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Price Cap on Medicines Costing Less Than Rs 5 Per Dose May Be Removed

Professor of Financial Economics and Part-time Value Investor, Transfin.
Nov 4, 2019 10:54 AM 1 min read

Medicines under Rs 5 per dose may now cost more. How is price capping hurting the healthcare industry in India?



Price cap on medicines costing less than Rs 5 per dose may be done away with as India's National List of Essential Medicines (NLEM) is being updated. 

The What: As per sources, India's National List of Essential Medicines (NLEM) is being updated and this could result in medicines costing less than Rs 5 per dose being taken out of price control.


What Would This Mean?: If the move goes through, drugmakers will be able to raise the prices of these drugs by up to 10% every year.


Good to Know: While around 19% of the INR1.36tr domestic drug market is under price control, 4-5% of it comprises drugs priced under INR5 per dose. Moneycontrol

What is the impact of price capping on the healthcare industry in India?

Interestingly, the list of drugs under price control has steadily expanded from 74 in 1995 to nearly 860 by 2019. While price control can ensure better access to quality healthcare, as per this report, the impact on the overall healthcare system and on innovation can be debilitating. As more Indians gain better access to healthcare, the quality of drugs—from stents to cancer medicines— will depend heavily on the price regime and whether there is room to reward new innovations. Livemint


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