The Gazette of India-Extraordinary
PART II Section 3 Sub-Section (11)
Ministry of Chemicals and Fertilizers
Department of Chemicals and Petrochemicals
New Delhi, dated the 6th January, 1995

S.O.18(E).In exercise of the powers conferred by section 3 of the Essential Commodities Act, 1955 (10 of 1955), the Central Government hereby makes the following Order,
namely:

1. Short title and commencement -

This Order may be called the Drugs (Prices Control) Order, 1995

It shall come into force on the date of its publication in the Official Gazette

2. Definitions - In this Order, unless the context otherwise requires:

a. "bulk drug" means any pharmaceutical, chemical, biological or plant product including its salts, esters, stereo-isomers and derivatives, conforming to pharmacopoeial or other standards specified in the Second Schedule to the Drugs and Cosmetics Act, 1940 (23 of 1940), and which is used as such or as an ingredient in any formulation

b. "capital employed" means net fixed assets plus working capital of a manufacturer in relation to manufacture of bulk drug

c. "ceiling price" means a price fixed by the Government for Scheduled formulations in accordance with the provisions of paragraph

d. "dealer" means a person carrying on the business of purchase or sale of drugs, whether as a wholesaler or retailer and whether or not in conjunction with any other business, and includes his agent

e. "distributor" means a distributor of drugs or his agent or a stockiest appointed by a manufacturer or an importer for stocking his drugs for sale to a dealer

f. "drug" includes:

(i) all medicines for internal or external use of human beings or animals and all substances intended to be used for, or in the diagnosis treatment, mitigation, or prevention of any disease or disorder in human beings or animals, including preparations applied on human body for the purpose of repelling insects like mosquitoes

(ii) such substances, intended to affect the structure or any function of the human or animal body or intended to be used for the destruction of vermin or insects which cause disease in human beings or animals, as may be specified from time to time by the Government by notification in the Official Gazette

(iii) bulk drugs and formulations

g. "Form" means a form specified in the Second Schedule

h. "formulation" means a medicine processed out of, or containing one or more bulk drug or drugs with or without the use of any pharmaceutical aids, for internal or external use for or in the diagnosis, treatment, mitigation or prevention of disease in human beings or animals, but shall not include:

(i) any medicine included in any bonafide Ayurvedic (including Sidha) or Unani (Tibb) systems of medicines

(ii) any medicine included in the Homeopathic system of medicine

(iii) any substance to which the provisions of the Drugs and Cosmetics Act, 1940 (23 of 1940) do not apply

i. "free reserve" means a reserve created by appropriation of profits, but does not include reserves provided for contingent liability, disputed claims, goodwill, revaluation and other similar reserves

j. "Government" means the Central Government

k. "import" with its grammatical variations and cognate expressions means bringing into India from a place outside India, and "importer", in relation to any goods at any time between their importation and consumption, includes any owner or any person holding himself out to be the importer

kk. "local taxes" means any tax or levy (except excise duty included in retail price) paid and/or payable to the Central Government or State Government or any Local authority under any law by the manufacturer or his agent or dealer;"*(1)

l. "manufacture" in relation to any drug, includes any process or part of a process for making, altering, finishing, packing, labeling, breaking or otherwise treating or adapting any drug with a view its sale and distribution, but does not include the compounding or dispensing of any drug or the packing of any drug in the ordinary course of retail business, and "to manufacture" shall be construed accordingly

m. "manufacturer" means any person who manufactures a drug

n. "net-worth" means the paid-up share capital of a company plus free reserve, if any, and surpluses excluding outside investments which are not readily available for operational activity

o. "non-Scheduled bulk drug" means a bulk drug not specified in the First Schedule

p. "non-Scheduled formulation" means a formulation not containing any bulk drug specified in the First Schedule

q. "pre-tax return" means profits before payment of income-tax and surtax and includes such other expenses as do not form part of the cost of formulation

r. "price list" means a price list referred to in paragraphs 14 and 15 and includes a supplementary price list

s. "retail price" means the retail price of a drug arrived at or fixed in accordance with the provisions of this Order and includes a ceiling price

t. "retailer" means a dealer carrying on the retail business of sale of drugs to customer

u. "Scheduled bulk drugs" means a bulk drug specified in the First Schedule

v. "Scheduled formulation" means a formulation containing any bulk drug specified in the First Schedule either individually or in combination with other drugs, including one or more than one drug or drugs not specified in the First Schedule except single ingredient formulation based on bulk drugs specified in the First Schedule and sold under the generic name

w. "sale turn-over" means the product of units of formulations sold by a manufacturer or an importer, as the case may be, in an accounting year multiplied by retail price inclusive of sales tax, if any, paid on direct sales by the manufacturer or importer but does not include excise duty and local taxes, if any

x. "Schedule" means a Schedule annexed to this Order

y. "Wholesaler" means a dealer or his agent or a stockiest appointed by a manufacturer or an importer for the sale of his drugs to a retailer, hospital, dispensary, medical, educational or research institution purchasing bulk quantities of drugs

