Context: Recently, the National Pharmaceutical Pricing Authority announced a change in the Wholesale Price Index (WPI) for the year 2023 in accordance with the Drugs (Price Control) Order, 2013, or DPCO, 2013. 

About National List of Essential Medicines (NLEM)

• The Union Health Ministry maintains a National List of Essential Medicines (NLEM) which satisfies the priority health care needs of the population.

• The list is made with consideration to disease prevalence, efficacy, safety and comparative cost-effectiveness of the medicines.

• The medicines listed in the NLEM are sold below a price ceiling fixed by the National Pharmaceutical Pricing Authority (NPPA).

• The price ceiling is fixed by NPPA based on Annual change in the WPI.

• This year's increase is because of 12.12% annual change in WPI 

Drug Pricing Mechanism

• Drugs sold in India are categorised in scheduled and non scheduled drugs.

• The drugs included in NLEM are called scheduled drugs. Their prices are regulated by the National Pharmaceutical Pricing Authority (NPPA)  which caps their prices and changes them only based on wholesale price index-based inflation.

• The other drugs are called non scheduled drugs and their prices can increase upto  to 10 per cent every year.

Issues with Drug Pricing Regulation

• Medicines are mostly sold on a per unit basis in india. Regulating cost of a strip is not effective.

• Access to essential medicines is very low

• The NLEM comprises only 348 drugs leaving out many essential medicines under price control.

• It does not cover combination drugs. If a price-controlled drug is combined with the non-price controlled drug, it will come out of the price control.

• No penalties against the companies in case of non-compliance with respect to the orders of NPPA.

Road Ahead

• Improving access for medicines through subsidised medicines along with increase of awareness regarding prices will have positive impacts on the health of the country.