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 Drug pricing I Patents | UPSC

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UPSC Current Affairs:  Regulation of Drug Prices

  1. Pharmaceutical Pricing Regime in India
  2. Exceptions to Patents under TRIPS | Page 05

UPSC Syllabus: Mains – GS Paper II, III – Science and tech., public policy and international trade

We all know that presently there is acute shortage of Remdesivir. A large number of people have died because of black marketing and hoarding of Remdesivir injections. The prices of Remdesivir injections in the black market have skyrocketed.

Hence, to bring down the prices of Remdesivir, recently a PIL was filed before the Bombay High Court. The PIL has argued for the Government’s intervention to fix the maximum price for the Remdesivir injections.

In this context, the Bombay HC has asked the Centre to include Remdesivir in the list of Scheduled Drugs and regulate its price. So, far the Centre has not taken any decision in this regard.

Drug Pricing

  • Drug Price Control Orders (DPCO) are issued by the Government in exercise of the powers conferred under the Essential Commodities Act, 1955, for enabling the Government to declare a ceiling price for lifesaving medicines to ensure that these medicines are available at a reasonable price to the general public.
  • Price controls are applicable to “Scheduled drugs” or “Scheduled formulations” i.e. those medicines which are listed out in the Schedule I of DPCO, also referred to as National List of Essential Medicines (NLEM).
  • The National Pharmaceutical Pricing Authority (NPPA) fixes the prices of controlled drugs and formulations and enforces prices and availability of the medicines in the country. It is to be noted that the NPPA not only fixes the prices of Essential Medicines, but it also ensures that the prices of
  • the non-scheduled drugs do not increase by more than 10% every year


  • The prices of the medicines are fixed based on Market pricing model. The ceiling price of the Essential drugs is the fixed by calculating the simple average price of all the brands having at least 1% of the market share.
  • Further, under Paragraph 19 of DPCO, the NPPA has been given the following exceptional powers:
  • Fix the prices of even those drugs that are not listed under NLEM. Example: In pursuance of these powers, the NPPA has fixed the ceiling prices of Cardiac Stents and Knee implants.
  • Increase or decrease the prices of the drugs listed under NLEM. In pursuance of these powers, the NPPA has recently increased the prices of the 21 essential medicines by almost 50%.

Exceptions under the TRIPS Agreement:

Compulsory licensing: It is issued when the government allows someone else to produce the patented drug without the consent of the patent owner. It can only be done under a number of conditions aimed at protecting the legitimate interests of the patent holder. For example: Normally, the person or company applying for a licence must have first attempted, unsuccessfully, to obtain a voluntary licence from the right holder on reasonable commercial terms. If a compulsory licence is issued, adequate remuneration must still be paid to the patent holder.

India has exercised the Compulsory licensing option in 2013 for Bayer’s Nexavar, a patented kidney cancer drug. It authorized Natco Pharma to manufacture and sell Nexavar in India. Subsequently, the price of the Nexavar drug got reduced to 4% of its original price.

Parallel or Grey Imports: These are products marketed by the patent owner in one country and imported into another country without the approval of the patent owner. For example, suppose company A has a drug patented in the Country ‘X’  and Country ‘Y’. In Country ‘Y’, the drug may be sold at lower prices. In this case, the Country ‘X’ may decide to import the drug from Country ‘Y’. It is referred to parallel or grey import.

Bolar Exception: Usually, the marketing approval for new drugs takes substantial amount of time. Hence, upon the expiry of patented drugs, the entry of cheaper Generic medicines into market may get delayed.

Hence, Bolar Exception allows potential competitors to use a patented invention during the patent term without the consent of the patent owner for the purpose of obtaining marketing approval for a prospective generic product.



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