3. Power to fix the maximum sale prices of bulk drugs specified in the First schedule -

[1] The Government may, with a view to regulate the equitable distribution and increasing supplies of a bulk drug specified in the First Schedule and making it available at a fair price, from different manufacturers, after making such inquiry as it deems fit, fix from time to time, by notification in the Official Gazette, a maximum sale price at which such bulk drug shall be sold

Provided that for the purpose of enquiry, in addition to the information required to be furnished by the manufacturers under this Order, the manufacturers shall provide any such additional information as may be required by the Government, and shall allow for inspection of their manufacturing premises for verification through on the spot study of manufacturing processes and facilities and records thereof, by the Government

(2) While fixing the maximum sale price of a bulk drug under sub-paragraph (1), the Government shall take into consideration a post-tax return of fourteen per cent on net worth or a return of twenty two per cent on capital employed or in respect of a new plant an internal rate of return of twelve per cent based on long term marginal costing depending upon the option for any of the specified rates of return that may be exercised by the manufacturer of a bulk drug

Provided that where the production is from basic stage, the Government shall taken into consideration a post-tax return of eighteen per cent on net worth or a return of twenty six per cent on capital employed

Provided further that the option with regard to the rate of return once exercised by a manufacturer shall be final and no change of rates shall be made without the prior approval of the Government

[3] No person shall sell a bulk drug at a price exceeding the maximum sale price fixed under sub-paragraph (1) plus local taxes, if any

Provided that until the price of a bulk drug is fixed by the Government under sub-paragraph (1), the price of such bulk drug shall be the price which prevailed immediately before the commencement of this Order and the manufacturer of such bulk drug shall not sell the bulk drug at a price exceeding the price prevailing immediately before the commencement of this Order

[4] Where, after the commencement of this Order, any manufacturer commences production of any bulk drug specified in the First Schedule, he shall within fifteen days of the commencement of production of such bulk drug, furnish the details to the Government in Form I, and any such additional information as may be required by the Government and the Government may after receipt of the information and after making such inquiry as it may deem fit, may fix the maximum sale price of bulk drug by notification in the Official Gazette

[5] Any manufacturer, who desires revision of the maximum sale price of a bulk drug fixed under sub-paragraph (1) or (4) or as permissible under sub-paragraph (3), as the case may be, shall make an application to the Government in Form I and the Government shall after making such enquiry, as it deems fit within a period of four months from the date of receipt of the complete information, fix a revised price for such bulk drug or reject the application for revision for reasons to be recorded in writing

(4) Information to be furnished by the manufacturer in relation to the Scheduled bulk drugs:- Every manufacturer, producing a Scheduled bulk drug shall furnish to the Government:

(a) a list of all Scheduled bulk drugs produced by him within thirty days of the commencement of this Order and indicate the details of the cost of each of such bulk drug in Form I

(b) the details of the cost of each Scheduled bulk drug produced by him, including such bulk drug which has been produced after the commencement of this Order, in Form I by the 30th September, every year

5. Information to be furnished by the manufacturer in relation to the non-Scheduled bulk drugs: - Every manufacturer, producing a non-Scheduled bulk drug shall furnish to the Government:

(a) a list of all such bulk drugs produced by him within thirty days of the commencement of this Order and indicate the details of the cost of each of such bulk drugs in From II

(b) the details of the cost of each non-scheduled bulk drug produced by him, including such bulk drug which has been produced after the commencement of this Order, in Form II

Provided that, for the purpose of this paragraph, the Government, may after making such inquiry as it may deem necessary in public interest, fix or revise the price of any non-Scheduled bulk drug and the manufacturer or importer of such bulk drug shall "give effect to the price so fixed or revised within fifteen days of receipt of the order and not sell such non-scheduled bulk drug at a price exceeding the price so fixed or revised thereafter" *(1)

6. Power to direct manufacturers of bulk drugs to sell bulk drugs to other manufacturers of formulations: - [1] With a view to achieving adequate production and regulating the equitable distribution, the Government may, from time to time, by general or special order, direct any manufacturer of any bulk drug to sell such bulk drug to such other manufacturers of formulations as may be specified in such order

Provided that while making any such order, the Government shall have regard to all or any of the following factors, namely:

(i) the requirement for captive consumption of such manufacturer, and
(ii) the requirement of other manufacturers.

