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Prices of Drugs going off-patent

Facts for Prelims (FFP)

Source: HBL

 Context: The government has introduced a formula to determine the pricing of medicines that are losing their patent exclusivity.


Patents in India:

A patent for drugs in India gives the patent holder exclusive rights to manufacture, use, sell, or import the patented drug in India for a specified period, typically 20 years from the date of filing the patent application.


Prices of Medicine in India:

National Pharmaceutical Pricing Authority (NPPA) (under the Ministry of Chemicals and Fertilizer) has been established to fix/revise prices of medicines under the Drugs (Prices Control) Order (DPCO), 2013.


The new formula:

  • For the off-patent price of a medicine (patented under the Patent Act, 1970): It will be capped at 50% of its original cost. After one-year ceiling price will be revised again based on market data.
  • For Generic version: When generic versions become available, the price will be determined based on the average price of similar versions.
  • For Fixed Dose Combinations (FDC), where one component is going off patent, the ceiling price will be revised to 50% of the current ceiling price.
  • For innovative drugs not available in India: An expert committee will decide the price cap.


Significance of the move: The move aims to streamline pricing and encourage competition in the market. Also, it will reduce the prices of the patented drugs which are a part of the National List of Essential Medicines (NLEM)


Concerns: Civil society representatives have raised concerns about the potential for increased prices by generic manufacturers.