Context-India’s drug pricing regulator has allowed an increase in the maximum retail prices of 21 drugs currently under price control by as much as 50 per cent.

• This is the first time the National Pharmaceutical Pricing Authority (NPPA) — which is known to slash prices of essential and life-saving medicines — is increasing prices in public interest to prevent patients opting for costlier alternatives in the face of shortage of these drugs.

• The decision by the NPPA, taken at a meeting on December 9, will apply to formulations like the BCG vaccine for tuberculosis, vitamin C, antibiotics like metronidazole and benzylpenicillin, anti-malarial drug chloroquine and leprosy medication dapsone.

• NPPA said it has been receiving applications for upward price revision under para 19 of DPCO, 2013, since last two years citing reasons like “increase in API (key ingredient) cost, increase in cost of production, exchange rates etc. resulting in unviability in sustainable production and marketing of the drugs”. The Indian Express has viewed a copy of these minutes.

• With India still dependent on China for over 60 per cent of its API (active pharmaceutical ingredient) requirement, higher API costs for price-controlled medicines eat into profits and sometimes make production of these drugs unviable here, an executive of a large drug maker told The Indian Express. For instance, costs of ingredients to make vitamin C went up as much as 250 per cent, leading to a 25-30 per cent shortage of this drug in India last year, the executive added.

Active pharmaceutical ingredient (API)

• Active pharmaceutical ingredient (API), is the term used to refer to the biologically active component of a drug product (e.g. tablet, capsule). Drug products are usually composed of several components. The aforementioned API is the primary ingredient. Other ingredients are commonly known as "excipients" and these substances are always required to be biologically safe, often making up a variable fraction of the drug product. The procedure for optimizing and compositing this mixture of components used in the drug is known as "formulation."
• For example, if the API is a solid and the drug is required to have a liquid dosage form, such as a cough syrup, then the excipients would be the liquids that are used to formulate the syrup
• active pharmaceutical ingredients or bulk drug" means any pharmaceutical, chemical, biological or plant product including its salts, esters, isomers, analogues and derivatives, conforming to standards specified in the Drugs and Cosmetics Act, 1940 (23 of 1940) and which is used as such or as an ingredient in any formulation;

What is an Essential Medicine?

• According to World Health Organization (WHO), Essential medicines are the medicines that "satisfy the priority health care needs of the population". People should have access to these medicines at all times in sufficient amounts. The prices should be at generally affordable levels.

What is National List of Essential Medicines (NLEM)?

• NLEM is a list of medicines prepared by the Ministry of Health and Family Welfare based on essentiality and made part of the Drugs Price Control Orders (DPCO), 2013 (DPCO 2013) in the form of first Schedule of the DPCO 2013.
• NLEM is the basis for the National Pharmaceutical Pricing Authority (NPPA), to revise the list of medicines that should come under government price control
• The first National List of Essential Medicines (NLEM) of India was prepared and released in 1996. This list was subsequently revised in 2003, 2011 and 2015.

National Pharmaceutical Pricing Authority (NPPA) 

• Established in: 1997.
• It has been set up as per executive order and thus not a statutory body.

Objectives: It is a government regulatory agency which performs the following functions

•  Controlling the prices of pharmaceutical drugs in India;
• Enforce the Drugs Price Control Order (DPCO), 2013; and
• Advising the Government of India in matters of drug policies and pricing.
• Parent agency: Department of Pharmaceuticals, Ministry of Chemicals and Fertilizers.
• The NPPA had constituted a committee comprising Adviser (Cost), Adviser DGHS (Directorate General of Health Services) and Deputy Drug Controller, DCGI (Drugs Controller General of India) under the convenorship of Director (Pricing), NPPA for “further examination” of these 19 formulations based on “parameters of essentiality, market share of the applicant company and available alternatives etc”