Non-Scheduled Drugs: Issues & Implications
- The Parliamentary Standing Committee on Chemicals and Fertilisers has highlighted that unchecked trade margins on non-scheduled drugs are inflating medicine prices and undermining affordability.
- The panel has recommended that the Department of Pharmaceuticals and the National Pharmaceutical Pricing Authority (NPPA) frame a policy to regulate pricing and ensure affordability of such medicines.
What are Non-Scheduled Drugs?
- Non-scheduled drugs are pharmaceutical formulations that are not listed in Schedule-I of the Drugs (Prices Control) Order (DPCO), 2013, or the National List of Essential Medicines (NLEM).
- Unlike scheduled drugs which have government-mandated ceiling prices, manufacturers of non-scheduled drugs are free to fix the initial launch price based on market forces and production costs.
- The National Pharmaceutical Pricing Authority (NPPA) monitors these drugs and mandates that their Maximum Retail Price (MRP).
- For non-scheduled drugs, companies cannot increase prices by more than 10% annually, but there is no control over the initial price set at launch. Hence, products can enter the market with high MRPs, rendering percentage-based regulation inadequate.
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Findings of the Parliamentary Standing Committee
- Comparison of price-to-stockist versus MRP indicated markups of 600%, 1200%, and even 1800% for commonly used medicines.
- For example, Cetirizine: MRP ₹21.06, stockist price ₹2 (953% markup), Pantoprazole: MRP ₹102, stockist price ₹10 (920% markup)
- The actual price at which drugs are supplied to the intermediaries remains undisclosed to consumers, limiting transparency.
- Data submitted indicates that non-scheduled drugs saw an average 5.6% price rise annually (2020-25) within the 10% permissible limit, yet without tools to curb inflated initial pricing.
- Notable success cases of trade margin control include anti-cancer medicines, which led to a nearly 50% price reduction, saving patients about ₹984 crore.
- During COVID-19, margin caps on medical devices resulted in savings of ₹1,000 crore.
Systemic Issues Highlighted by the Panel
- India’s dual control system allows scheduled drugs to be regulated, while the unregulated, larger category of non-scheduled drugs becomes a grey zone.
- High margins often incentivise aggressive marketing practices and skew prescription patterns.
- Lack of transparency in trade margins limits consumer rights and informed choice.
Implications for Citizens and Public Health
- High out-of-pocket expenditure (OOPE), medicines account for over 43% of OOPE in India.
- Medical impoverishment deepens when common chronic drugs for diabetes, cardiovascular diseases, acidity, and allergies remain overpriced.
- Affordability is linked not only to availability but also to information symmetry and pricing governance.
Recommendations of the Committee
- Formulate a comprehensive TMR policy applicable to non-scheduled medicines.
- Fix proportional profit margins across the supply chain rather than controlling individual MRPs.
- Link GST to actual MRP rather than supply-chain pricing to discourage inflated margins.
- Create a real-time pricing database, collecting data from manufacturers, hospitals, and distributors.
- Monitor online sale of cancer medicines to ensure authenticity amid steep discounts.
