DPCO explained: how India caps drug prices under the 2013 order

The DPCO, India’s Drugs (Prices Control) Order, 2013, is the rule book that decides how much a manufacturer may charge for an essential medicine and how fast it may raise the price of everything else. For pricing, commercial and compliance teams in pharma, and for hospital buyers and investors, a mistake under it is expensive: a demand for the overcharged amount, interest from the date of overcharging and, in a case disclosed in October 2026, a penalty of the same size.

This guide sets out how ceiling prices are fixed, the annual revision, the 10% rule, enforcement, the June 2026 amendment order and the October 2026 cap on cancer drug margins, as of November 2026.

It relies on the consolidated text of the DPCO published by the Department of Pharmaceuticals, the 2026 amendment order, government press releases, a stock exchange filing and a parliamentary committee report. The National Pharmaceutical Pricing Authority (NPPA) website could not be accessed for this guide, so NPPA documents are cited through the reports that carried them, and the text says so.

What the DPCO is and who runs it

The Drugs (Prices Control) Order is made under section 3 of the Essential Commodities Act, 1955. The original order was notified as S.O. 1221(E) dated 15 May 2013. The Department of Pharmaceuticals, part of the Ministry of Chemicals and Fertilizers, publishes a consolidated version “as amended up to” S.O. 2324(E) dated 25 May 2023. Its footnotes record, among others, S.O. 39(E) of 3 January 2019, which changed paragraphs 9 and 32, and S.O. 2165(E) of 11 May 2023, which amended paragraph 5 and inserted paragraph 18A. The consolidated text predates the latest change, the Drugs (Prices Control) Amendment Order, 2026, S.O. 3516(E) of 30 June 2026, covered below.

The DPCO itself speaks only of “the Government”, defined as the Central Government. In practice the NPPA fixes and revises prices, issues the annual inflation memorandum and raises overcharging demands, and the Department of Pharmaceuticals announces its major decisions through the Press Information Bureau. The Lok Sabha Standing Committee on Chemicals and Fertilizers reviewed the NPPA’s role in a report presented on 6 August 2026.

The department’s page on the Drugs (Prices Control) Order lists the order and its main amendments, including changes to paragraphs 11 and 18, an amendment of Schedule I, the notification that brought coronary stents into Schedule I, the order inserting Form VI and the 2026 amendment order. Any manufacturer, importer or marketer that sells a drug in India is covered, whether or not the product is on the essential list, because paragraph 20 monitors the prices of all drugs.

Scheduled and non-scheduled drugs under the DPCO

The DPCO divides the market in two. A “scheduled formulation” is one included in the First Schedule, whether sold under a generic or a brand name. The First Schedule is built from the National List of Essential Medicines; the consolidated order shows Schedule I as the National List of Essential Medicines 2022, substituted by S.O. 5249(E) of 11 November 2022. Ceiling prices of 935 formulations were in effect on 18 March 2026, the Minister of State told the Lok Sabha, according to a Press Information Bureau release.

Everything else is non-scheduled. For these medicines the company sets the launch price, and the DPCO limits only how fast it can rise. The Standing Committee’s 33rd report, presented on 6 August 2026, noted that non-scheduled formulations hold about 82% of the market by value, a share the department gave from Pharmarack data for 2024-25, and asked for a review of medicine categories to stop arbitrary launch prices for non-scheduled formulations.

Feature	Scheduled formulations	Non-scheduled formulations
Who sets the price	Government fixes a ceiling price	Manufacturer sets the launch price
Annual change	Ceiling price revised by the annual WPI change from 1 April	MRP may rise by no more than 10% in twelve months
Main paragraphs	4, 13, 14, 16, 17, 18A	20, 25
New versions	A “new drug” needs a retail price fixed by the Government (paragraph 15)	Launch price set by the company
Override	Paragraph 19 lets the Government fix or change prices in extraordinary circumstances in the public interest

How a DPCO ceiling price is fixed

Paragraph 4 of the DPCO sets the formula. The Government takes the price to retailer of every brand and generic version of the formulation that has a market share “more than or equal to one percent of the total market turnover”, calculates the simple average, and adds a retailer margin. The consolidated order states the margin plainly: “M = % Margin to retailer and its value =16.” The result is the ceiling price, the most any manufacturer may charge for that formulation.

