The National Pharmaceutical Pricing Authority (NPPA), under the Department of Pharmaceuticals, runs the Drugs (Prices Control) Order, 2013 (DPCO, 2013). As of July 23, 2026, ceiling prices are in place for 935 formulations. Prices refixed under the National List of Essential Medicines (NLEM), 2022, have dropped by about 17% on average.
Setting prices for essential medicines
NPPA sets ceiling prices for formulations listed in Schedule-I of DPCO, 2013, using the NLEM published by the Ministry of Health and Family Welfare. It also sets retail prices for new drugs, including cases where an existing manufacturer combines an NLEM medicine with another drug, or changes its strength or dosage.
As of July 23, 2026, NPPA has fixed retail prices for 3,845 new drugs. Manufacturers and marketers cannot sell these drugs above the notified price.
For formulations outside the schedule, manufacturers can’t raise the maximum retail price (MRP) by more than 10% over what it was in the preceding 12 months. NPPA can also step in under Para 19 of DPCO, 2013, to fix or revise prices in the public interest, when needed to keep medicines affordable.
Annual revisions tied to the WPI
Ceiling prices for scheduled medicines go up once a year, based on the Wholesale Price Index (WPI) for all commodities from the previous calendar year. The government notifies the revised prices every April 1, and this figure sets the maximum increase allowed for scheduled medicines.
The last three years of WPI-linked revisions came to 0.00551% on April 1, 2024, 1.74028% on April 1, 2025, and 0.64956% on April 1, 2026.
Manufacturers of non-scheduled formulations can raise their MRP by up to 10% over the previous 12 months, but they mostly don’t use the full margin. Pharmarack data from June 2026 puts the weighted average annual price increase for non-scheduled drugs over the last three years at 6.94%, well under the 10% ceiling.
NPPA keeps watch over both scheduled and non-scheduled formulations and acts under DPCO, 2013, when companies overcharge.
Government schemes that lower costs further
The Pradhan Mantri Bhartiya Janaushadhi Pariyojana (PMBJP) sells quality medicines through Jan Aushadhi Kendras at 50% to 80% below branded prices.
Under the AMRIT initiative (Affordable Medicines and Reliable Implants for Treatment), run by the Department of Health and Family Welfare, AMRIT Pharmacy stores in hospitals supply medicines for cancer, cardiovascular disease and other conditions, along with implants and surgical consumables, at an average discount of up to 50%.
The Free Drugs Service Initiative, part of the National Health Mission, hands out essential medicines free at public health facilities, from Primary Health Centres up to district hospitals, based on the Indian Public Health Standards (IPHS) list.
Key Takeaway: Drug manufacturing, sale and distribution fall under the Drugs and Cosmetics Act, 1940, and the Drugs and Cosmetics Rules, 1945. State Licensing Authorities issue the licenses and carry out inspections.
State and Union Territory Drugs Controllers tested 1,41,322 drug samples in 2025-26, up from 1,16,323 in 2024-25 and 1,06,150 in 2023-24. Of the 2025-26 samples, 3,012 failed quality standards (compared with 3,104 the year before and 2,988 the year before that), and 283 turned out spurious or adulterated (against 245 in 2024-25 and 282 in 2023-24). Prosecution cases followed a different pattern: 779 in 2025-26 (still a provisional figure), down from 961 in 2024-25, though above the 604 recorded in 2023-24.
State authorities run periodic and risk-based inspections of licensed premises. Firms that break the rules face license suspension, cancellation or prosecution in court.
MCQ’s:
1. The National Pharmaceutical Pricing Authority (NPPA) functions under which Ministry/Department?
A. Ministry of Health and Family Welfare
B. Department of Pharmaceuticals
C. Department of Biotechnology
D. Central Drugs Standard Control Organization (CDSCO)
2. Under the Drugs (Prices Control) Order, 2013 (DPCO, 2013), manufacturers of non-scheduled formulations are permitted to increase the Maximum Retail Price (MRP) by a maximum of:
A. 5% over the previous 12 months
B. 8% over the previous 12 months
C. 10% over the previous 12 months
D. 15% over the previous 12 months
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