedrugsarefixedbythe
mutualagreementofgovernmentand
industriesforthewelfareofthepublic

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DEFINITIONS
BULKDRUGS:-
Itmeansanypharmaceutical,chemicalandbiologicalorplantproduct
conformtopharmacopoeialstandardsspecifiedinDAndCAct,1940.
CEILINGPRICE:-
PriceFixedByGovernmentForScheduledFormulation.
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DRUG :-
Substance intended to be used for or in the diagnosis, treatment, or
prevention of any disease or disorder in human or animal.
RETAIL PRICE :-
Retail price of drug fixed in accordance with provisions of DPCO 1995 and
include ceiling price.
SCHEDULED BULK DRUG : -
It Means Bulk Drug Specified In First Schedule.
Mr.Tushar D Morankar

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PRICES OF BULK DRUGS
Government has power to fix the maximum sale price.
A) While fixing the sale price government shall take into following considerations:-
➢Post-tax return of 14% on net worth.
➢Return of 22% on capital employed.
➢For new plant, return of 12% based on long term marginal cost.
➢On the basic stage of production, post tax return of 18% on net worth or 26% on capital
employed.
Mr.Tushar D Morankar

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PRICES OF BULK DRUGS
B) At the time of production of drug, manufacturer fill detail inFORM-I and give
necessary information to government within 15 days.
C) Make necessary inquiry and then government fix maximum sale price of bulk
drug and noted in official gazette.
D) Gov. Also fix or revise the price of non-scheduled bulk drugs.
Mr.Tushar D Morankar

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Information Required From Manufacturer to The Government
➢ForthebothScheduledandNon-scheduledbulkdrugs
➢ListofdrugproducedwithcostinFORM1andFORM2resp.
➢Butforscheduledbulkdrugsitshouldgivenby30Septembereveryyear.
Mr.Tushar D Morankar

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RETAIL PRICE OF FORMULATION
CALCULATION : -
FORMULA :
Where, R.P. = Retail Price
M.C.= Material Cost
C.C.= Conversion Cost
P.M.= Packaging Material Cost
P.C.= Packing Charges
MAPE= Maximum Allowable Post Manufacturing Expenses
ED = Excise Duty
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POWER TO FIX RETAIL PRICE OF SCHEDULED FORMULATION
➢Government fix the Retail Price Of Bulk Drug.
➢And manufacturer use drugs in scheduled formulation.
➢For price revision of such formulation manufacturer should apply within 30
days.
➢From Date Of Receipt of complete information Govr. Fix Retail Price within 2
months.
Mr.Tushar D Morankar

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No Person Shall Sell Imported Scheduled Formulation.
Manufacturer Should Not Marketed New Formulation.
Manufacturer Should Not Increase Retail Price Of Drug.
Without Approval Of Government,
Mr.Tushar D Morankar

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POWER TO FIX CEILING PRICE OF SCHEDULED FORMULATION
➢Government fix the Ceiling Price of Scheduled Formulation with formula
given in the Paragraph 7 keep cost and efficiency or both.
➢Ceiling Price for formulation including those sold under GENERIC NAME.
➢Fixed Revised Ceiling Price for Schedule Formulation either on it’s own
motion or on application made in prescribed form.
Mr.Tushar D Morankar

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PRICING OFSCHEDULED FORMULATION
The ceiling price of a scheduled formulation of specified strengths and dosages as
specified under the first schedule shall be calculated as under:
•Step I: First the Average Price to Retailer of the scheduled formulation i.e. P(s) shall
becalculated as below:
Average Price to Retailer
P(s) = (Sum of prices to retailer of all the brands and generic versions of the medicine having market share
more than or equal to one percent of the total market turnover) / (Total number of such brands and generic
versions of the medicine having market share more than or equal to one percent of total market turnover on the
basis of moving annual turnover for that medicine.)
Mr.Tushar D Morankar

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•Step II. Thereafter, the ceiling price of the scheduled formulation i.e. P(c) shall be
calculated as below:
P(c) = P(s).(1+M/100), where
P(s) = Average Price to Retailer for the same strength and dosage
of the medicine as calculated in step1 above.
M = % Margin to retailer and its value =16
Margin to retailer: While fixing a ceiling price of scheduled formulations and retail
prices of new drugs, sixteen percent of price to retailer as a margin to retailer shall be
allowed.
Mr.Tushar D Morankar

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Maximum retail price:
(1)The maximum retail price of scheduled formulations shall be fixed by the
manufacturers on the basis of ceiling price notified by the Government plus local taxes
wherever applicable, as under:
Maximum Retail Price = Ceiling price + Local Taxes as applicable
(2)The maximum retail price of a new drug shall be fixed by the manufacturers on the
basis of retail price determined by the Government plus local taxes wherever
applicable, as under:
Maximum Retail Price = Retail Price + Local Taxes as applicable
Mr.Tushar D Morankar

