Who Decides Medicine Prices in India? The Gap Between Drug Approval (CDSCO) and Drug Pricing (NPPA)
A recent analysis points out a gap in how India manages medicines. One body decides whether a medicine is safe and effective, and a different body decides its price.
The Central Drugs Standard Control Organisation (CDSCO), under the Ministry of Health and Family Welfare, approves and licenses medicines.
The National Pharmaceutical Pricing Authority (NPPA), under the Department of Pharmaceuticals (Ministry of Chemicals and Fertilizers), fixes and monitors prices.
Because the two work separately, the price of a new medicine is often not linked to how much extra benefit it gives patients compared with older, cheaper medicines.
The analysis suggests stronger coordination between the two, supported by experts in pharmacy, clinical medicine and health economics, for example through Health Technology Assessment (HTA), which checks whether a medicine is worth its cost.
Drug Price Regulation in India: DPCO and NPPA
India controls the prices of many medicines so that ordinary people can afford them. The main rulebook is the Drugs (Prices Control) Order, 2013 (DPCO), issued under the Essential Commodities Act, 1955. The body that applies it and fixes prices is the National Pharmaceutical Pricing Authority (NPPA), set up in 1997 and now working under the Department of Pharmaceuticals.
The DPCO system prices medicines based on market averages, not on how much health benefit they give. So a new, costly medicine that is only slightly better than an older one is not assessed for value before it enters the market. This is the gap the analysis highlights.
Central Drugs Standard Control Organisation (CDSCO)
The Central Drugs Standard Control Organisation (CDSCO) is India's national drug regulator. It decides which new medicines, vaccines and medical devices can be sold in India, approves clinical trials, controls imports and sets quality standards. It is headed by the Drugs Controller General of India (DCGI) and works under the Directorate General of Health Services, Ministry of Health and Family Welfare. Its powers come mainly from the Drugs and Cosmetics Act, 1940.
CDSCO lets a medicine into the market, but it does not look at whether the price is justified by the benefit. Since pricing sits with NPPA in another ministry, the analysis argues for a bridge between the two bodies so that approval and pricing decisions use the same evidence.
Health Technology Assessment (HTA) and HTAIn
Health Technology Assessment (HTA) is a scientific way of checking whether a medicine, vaccine, medical device, test or health programme gives good value for money. It compares a new option with what is already used and asks: how much extra health does it give, and at what extra cost? Governments use HTA to decide what to pay for, what to include in public health schemes and sometimes what price is fair. India's national HTA body is Health Technology Assessment in India (HTAIn), under the Department of Health Research.
The analysis suggests that India should link drug approval and drug pricing through evidence on value. HTA is the tool designed for exactly this: it tells regulators how much benefit a new medicine adds and what a fair price for that benefit might be.
- Drug approval and quality: CDSCO, headed by the DCGI, under the Ministry of Health and Family Welfare (Drugs and Cosmetics Act, 1940)
- Drug pricing: NPPA (set up 1997), under the Department of Pharmaceuticals, Ministry of Chemicals and Fertilizers (DPCO, 2013)
- NLEM 2022: 384 medicines; notified as Schedule I of DPCO in November 2022
- Ceiling price: simple average of brands with at least 1% market share + 16% retailer margin; revised yearly with WPI
- Non-scheduled medicines: price rise capped at 10% a year
- HTAIn: under the Department of Health Research, since 2017