The market data comes from “the pharmaceutical market data specializing company as decided by the Government”, under paragraph 9(1). The Standing Committee noted in 2026 that Pharmarack, the third-party data company the NPPA has used since 2021, does not capture hospitals, dispensing doctors, Jan Aushadhi, trade generics or direct supplies to e-commerce, and recommended bringing those segments into the data collection framework.

1. When a medicine is added to the First Schedule, its ceiling price is to be fixed “within a period of sixty days from the date of the notification” (paragraph 17(1)).
2. Manufacturers selling above the new ceiling price must revise prices downward, not exceeding the ceiling price; the proviso to paragraph 13(1) gives 45 days for products already on the market.
3. Manufacturers whose MRPs are below the ceiling price keep their existing MRP (paragraph 13(2)) and may raise it each year in line with the WPI (paragraph 13(3)); the April 2026 order let them revise it by 0.64956%, Medical Dialogues reported.
4. When a patent expires, paragraph 18A cuts the ceiling price by fifty per cent, and after one year it is recalculated under paragraph 4(1).
5. Anyone aggrieved by a price notification may seek a review under paragraph 31 within thirty days, but a pending review does not allow sales above the notified price.

Manufacturers of scheduled formulations must print the maximum retail price on the label of the container and the smallest retail pack, issue price lists in Form V or Form VI to State Drugs Controllers and the Government, and every retailer and dealer must display the price list furnished by the manufacturer (paragraph 24).

The annual WPI revision and the 2026 figure

DPCO paragraph 16(1) requires the Government to revise ceiling prices of scheduled formulations according to the annual wholesale price index (WPI) for the preceding calendar year, on or before 1 April each year. Under paragraph 16(2), manufacturers may then raise the MRP of scheduled formulations once a year, in April, without prior approval. They must report the revision in Form II within 15 days.

The latest figure was issued on 25 March 2026. The NPPA office memorandum, reference F. No. 8(144)/2026/D.P./NPPA-Div.-II, notified a WPI change of plus 0.64956% for calendar year 2025 over 2024, according to the regulatory service CliniExperts, which summarised the memorandum, and an ANI report of 26 March 2026. Revised ceiling prices applied from 1 April 2026 under several NPPA orders: CliniExperts summarised one covering 767 scheduled formulations under the National List of Essential Medicines 2022, and Medical Dialogues reported on 2 April 2026 on another covering 138 formulations, noting that pack sizes not listed need specific NPPA approval.

Revision effective	WPI change used	Source
1 April 2026	+0.64956% (calendar 2025 over 2024)	NPPA memorandum of 25 March 2026, as reproduced by CliniExperts and reported by ANI
1 April 2025	+1.74028% (calendar 2024 over 2023)	Business Standard, 28 March 2025; 906 scheduled formulations revised
1 April 2024	+0.00551%	Lok Sabha reply published by PIB, 28 March 2025
2023	Over 12%	Outlook India, 26 March 2026
2022	Around 10.7%	Outlook India, 26 March 2026

The swing matters commercially. In 2022 and 2023 the formula allowed double-digit increases on essential medicines; in 2024 and 2026 it allowed less than 1%. The DPCO allows the increase once a year, in April, so the timing is fixed.

New drugs, Form I and exemptions

The DPCO defines a “new drug” as a formulation launched by an existing manufacturer of a drug, which covers new combinations and changes in strength or dosage of listed drugs. Under DPCO paragraph 15 the manufacturer must seek prior price approval in Form I, and “the Government shall fix the retail price of the new drug”. Where the drug is not available in the domestic market, a Standing Committee of Experts makes recommendations on pharmacoeconomic principles.

The Drugs (Prices Control) Amendment Order, 2026, S.O. 3516(E), published in the Gazette on 30 June 2026 and in force from that date, eased this step. Another existing manufacturer launching the same new drug within twelve months of its retail price being fixed no longer has to apply in Form I, but must report the launch in a new Form IA within one month. No manufacturer may launch such a drug above the latest retail price fixed for it in the preceding twelve months.

Skipping the Form I step remains one of the costliest errors a marketer can make. On 15 October 2026 Akums Drugs and Pharmaceuticals told the stock exchanges that the NPPA had issued a notice dated 13 October 2026 over Lanol 1000 mg injection, for not obtaining prior price approval under Section 15 of the DPCO, 2013. The demand totalled Rs 52,74,68,193: an overcharged amount of Rs 18,94,80,649 for batches made between December 2017 and August 2024, a penalty “being 100% of the overcharged amount”, and interest of Rs 14,85,06,895 calculated to 30 October 2026.

