National List of Essential Medicines in India

The National List of Essential Medicines (NLEM) identifies medicines needed to meet India’s priority healthcare requirements. It supports access to safe, effective and affordable treatment, guides public procurement and provides the basis for direct price controls on listed formulations.

Purpose and Preparation of the NLEM

The NLEM is a dynamic list of medicines used to address diseases of public health importance. Its central aims are to promote rational use, improve affordability and availability, and guide procurement by public health agencies. Inclusion is based on public health need and evidence, rather than on a medicine’s commercial popularity. The Ministry of Health and Family Welfare prepares the list, which is reviewed by an expert committee. The NLEM is typically revised every three years, although revisions reflect the assessment process and are not automatic. Its successive editions were published in 1996, 2003, 2011, 2015 and 2022.

• Latest edition: NLEM 2022 was released in September 2022.
• Coverage: It includes 384 medicines across therapeutic categories, up from 376 in NLEM 2015.
• Inclusion criteria: Selection considers efficacy, safety, cost-effectiveness, disease burden in India and public health relevance. Listed medicines are approved by the Drugs Controller General of India.
• Exclusion: Medicines banned in India, those with better alternatives, or those not considered cost-effective are generally not included.

Legal Framework for Price Control

The Essential Commodities Act, 1955, empowers the government to regulate the production, supply and distribution of essential commodities, including drugs, in the public interest. The Drug Prices Control Order (DPCO), issued under Section 3 of the Act, provides the framework for drug price regulation. DPCO 2013, issued by the Department of Pharmaceuticals under the Ministry of Chemicals and Fertilizers, governs price controls on scheduled formulations and monitoring of other medicines. Medicines listed in the NLEM are categorised as scheduled formulations and are subject to government-fixed ceiling prices. Medicines outside the NLEM are generally non-scheduled formulations: their prices are monitored, and manufacturers cannot raise their maximum retail price (MRP) by more than 10% over the preceding 12 months.

• Scheduled formulations: Their ceiling prices are fixed by the government under DPCO 2013.
• Non-scheduled formulations: They are monitored, with annual MRP increases limited to 10%.
• Policy purpose: The framework seeks to improve affordability while maintaining medicine availability and considering the interests of the pharmaceutical sector.

National Pharmaceutical Pricing Authority

The National Pharmaceutical Pricing Authority (NPPA) implements and enforces the DPCO. It was established as an independent body through a Government of India Resolution on August 29, 1997. The NPPA functions as an attached office of the Department of Pharmaceuticals, Ministry of Chemicals and Fertilizers. Its work covers scheduled and non-scheduled formulations, as well as information needed for price-policy decisions. This makes the authority central to translating statutory price rules into monitoring and enforcement.

• Price-setting: Fixes and revises ceiling prices for scheduled formulations and fixes retail prices of new drugs under price control.
• Market monitoring: Tracks prices of non-scheduled formulations and monitors compliance with applicable limits.
• Recovery and data: Recovers amounts overcharged by manufacturers and collects or analyses data on production, imports, exports, market share and company profitability.
• Policy support: Undertakes or sponsors studies on drug pricing and availability, and advises the Central Government on drug-policy changes.

Price Fixation and Trade-Margin Regulation

For scheduled formulations, the NPPA uses market-based pricing to determine the ceiling price. The calculation is generally based on the simple average of the market prices of brands of the same formulation that each have a market share of at least 1%. A notional retailer margin, typically 16%, is added in the calculation. The price to retailer (PTR) is the price at which a medicine is sold to a retailer. The MRP is the highest price at which it may be sold to a consumer. The difference between PTR and MRP can reflect trade margins. The government can use trade-margin rationalisation to limit these margins, including for medicines that are not scheduled formulations.

• Ceiling price: The maximum price applicable to a scheduled formulation under price control.
• Market-based method: Uses prices of qualifying brands with at least 1% market share, alongside the notional retailer margin.
• Anti-cancer medicines: Trade margins on 137 non-scheduled anti-cancer drugs were capped at 30% of MRP; the decision was approved on October 8, 2026.
• Estimated effect: The Department of Pharmaceuticals estimated that the measure could reduce retail prices by up to 70% and save patients about ₹2,500 crore annually.

Public Health Significance and Policy Issues

The NLEM links clinical priorities with affordability and procurement. It can help prescribers favour evidence-based, cost-effective treatment options and gives government agencies and state health departments a reference for purchasing medicines for public programmes. Price controls on listed medicines can widen access, particularly for people who face financial barriers to treatment. The framework also presents a policy challenge: balancing public health priorities and affordable healthcare with the availability of medicines and the sustainability of supply. The NLEM’s evidence-based selection criteria and the NPPA’s monitoring and enforcement are therefore important to effective price regulation. Price control alone does not replace the need for safe, effective medicines or sound procurement and prescribing practices.

Key Prelims Takeaways

• NLEM: Prepared by the Ministry of Health and Family Welfare; NLEM 2022 lists 384 medicines.
• Legal basis: The Essential Commodities Act, 1955, supports the DPCO framework for drug price control.
• DPCO 2013: Scheduled formulations listed in the NLEM are subject to ceiling prices; non-scheduled formulations are monitored.
• NPPA: Established in 1997, it functions under the Department of Pharmaceuticals and implements the DPCO.
• Price calculation: Scheduled-formulation ceilings use a market-based approach, including prices of brands with at least 1% market share.
• Terms: PTR is the price to a retailer; MRP is the maximum price to a consumer. Non-scheduled medicines are subject to a 10% annual MRP increase limit.

Recent Context

On October 27, 2026, the Supreme Court reserved its order on petitions concerning medicine prices and trade margins. It questioned the PTR–MRP disparity, the limited coverage of trade-margin controls and the fact that about 90% of medicines fall outside direct price controls. As of March 31, 2026, ₹8,447.4 crore in overcharging claims remained outstanding.