Who actually sets the MRP on your medicine? A plain guide for India
Last reviewed
The MRP on a medicine strip is printed by the manufacturer, inside rules set by the government. For essential medicines, the National Pharmaceutical Pricing Authority fixes a ceiling price. For all other medicines, the manufacturer sets the price but can raise it by no more than 10% a year. Every seller, including a hospital, can sell at or below MRP, never above it. That is why the same molecule can carry very different prices across brands.
Updated 24 October 2026: added the ceiling price formula with a worked example, the price chain, market share under control, how to check and complain, device price caps and the October 2026 cancer drug margin cap.
New to the topic? Start here: Hospital growth strategy sets out the reading order.
The short answer
Three parties shape the number you see: the government, which writes the rules; the manufacturer, which sets the price within them; and the trade (distributors, stockists and retailers, including hospital pharmacies), which earns the gap between what it pays and the MRP. The rules come from the Drugs (Prices Control) Order, 2013, administered by the National Pharmaceutical Pricing Authority (NPPA).
In a hospital, medicines for planned procedures are often billed inside a package rate, so ask whether drugs are included before comparing bills.
Who actually sets the MRP on your medicine? A plain guide for India
1:01Three parties shape the number printed on a medicine strip in India. The government writes the rules, the manufacturer sets the price within them, and the trade earns the gap.
Read the transcript
Three parties shape the number printed on a medicine strip in India.
The government writes the rules, the manufacturer sets the price within them, and the trade earns the gap.
Essential medicines are placed in Schedule One of the price control order.
For these, the national pricing authority calculates a ceiling price.
Manufacturers may sell at or below it.
For everything else, the manufacturer fixes the MRP at launch.
After that, it cannot raise the MRP by more than ten percent in twelve months.
And trade margins are negotiated brand by brand.
That is why online pharmacies and Jan Aushadhi stores can offer discounts.
The useful question is usually whether an equivalent brand or generic is available at a lower MRP, and whether it suits the patient.
The full guide, with sources, is on gauravphogat.com.
The link is in the description.
Scheduled medicines: a government ceiling
Medicines on the National List of Essential Medicines are placed in Schedule I of the order. For these, NPPA calculates a ceiling price, broadly based on the average price of brands with meaningful market share. Manufacturers may sell at or below the ceiling. Price changes each year are linked to the wholesale price index, so ceilings can move up or down.
How NPPA calculates a ceiling price
Paragraph 4 of the Drugs (Prices Control) Order, 2013 sets a two-step formula. Step 1: take every brand and generic version of the medicine with a market share of at least 1% of that medicine’s total turnover, measured on moving annual turnover (MAT), and work out the simple average of their prices to retailer (PTR). Step 2: add a 16% margin for the retailer. The result is the ceiling price. GST is not part of it: NPPA notifies ceilings exclusive of GST, and a manufacturer may add GST only if it has actually paid it or it is payable.
A worked example in rupees
Illustrative numbers for a strip of 10 tablets, not a real medicine (our calculation):
| Brand | Market share (MAT) | PTR per strip | Counted? |
|---|---|---|---|
| Brand A | 30% | ₹80 | Yes |
| Brand B | 12% | ₹100 | Yes |
| Brand C | 4% | ₹120 | Yes |
| Brand D | 0.6% | ₹200 | No, below 1% |
- Step 1, average PTR: (₹80 + ₹100 + ₹120) ÷ 3 = ₹100.
- Step 2, add 16% for the retailer: ₹100 × 1.16 = ₹116. This is the ceiling price.
- Add GST: at 5%, the rate for most medicines since 22 September 2025 (some lifesaving drugs are now nil, per Lakshmikumaran and Sridharan), the highest MRP allowed is ₹116 × 1.05 = ₹121.80.
- Every brand must comply: Brand D, priced above the ceiling, has to cut its MRP to ₹121.80 or less. Brands already below it keep their lower MRP (paragraph 13).
Ceilings then move once a year with the wholesale price index, on or before 1 April (paragraph 16). For April 2026 the WPI change was 0.64956%, so a ₹116 ceiling could rise to about ₹116.75 (our calculation). The list that decides which medicines get a ceiling is the National List of Essential Medicines 2022, which has 384 medicines.
The price chain: PTS, PTR and MRP
- Manufacturer
sets the price and sells to the stockist at PTS (price to stockist) - Stockist
distributor; sells to the retailer at PTR (price to retailer) - Retailer or hospital pharmacy
sells at or below MRP, which includes GST - Patient
pays no more than the MRP, or the notified ceiling plus GST if that is lower
Non-scheduled medicines: the manufacturer decides, within a limit
For everything outside Schedule I, which is most of the market by number of brands, the manufacturer fixes the MRP when it launches. After that, it cannot raise the MRP by more than 10% in twelve months. The Centre restated these rules in the Rajya Sabha in August 2026, explaining why the same drug can carry different MRPs under different brands (Medical Dialogues).
| Type of medicine | Who sets the price | Main control |
|---|---|---|
| Scheduled (essential medicines list) | NPPA fixes a ceiling | Cannot sell above ceiling; annual revision linked to WPI |
| Non-scheduled | Manufacturer | Increase capped at 10% in 12 months |
| New drugs (new combinations or forms of scheduled drugs) | NPPA fixes a retail price on application | Price set before launch |
| Special cases | Government, using special powers | Trade margin caps, as with cancer drugs in 2019 |
How much of the market is under direct price control
Less than you might think. Scheduled medicines are about 18% of the overall pharmaceutical market; the other 82% is non-scheduled, where the only limit is the 10% yearly cap. That is from the 33rd report of the Parliamentary Standing Committee on Chemicals and Fertilizers, presented on 6 August 2026 (PRS summary, South First coverage).
