New rules simplify drug launches, reduce manufacturer liability for overcharging

Drug manufacturers will no longer need any separate clearance from the drug pricing regulator to launch a drug similar to one that has already received price approval.

According to new rules notified on June 30, any manufacturer launching a new drug with the same composition within 12 months of setting the price on the earlier one can proceed without prior approval. The manufacturer, however, must inform the National Pharmaceutical Pricing Authority (NPPA) about the product on a newly introduced disclosure form within one month of the launch.

The Drugs (Prices Control) Amendment Order, 2026 issued under the Essential Commodities Act amended the Drugs (Prices Control) Order (DPCO) of 2013 and took effect immediately.

Alongside faster market entry, the order reduces manufacturers' liability for overcharging in many cases, balanced by tight disclosure requirements meant to keep consumers informed of price changes.

"Long-awaited DPCO reforms: Balanced framework strengthens consumer protection, enhances regulatory clarity and promotes ease of doing business for the pharmaceutical industry," Indian Drug Manufacturers Association executive director Ashok Madan wrote on microblogging site X.

Under the revised Paragraph 11, which deals with price-controlled medicines, companies can seek separate ceiling or retail prices for the same scheduled drug depending on how it is packaged, such as type of packaging, pack size, dosage compliance, dosage form (liquid, gaseous, etc.), or unit dosage. "Any such request should come with a clear therapeutic justification and conform to Indian Pharmacopeia standards or other benchmarks set under the Drugs and Cosmetics Act, 1940," it says.

The change gives the NPPA greater flexibility to differentiate prices instead of applying a single price across all variants of a drug.

In one of the most significant shifts, manufacturers that are found to have overcharged on scheduled formulations already in the market before a ceiling price was notified will no longer bear liability for their entire stock. Under a new proviso to Paragraph 14, if they demonstrate compliance with government guidelines, their liability will be limited to the specific quantities traded through the distributor or retailer found to have effected the overcharging.

Under this provision, manufactures will have to show that they circulated the revised market retail price list to dealers and retailers within two weeks of notification, advertised the price change in at least two national newspapers, issued a revised or supplementary price list in Form V or VI, created a dedicated DPCO Matters section on their company website disclosing the revised prices, and submitted batch-wise production and stock details. Where all this is demonstrated, the overcharging calculation is limited to actual stock sold above the revised price.

Under a revised Paragraph 15(5), an existing manufacturer that fails to properly intimate the launch of a drug above the NPPA-notified retail price during the preceding 12 months will be liable to deposit any overcharged amount with interest from the date of launch, in addition to penalty.

Separately, Paragraph 15(6) bars existing manufacturers from launching the same new drug at a price higher than the latest government-notified retail price plus applicable local taxes. Violations will attract recovery of the overcharged amount with interest and penalty.

"Restricting overcharging liability to the specific distributor or retailer at fault, rather than the entire company, corrects a long-standing disproportionate burden on our members, many of whom are SME manufacturers," said Harish Jain, national president of the Federation of Pharma Entrepreneurs. "Easing entry for follow-on manufacturers and allowing pack-based price flexibility will further support ease of doing business," he added.

The government has also tightened record-keeping obligations. Manufacturers will have to now retain records which include sales of active pharmaceutical ingredients or bulk drugs and unit- and pack-wise formulation sales for a minimum of seven financial years, plus any other records the government may direct. Where any proceeding is pending against a manufacturer, records must be preserved until the matter is finally disposed of.

Jain said the extended record-retention requirement would need stronger compliance systems, and that the federation would engage with the department for implementation clarity.