[2] For the purpose of making any order under sub-paragraph (1), the Government may call for such information from manufacturer, importer or distributor, of bulk drugs, as it may consider necessary and such manufacturer, importer or distributor shall be bound to furnish such information within such time as may be specified by the Government

7. Calculation of retail price of formulation: - The retail price of a formulation shall be calculated by the Government in accordance with the following formula, namely:

R. P. = (M.C.+C.C.+P.M.+P.C) x (1+MAPE/100) + ED. where

"R.P." means retail price

"M.C." means material cost and includes the cost of drugs and other
pharmaceutical aids used including overages, if any, plus process loss thereon specified as a norm from time to time by notification in the Official Gazette in this behalf

"C.C." means conversion cost worked out in accordance with established procedures of costing and shall be fixed as a norm every year by notification in the Official Gazette in this behalf

"P.M." means cost of the packing material used in the packing of concerned formulation, including process loss, and shall be fixed as a norm every year by notification in the Official Gazette in this behalf

"P.C." means packing charges worked out in accordance with established procedures of costing and shall be fixed as a norm every year by notification in the Official Gazette in this behalf

"MAPE" (Maximum Allowable Post-manufacturing Expenses) means all costs incurred by a manufacturer from the stage of ex-factory cost to retailing and includes trade margin and margin for the manufacturer and it shall not exceed One hundred per cent for indigenously manufactured Scheduled formulations

"E.D." means excise duty;

Provided that in the case of an imported formulation, the landed cost shall form the basis for fixing it's price alongwith such margin to cover selling and distribution expenses including interest and importer's profit which shall not exceed fifty per cent of the landed cost

Explanation - For the purpose of this proviso, "landed cost" means the cost of import of formulation inclusive of customs duty and clearing charges.

8. Power to fix retail price of Scheduled Formulations: -

[1] The Government may, from time to time, by order, fix the retail price of a Scheduled formulation in accordance with the formula laid down in paragraph 7.

[2] Where the Government fixes or revises the price of any bulk drug under the provisions of this Order and a manufacturer utilises such bulk drug in his Scheduled formulations he shall, within thirty days of such fixation or revision, make an application to the Government, in Form-III for price revision of all such formulations and the Government may, if it considers necessary, fix or revise the price of such formulation.

[3] The retail price of a formulation once fixed by the Government under sub-paragraphs (1) and (2) shall not be increased by any manufacturer except with the prior approval of the Government.

[4] Any manufacturer, who desires revision of the retail price of a formulation fixed under sub-paragraph (1), shall make an application to the Government in Form III or Form IV, as the case may be, and the Government shall after making such enquiry, as it deems fit within a period of two months from the date of receipt of the complete information, fix a revised price for such formulation or reject the application for revision for reasons to be recorded in writing.

[5] Notwithstanding anything contained in the foregoing sub-paragraphs, the retail price of a Scheduled formulation, of a manufacturer shall, until the retail price thereof is fixed under the provisions of this Order, be the price which prevailed immediately before the commencement of this Order, and the manufacture of such formulation shall not sell the formulation at a price exceeding the price prevailing immediately before the commencement of this Order.

[6] No manufacturer or importer shall market a new pack, if not covered under sub-paragraph 3 of para 9, or a new formulation or a new dosage form of his existing Scheduled formulation without obtaining the prior approval of its price from the Government.

[7] No person shall sell or dispose of any imported Scheduled formulation without obtaining the prior approval of its price from the Government.

9. Power to fix ceiling price of Scheduled formulations:-

[1] Notwithstanding anything contained in this Order, the Government may, from time to time, by notification in the Official Gazette fix the ceiling price of a Scheduled formulation in accordance with the formula laid down in paragraph 7, keeping in view the cost or efficiency, or both, of major manufacturers of such formulations and such price shall operate as the ceiling sale price for all such packs including those sold under generic name and for every manufacturer of such formulations.

[2] The Government may, either on its own motion or on application made to it in this behalf by a manufacture in Form III or Form IV, as the case may be, after calling for such information as it may consider necessary, by notification in the Official Gazette, fix a revised ceiling price for a Scheduled formulation.

