As the pandemic continues to rage on in India, with cases spiking up and reaching new peaks, vaccinations have become a necessity for survival. With millions of people spending loads of money in search of oxygen cylinders, hospital beds and medications, the healthcare system is on the edge of an apocalypse. If vaccine prices are too high, consumers may not go for it. Health insurance payers may not allow reimbursement and physicians won’t prescribe it. 

How Governments regulate drug prices via DPCO?

Governments can regulate drug pricing to ensure affordability and accessibility. They initiate price control policies that make drugs cheaper and easily accessible to everyone which is necessary for a country where most of the citizens cannot afford medications. 

For instance, consider the price ceiling policy in India which was placed more than two decades ago. This led to India having one of the lowest drug prices in the world. Prices of essential drugs are regulated by the Indian central government under the Essential Commodities Act, 1955. 

1997, the National Pharmaceutical Pricing Authority was set up to revise prices of drugs, enforce the Drug Price Control Order (DPCO) and monitor the prices of drugs. The Drugs Prices Control Order, 1995 is an order issued by the Government of India under Sec. 3 of Essential Commodities Act, 1955 to regulate the prices of drugs. The Order provides the list of price controlled drugs, procedures for fixation of prices of drugs, method of implementation of prices and penalties for contravention of provisions. Today, the DPCO lists 851 drug formulations whose prices can be capped based on certain dosages. 

The ceiling price is set as the average price for all brands selling a particular drug with more than 1 percent of the market share. If the price of a drug is below the ceiling price, it can be raised only after a year. Patented drugs or fixed-dose combination drugs are exempted from this policy.