The notice named Hetero Healthcare as marketer, Abaris Healthcare, and Akums’ wholly owned subsidiary Pure and Cure Healthcare as manufacturer. Akums said its supply agreements make the marketing entity solely liable for DPCO violations, and The Healthcare Daily’s report on the Lanol demand notice sets out who the company says is liable.

Paragraph 32 of the DPCO exempts some products for a period. As substituted in 2019, it covers a manufacturer producing a new drug patented under the Patents Act, 1970, for five years from the start of its commercial marketing in India; a new drug made by a new process developed through indigenous research and patented in India, for five years from the start of commercial production; a new delivery system developed through indigenous research, for five years from market approval in India; and drugs for orphan diseases as decided by the Ministry of Health and Family Welfare.

The exemption applies only when a document showing approval of the new drug by the Drugs Controller General (India) is produced.

The 10% rule for non-scheduled formulations

DPCO paragraph 20(1) requires the Government to ensure that “no manufacturer increases the maximum retail price of a drug more than ten percent of maximum retail price” in a twelve-month period. If a company goes beyond that, the excess has to be cut back to the 10% level for the next twelve months. Paragraph 25(3) requires retailers to display the price lists of non-scheduled formulations too.

Three practical points follow for pricing teams. The limit runs over any twelve months, not the financial year. It applies to each drug, so a portfolio average does not help. And it sits alongside, not instead of, paragraph 19, which allows the Government to step in on any drug in the public interest, as it did for cancer drug margins in 2019 and again in October 2026.

Other routine filings apply to scheduled formulations. Manufacturers must send quarterly information on production and availability, and on the active ingredients used, in Form III under paragraph 21(1). A company that intends to discontinue a scheduled formulation must issue a public notice and inform the Government in Form IV “at least six months prior to the intended date of discontinuation” (paragraph 21(2)).

DPCO overcharging: demands, recovery and litigation

Paragraph 14(2) of the DPCO makes a manufacturer that sells above the ceiling price “liable to deposit the overcharged amount along with interest thereon from the date of such overcharging”. The figures show how much of the money remains uncollected.

The June 2026 amendment narrows that liability for stock already on the market when a ceiling price is notified. Under a new proviso to paragraph 14(2), a manufacturer that shows it complied with paragraph 24 and government guidelines is liable only for the stock traded through the distributor or retailer found overcharging. A new proviso to paragraph 24(1) lists the evidence: revised price lists sent to dealers and retailers, and advertisements in at least two national newspapers, both within two weeks of the notification; revised price lists in Form V or VI; a section on DPCO matters on the company’s website; and batch-wise production and stock details.

Measure	Figure	Period or date
Overcharging cases in which NPPA initiated action	2,605	31 March 1979 to 31 March 2025 (Lok Sabha reply, reported August 2025)
Total demand raised	Rs 9,950.10 crore	Same period
Amount recovered	Rs 1,418.80 crore	Same period
Total demand	Rs 10,013.30 crore	As of 30 September 2025 (Standing Committee)
Unpaid	Rs 8,526.10 crore	As of 30 September 2025
Locked in High Court and Supreme Court cases	Rs 5,944.16 crore across 345 cases	As of 30 September 2025
Unpaid but not in court	Rs 2,581.94 crore	As of 30 September 2025
Referred to District Collectors for recovery	Rs 223.80 crore across 282 cases	As of 30 September 2025
Demand notices issued, FY2015-16 to FY2025-26	1,021, of which 430 recovered (Rs 13,860.93 lakh) and 591 pending	Up to 30 September 2025 (Lok Sabha reply, PIB, 20 March 2026)

The first three rows come from a written reply by Minister of State Anupriya Patel in the Lok Sabha, as reported by Medical Dialogues on 8 August 2025; the period starts in 1979, so it includes cases under earlier price control orders. The next five come from the Standing Committee’s 33rd report, presented on 6 August 2026, which records the department’s figures; the last row is from a Lok Sabha reply of 20 March 2026.

The committee said 280 of the 345 court cases had been pending for six to more than 20 years, and that Rs 2,358.20 crore across 436 cases was disputed by companies that had received demand notices.

