Starting from April 1, prices of medicines listed in the National List of Essential Medicines (NLEM) are set to experience a slight increase. This adjustment will encompass over 800 drugs enlisted in the NLEM. Annually, drug companies are permitted to implement a price change for scheduled drugs, with a permissible hike of 0.0055 percent beginning April 2024.
Annual Price Ceiling Calculation
Each year, the National Pharma Pricing Authority (NPPA) determines a ceiling on prices based on the Wholesale Price Index (WPI) of the preceding calendar year. This index serves as a benchmark, regulating the percentage increase that pharmaceutical companies can apply to their portfolio under NLEM.
WPI Data Analysis
As per the notification issued by the National Pharmaceutical Pricing Authority (NPPA), the change in WPI during the calendar year 2023, in comparison to 2022, stands at (+)0.00551 percent. This data is sourced from the office of the Economic Advisor, Department of Industry and Internal Trade, Ministry of Commerce and Industry.
Significance of Essential Medicines
Essential medicines are crucial for meeting the primary healthcare needs of a vast majority of the population. The National List of Essential Medicines (NLEM) is tailored to the specific healthcare requirements and disease burdens of the country. It ensures accessibility to commonly used medications across primary, secondary, and tertiary healthcare levels, at affordable prices without compromising on quality.
Industry Impact and Expert Analysis
Despite consecutive annual price hikes of 12 percent and 10 percent in 2023 and 2022 respectively, the forthcoming increase is relatively modest for the pharmaceutical industry. According to industry experts, the NLEM medicines constitute a minority component of Indian pharmaceutical companies’ portfolios. The majority, around 80 percent, comprises non-NLEM products, while the NLEM segment contributes approximately 15 to 20 percent to domestic sales.
Market Growth and Price Influence
In the calendar year 2023, the Indian pharmaceutical market witnessed a growth of 6.8 percent. Price played a pivotal role in driving this growth, as volumes experienced a slight decline of 0.9 percent. The price benefits stemming from the NPPA’s previous 12 percent price hike began reflecting in the performances of listed Indian companies by the end of the third quarter of 2024.
