The National Pharmaceutical Pricing Authority (NPPA) is a government regulatory agency, constituted as an attached office of the Department of Pharmaceuticals (DoP), Ministry of Chemicals and Fertilizers. It was established via a Government of India Resolution on August 29, 1997, following a review of the Drug Policy in September 1994. The NPPA was created to act as an independent regulator for drug pricing, solving the problem of ensuring the availability and accessibility of medicines at affordable prices for the public.
The NPPA's core function is to implement and enforce the provisions of the Drugs (Prices Control) Order (DPCO), which is an order issued under Section 3 of the Essential Commodities Act, 1955. The current governing framework is the DPCO, 2013, which replaced the earlier DPCO, 1995. The NPPA fixes and revises the ceiling prices of "scheduled drugs," which are those included in the National List of Essential Medicines (NLEM), prepared by the Ministry of Health and Family Welfare. Under the DPCO, 2013, the NPPA calculates the ceiling price based on the simple average price of all brands of a drug with a market share of 1% or more, and then adds a fixed 16% margin for retailers. The NPPA also monitors the prices of non-scheduled drugs and can regulate them in the public interest by invoking powers under Para 19 of the DPCO, 2013.
A significant recent change occurred with the Drugs (Prices Control) Amendment Order, 2026 (S.O. 3516(E)), which amended the DPCO, 2013, effective June 30, 2026. This amendment streamlined the process for manufacturers to launch new drugs by removing the requirement for fresh price approval if a similar drug already has a fixed price, provided the manufacturer files a disclosure form within one month. Furthermore, the amendment limited a manufacturer's liability for overcharging under a new proviso to Paragraph 14, restricting it to the stock overcharged by the distributor or retailer, provided the manufacturer proves compliance with price dissemination steps. The NPPA also recently directed drug manufacturers to revise Maximum Retail Prices (MRPs) to pass on the benefit of customs duty exemptions granted in the Union Budget 2026.