The committee recommended speeding up old cases, studying a dedicated legal cell within the NPPA, which hires consultants on contract for legal work, a time-bound fast-track mechanism to settle recovery cases outside court, and unambiguous rules on the grounds companies dispute, such as data, classification, trade margin deductions and interest. It noted that the NPPA uploaded 1,426 draft working sheets of new drug retail prices for comment between 1 December 2022 and 30 November 2025 and received about 30 comments, 29 of them from companies, and that 15 of its 48 sanctioned posts were vacant.

Trade margin rationalisation under paragraph 19

Trade margins are the gap between the price at which a manufacturer first sells a medicine and its MRP; a cap on them limits the mark-up rather than fixing a ceiling price. The Government has used paragraph 19 to cap them for cancer medicines twice. According to a Department of Pharmaceuticals statement of 8 October 2026, the NPPA capped trade margins on 42 selected non-scheduled anti-cancer drugs in February 2019 under paragraph 19 of the DPCO; MRPs fell by up to 91%, with reported savings of Rs 984 crore across 526 brands.

The October 2026 statement announced a wider version. Trade margins on non-scheduled cancer medicines “will be limited to 30% of the Maximum Retail Price (MRP)”, covering branded and generic, domestic and imported, and patented and non-patented products. The department said NPPA market data showed an average mark-up of about 170% on non-scheduled anti-cancer medicines, sometimes 700% or more, and that the cap is expected to cut prices by up to 70% and save patients Rs 2,500 crore a year. Manufacturers must maintain current production levels.

The cap has since been notified. On 17 October 2026 the NPPA issued a Gazette notification under paragraph 19 capping the trade margin at 30% of MRP for 137 non-scheduled anti-cancer drugs recommended by an expert committee under the Directorate General of Health Services, according to a PIB statement that day. Manufacturers had seven days from publication to report revised prices, which take effect on 9 November 2026. From that date retailers and hospitals must charge and display the reduced prices, and hospitals must also show them on their websites.

On 28 October 2026 the NPPA published revised MRPs for 543 brands and said the list would be updated as companies file. Manufacturers must maintain current production and supply levels for the notified formulations. The Healthcare Daily covered the 30% trade margin decision when it was announced.

What the DPCO means for manufacturers, hospitals and investors

For manufacturers and marketers, the DPCO compliance list is specific: Form I approval before launching a new drug, or a Form IA report within a month where the same new drug was priced in the previous twelve months; Form II within 15 days of an April price change; quarterly Form III returns; six months’ notice in Form IV before dropping a scheduled product; MRPs printed on every pack; price lists in Form V or VI; sales records kept for at least seven financial years under the paragraph 29 inserted in 2026; and a twelve-month record of every non-scheduled MRP change.

Contract manufacturers should note the Lanol case, in which the NPPA notice named the manufacturer as well as the marketer.

For hospital pharmacies and distributors, scheduled drugs come with a published ceiling price and an annual adjustment that has been small since 2024. From 9 November 2026 the cancer margin cap narrows the gap between purchase price and MRP that hospital pharmacies and distributors work with, because it is set as a share of MRP, and the NPPA has made hospitals responsible for charging the revised prices on drugs supplied directly to them. Price trends feed into wider inflation data: The Healthcare Daily has analysed health prices against headline CPI.

For investors, DPCO exposure shows up in three places: the share of revenue from scheduled products, the size of any disputed demands disclosed as contingent liabilities, and exposure to categories such as cancer medicines where paragraph 19 has been used. Akums made its disclosure under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. More analysis sits in The Healthcare Daily’s policy and payers and pharma sections.

What to watch next

• Cancer drug prices from 9 November 2026. The revised MRP list for the 137 drugs is being filled in as companies file, and the NPPA has said the drug list will be updated periodically.
• The June 2026 amendment in practice, including how the new limits on overcharging liability apply to demands raised after 30 June 2026.
• The Government’s response to the Standing Committee, including any decision on an NPPA legal cell, a pre-litigation settlement route and a review of launch pricing for non-scheduled drugs.
• The next WPI memorandum, due before 1 April 2027, which will set the permitted increase for scheduled formulations for 2027.
• Further demand notices disclosed by listed companies, which are often the first public sign of a DPCO dispute.
• Changes to the essential medicines list, which would trigger a new ceiling price for each added formulation within the sixty days set by DPCO paragraph 17.

The Healthcare Daily tracks pricing actions on The Tracker.