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POWER TO REVISE PRICE OF BULK DRUG AND FORMULATION
➢Government Fix or Revise Retail Price of One or more Formulation.
➢As the Pre-Tax Return on Sales Turnover of Formulation then the
Scheduled and Non-scheduled Formulation.
Mr.Tushar D Morankar

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FIXATION OF PRICE UNDER CERTAIN CIRCUMSTANCES
➢If any Manufacturer of Bulk Drug Fails to Submit the Application For Fixation
or Revision of Price or Fails to give Information Within Specified time period.
➢Then Government Fix Price of the Bulk Drug.
Mr.Tushar D Morankar

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POWER TO RECOVER OVERCHARGED AMOUNT
➢If any manufacturer or importer charging higher price than
the price fixed by government
➢Then government may recover the overcharged amount.
Mr.Tushar D Morankar

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CONTROL OF SALE PRICES OF BULK DRUG AND FORMULATION
➢No person or retailer shall sale the drug/ formulation
➢To any customer at increasing price specified in current price list
indicated on container label.
Mr.Tushar D Morankar

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SALE OF SPLIT QUANTITY OF FORMULATION
➢Nodealershallselltheloosequantityofformulation
➢Atpriceexceedingpro-ratapricesofformulationplus5%.
Mr.Tushar D Morankar

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SCHEDULES RELATED WITH DPCO ACT, 1995
FIRST SCHEDULE
▪First Schedule Includes 76 Bulk Drugs.
▪E.g. Penicillin, Ranitidine, Chloroquine Etc.
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SECOND SCHEDULE
❖Different Forms Included :-
▪FORM-I :-Application For Fixation/ Revision Of Price.
▪FORM-II :-Information Related With Price Of Non-scheduled Bulk Drug.
▪FORM-III:-Application For Approval/Revision Of Price Of Scheduled Formulation.
▪FORM-IV :-Application For Approval/Revision Of Price Of Scheduled Formulation
imported In Finished Form.
▪FORM-V :-Form Of Price List
▪FORM-VI :-Yearly Information On Turnover And Allocation Of Sales And Expense's.
Mr.Tushar D Morankar

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THIRD SCHEDULE
Include,
CATEGORY A :-LARGE UNIT WITH TURNOVER EXCEEDING
Rs. 6 crores per annum.
CATEGORY B :-MEDIUM SIZED UNIT TURNOVER BETWEEN
Rs. 1 crore to 6 crore per annum.
CATEGORY C :-OTHER UNITS WITH TURNOVER OF LESS THAN
Rs. 1 crore per annum.
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New Drug / NewFormulation
A)NLEM (National List of Essential Medicines)
Formulationswithsamespecifieddosageandstrengthascombinedwith
anotherNLEMFormulationswithsamespecifieddosageandstrength.
Example I:
•Paracetamol500mgTabletisScheduledFormulation
•Diclofenac50mgTabletisScheduledFormulation
• NewDrug=Paracetamol500mg+Diclofenac50mgTabletisNew
Drug/Formulation.
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B)NLEMFormulationswithsamespecifieddosageandstrengthascombinedwith
anotherNon-NLEMFormulations
Example II:
•Paracetamol 500mg Tablet is Scheduled Formulation
•Aceclofenac 100mg Tablet is Non -Scheduled Formulation
•Paracetamol 500mg + Aceclofenac 100mg Tablet is New Drug
Mr.Tushar D Morankar

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C) NLEM Formulations by changing its strength
Example I:
•Paracetamol 500mg Tablet is a Scheduled Drug
•Paracetamol 325mg Tablet is a New Drug
D) NLEM Formulations by changing its dosage
Example I:
•Diclofenac 50mg Tablet is a Scheduled Drug.
•Diclofenac 50mg Ointment is a New Drug.
Mr.Tushar D Morankar

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OFFENCES AND PENALTIES
PENALTIES—
❑He shall be punishable with imprisonment for one year and also liable to fine.
❑In the case of any other order, with imprisonment for not less than three
months but which may extend to seven years and also be liable to fine.
Mr.Tushar D Morankar

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REFERENCES
❖Dr. Kuchekar B.S., Khadatare A.M., Itkar S.C., “Forensic Pharmacy”, Ed. 7
th
,
2008, NIRALI PRAKASHAN, P. 3.1-3.29.
❖Sampath K. “ Pharmaceutical Jurisprudence”, Ed. 3
rd
, BIRLA PUBLICATION, P.
170-177.
❖Gandhi Neerja, Popli Harvinder, “Pharmaceutical Jurisprudence”, Ed.1
st
, 2010,
CBS PUBLICATION, P. 136-154.
Mr.Tushar D Morankar

41. 41Mr.Tushar D Morankar