[3] With a view to enabling the manufacturers of similar formulations to sell those formulations in pack size different to the pack size for which ceiling price has been notified under the sub-paragraphs (1) and (2), manufacturers shall work out the price for their respective formulation packs in accordance with such norms, as may be notified by the Government, form time to time, and he, shall intimate the price of formulation pack, so worked out, to the Government and such formulation packs shall be released for sale only after the expiry of sixty days after such intimation.

Provided that the Government may, if it considers necessary, by order revise the price so intimated by the manufacturer and upon, such revision, the manufacturer shall not sell such formulation at a price exceeding the price so revised.

Explanation- For the purpose of this paragraph the "Scheduled formulation" includes single ingredient formulation based on bulk drugs specified in the First Schedule and sold under the generic name .

10. Power to revise price of bulk drugs and formulation:- Notwithstanding anything contained in this order :-

(a) The Government may, after obtaining such information as may be considered necessary from a manufacture or importer, fix or revise the retail price of one or more formulations marketed by such manufacturer or importer, including a non-Scheduled formulation, in such manner as the pre-tax return on the sales turnover of such manufacturer or importer does not exceed the maximum pre-tax return specified in the Third Schedule;

(b) The Government may, if it considers necessary so to do in public interest, after calling for such information by order fix or revise the retail price of any formulation including a non-Scheduled formulation;

(c) The Government may, if it considers necessary so to do in public interest, by order include any bulk drug in the First Schedule and fix or revise the prices of such a bulk drug and formulations containing such a bulk drug in accordance with the provisions of paragraphs 3, 7, 8 and 9, as the case may be.

11. Fixation of price under certain circumstances:- Where any manufacturer, importer of a bulk drug or formulation fails"to submit the application for price fixation or revision, as the case may be, or to furnish information as required under this Order, within the time specified therein, the Government may, on the basis of such information as may be available with it, by order fix a price in respect of such bulk drug or formulation as the case may be.

12. Power to recover dues accrued under the Drugs (Prices Control) Order, 1979 and to deposit the same into the Drug Prices Equalisation Account:- [1] Notwithstanding anything contained in this Order, the Government may by notice, require the manufacturer, importer or distributor, as the case may be, to deposit the amount which has accrued under the provisions of the drugs (Price Control) Order, 1979 on or before the commencement of this Order, into the Drugs Prices Equalisation Account and the manufacturer, importer or distributor, as the case may be, shall deposit the said amount into the said Account within such time as the Government may specify in the said notice.

[2] The existing amount, if any, in the Drugs Prices Equalisation Account on or before the date of commencement of this Order, and the amount deposited under sub-paragraph (1) shall be utilised for,-

[a] Paying to the manufacturer, importer or distributor, as the case may be, the short-fall between his retention price and the common selling price or, as the case may be, the pooled price for the purpose of increasing the production, or securing the equitable distribution and availability at fair prices, of drugs;

[b] Meeting the expenses incurred by the Government in discharging the functions under this paragraph; and

[c] Promoting higher education and research in Pharmaceutical Sciences and Technology and for the purposes incidental thereto.

13. Power to recover overcharged amount:- Notwithstanding anything contained in this order, the Government shall by notice, require the manufacturers, importers or distributors, as the case may be, to deposit the amount accrued due to charging of prices higher than those fixed or notified by the Government under the provisions of Drugs (Prices Control) Order, 1987 and under the provisions of this Order.

14. Carrying into effect the price fixed or revised by the Government, its display and proof thereof:-

[1] Every manufacturer or importer shall carry into effect the price of a bulk drug or formulation, as the case may be, as fixed by the Government from time to time, within fifteen days from the date of notification in the Official Gazette or receipt of the order of the Government in this behalf by such manufacturer or importer.

[2] Every manufacturer, importer or distributor of a formulation intended for sale shall display in indelible print mark, on the label of container of the formulation and the minimum pack thereof offered for retail sale, the retail price of that formulation, notified in the Official Gazette or ordered by the Government in this behalf, with the words "retail price not to exceed" preceding it, and "local taxes extra" succeeding it, in the case of Scheduled formulations :

Provided that in the case of a container consisting of smaller saleable packs, the retail price of such smaller pack shall also be displayed on the label of each smaller pack and such price shall not be more than the prorata retail price of the main pack rounded off to the nearest paisa.

[3] Every manufacturer or importer shall issue a price list and supplementary price list, if required, in Form V to the dealers, State Drugs Controllers and the Government indicating reference to such price fixation or revision as covered by the order or Gazette notification issued by the Government, from time to time.

[4] Every retailer and dealer shall display the price list and the supplementary price list, if any, as furnished by the manufacturer or importer, on a conspicuous part of the premises where he carries on business in a manner so as to be easily accessible to any person wishing to consult the same.

