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Drug Price Regulation: Supreme Court Directs Centre to Examine Price Caps [Prelims Bits]

Tags: Prelims Current events of national and international importance

Source: The Hindu

Context: The Supreme Court asked the Centre to explore capping prices and trade margins across medicines and medical products amid concerns over excessive mark-ups.
Centre’s proposal: 30% trade-margin cap on patented and non-patented cancer medicines.
Existing provision: The Drugs (Prices Control) Order (DPCO), 2013 prescribes a 16% retailer margin for relevant scheduled formulations under its pricing framework.
Issue highlighted: Some cancer medicines reportedly had mark-ups up to 1,000%; a cardiac stent costing around ₹5,000 was reportedly sold by hospitals for over ₹25,000.
Legal basis: Essential Commodities Act, 1955, under which the Centre regulates drug prices through the DPCO.
Authority: National Pharmaceutical Pricing Authority (NPPA), under the Department of Pharmaceuticals, implements and monitors drug-price controls.
Next step: The Supreme Court directed the Centre to work out modalities by October 27.
DPCO, 2013: Issued under the Essential Commodities Act, 1955; provides the framework for fixing and revising prices of scheduled formulations.
NPPA:Fixes or revises prices of scheduled drugs, monitors prices of non-scheduled formulations and ensures compliance with price-control orders.

Q1. With reference to drug price regulation in India, consider the following statements:

The Drugs (Prices Control) Order (DPCO), 2013 derives its legal authority from the Essential Commodities Act, 1955.
The National Pharmaceutical Pricing Authority (NPPA) fixes or revises prices of scheduled formulations and monitors prices of non-scheduled formulations.
The Central Government can regulate the prices of essential medicines to improve their affordability and availability.

Which of the statements given above are correct?

(a) 1 and 3 only

(b) 3 only

(d) 1 and 2 only

Answer: (c)

Explanation:

Statement 1 is correct: The DPCO, 2013 was issued under the Essential Commodities Act, 1955, providing the framework for drug price control.
Statement 2 is correct: The NPPA, under the Department of Pharmaceuticals, fixes or revises prices of scheduled formulations and monitors prices of non-scheduled formulations for compliance with applicable provisions.
Statement 4 is correct: The government can regulate drug prices under the applicable legal framework to promote the affordability and availability of essential medicines.