15. Display of prices of non-Scheduled formulations and price list thereof:-

[1] Every manufacturer, importer or distributor of a non-Scheduled formulation intended for sale shall display in indelible print mark, on the label of container of the formulation and the minimum pack thereof offered for retail sale the retail price of that formulation with the words "retail price not to exceed" preceding it and the words "local taxes extra" succeeding it. *(1)

Provided that in the case of a container consisting of smaller saleable packs, the retail price of such smaller pack shall also be displayed on the label of each smaller pack and such price shall shall not to be more than the prorata retail price of the main pack rounded off to the nearest paisa.

[2] Every manufacturer or importer shall issue a price list and supplementary price list, if required, of the non-Scheduled formulations in Form V to the dealers, State Drugs Controllers and the Government indicating changes, from time to time.

[3] Every retailer and dealer shall display the price list and the supplementary price list, if any, as furnished by the manufacturer or importer, on a conspicuous part of the premises where he carries on business in a manner so as to be easily accessible to any person wishing to consult the same.

16. Control of sale prices of bulk drugs and formulations:- No person shall sell any bulk drug or formulation to any consumer at a price exceeding the price specified in the current price list or price indicated on the label of the container or pack thereof, whichever is less, plus all local taxes, if any, payable.*(1)

17. Sale of split quantities of formulations:- No dealer shall sell loose quantity of any formulation at a price which exceeds the pro-rata price of the formulation plus 5 per cent thereof.

18. Manufacturer, distributor or dealer not to refuse sale of drug:- Subject to the provisions of the Drug and Cosmetics Act, 1940 (23 of 1940) and the Rules framed thereunder:-

[a] No manufacturer or distributor shall withhold from sale or refuse to sell to a dealer any drug without good and sufficient reasons;

[b] No dealer shall withhold from sale or refuse to sell any drug available with him to a customer intending to purchase such drug.

19. Price of formulations sold to the dealer:-

[1] A manufacturer, distributor or wholesaler shall sell a formulation to a retailer, unless otherwise permitted under the provisions of this Order or any order made thereunder, at a price equal to the retail price, as specified by an order or notified by the Government (excluding excise duty, if any) minus sixteen per cent thereof in the case of Scheduled drugs.

[2] Notwithstanding anything contained in sub-paragraph (1), the Government may be a general or special order fix, in public interest, the price of formulation sold to the wholesaler or retailer in respect of any formulation the price of which has been fixed or revised under this Order.

(20) Maintenance of records and production thereof for inspection:-

[1] Every manufacturer and importer shall maintain in such form as may be specified by the government, records relating to the sales turnover of individual bulk drugs manufactured or imported by him, as the case may be, and the sales turnover of formulations pack-wise and also such other records as may be directed from time to time by the Government and the Government shall have the power to call for such records or to inspect such records at the premises of the manufacturer or importer.

[2] Every manufacturer or importer shall, within six month of the close of the accounting Year, submit to the Government information in respect of turnover and allocation of sales and expenses for that year in Form-VI.

[3] Every dealer, manufacturer or importer shall maintain the cash memo or credit memo, books of account and records of purchase and sale of drugs and shall make available such records for inspection by the Government or any officer authorised in this behalf by the Government.

(21) Power of entry, search and seizure:-

[1] Any Gazetted Officer of the Central Government or of a State Government authorised by a general or special order by the Central Government or, as the case may be, by the State Government in this behalf may, with a view to securing compliance with this Order or to satisfy himself that the provisions of this Order have been compiled with -

[a] Enter and search any place;

[b] Seize any drug, alongwith the containers, packages or covering in which the drug is found, in respect of which he suspects that any provision of this Order has been, is being, or is about to be contravened, and thereafter take all measures necessary for securing production of the drug, containers, packages or covering, so seized, in a court of law and for their safe custody pending such production :

[c] Seize any document, such as, cash memo or credit memo books, books of account and records of purchase and sale of the drugs in respect of which he suspects that any provision of this Order has been, is being, or is about to be contravened.

[2] The provision of section 100 of the Code of Criminal Procedure, 19/3 (2 of 1974), relating to search and seizure shall, so far as may be, apply to searches and seizures under this Order .

22. Power to review:- Any person aggrieved by any notification issued or order made under paragraphs 3, 5, 8,9 or 10 may apply to the Government for a review of the notification or order within fifteen days of the date of publication of the notification in the Official Gazette or the receipt of the order by him, as the case may be, and the Government may make such order on the application as it may deem proper :