The committee flagged several concerns:
- Manufacturers can launch non-scheduled medicines at arbitrary starting prices, because the rules cap increases, not launch prices. Average yearly increases for non-scheduled medicines ran at 5.6% from April 2020 to March 2025.
- NPPA cannot do cost audits, and DPCO 2013 does not allow cost-based pricing. The committee asked the government to examine bringing cost-based pricing back where markups are abnormally high.
- Discounts of 20% to 60% on MRP at hospitals and retailers suggest large built-in margins. It asked for a permanent trade margin framework within a defined timeline.
- NPPA’s market data covers about 70% of the market and leaves out hospital sales, Jan Aushadhi stores, trade generics and direct e-commerce supplies.
- As of 2025, ₹8,526 crore of overcharging dues, 85% of the amount demanded, was still unrecovered, about 70% of it stuck in litigation.
- Only 30 public representations came in on 1,426 draft price worksheets between 2022 and 2025, all from industry.
Where the trade margin fits
The trade margin is the difference between the price at which a manufacturer sells to the stockist and the MRP. It funds the distributor, the retailer and the costs of storage and transport. India does not cap it for most medicines, so it can vary a lot between brands. When the government did cap it, at 30%, for 42 non-scheduled cancer medicines in February 2019 (coverage of the notification), prices of 526 brands fell, some by up to 90% (PIB). The full story is in what India’s 2019 cancer drug margin cap teaches us.
In October 2026 the government went further. A gazette notification of 17 October capped trade margins at 30% of MRP for 137 non-scheduled anti-cancer medicines, with revised prices from 9 November 2026 and MRPs expected to fall by up to 70% (News On AIR). For most other medicines, the trade margin is still not capped.
Why the same molecule has different MRPs
- Each brand is priced by its own manufacturer.
- Brands launched at different times start from different base prices.
- The 10% annual rule limits increases, not the starting point.
- Trade margins are negotiated brand by brand.
- Generic and trade-generic versions are often priced far lower to win volume.
Can anyone charge more than MRP?
No. Selling above MRP is not allowed for any seller. Selling below MRP is allowed, which is why online pharmacies, chain stores and government schemes can offer discounts. Jan Aushadhi Kendras, 18,646 of them as of 28 February 2026, sell generic medicines about 50% to 80% cheaper than branded equivalents (PIB).
How to check and complain
- Look up the price. Search the medicine on NPPA’s Pharma Sahi Daam portal or app, or its medicine price search, to see the notified ceiling or retail price.
- Pay the lower figure. For a scheduled medicine you should pay no more than the lower of the printed MRP and the notified ceiling plus GST. When a ceiling is cut, existing stock is to be billed at the revised price or the existing MRP, whichever is lower, as manufacturers’ own price revision notices instruct the trade.
- Remember GST is on top of the ceiling. The ceiling is notified without GST; the MRP you see already includes it. A bill that adds GST again on top of the MRP is wrong.
- Ask for the price list. Under paragraph 24(4) of DPCO 2013, every retailer and dealer must display the price list and supplementary price list where customers can see it.
- Complain. Since June 2026, Pharma Jan Samadhan has been merged into Pharma Sahi Daam, so you can check a price and file an overcharging or shortage complaint in one place. You can also call the NPPA helpline on 1800111255 (toll free, working days, 10 am to 6 pm, as listed on nppa.gov.in in October 2026), or write to your state drug controller.
- Keep the evidence. A photo of the strip showing MRP, batch number and expiry, plus the bill, makes a complaint far easier to act on.
What this means for patients and hospitals
For patients, the useful question is rarely “is this above MRP?” and usually “is there an equivalent brand or generic at a lower MRP, and is it right for me?” That is a conversation to have with the doctor and pharmacist. For hospitals, explaining how MRP works is one of the easiest ways to reduce suspicion at the billing counter. I cover the hospital side in what a hospital pharmacy does that a chemist doesn’t and the wider debate in hospital medicine prices: what the debate misses.
Price-capped devices in hospitals: stents and knee implants
DPCO is not only about tablets. In 2017 NPPA used it to cap two devices that hospitals bill every day. Figures below are the government’s own, from the Department of Pharmaceuticals’ four-year achievements report.
| Device | When | Ceiling at launch | Average price fall |
|---|---|---|---|
| Coronary stents | 13 February 2017 | ₹29,600 drug-eluting; ₹7,260 bare metal | About 76% drug-eluting; 84% bare metal |
| Knee implants | 16 August 2017 | Set by implant type | 59% to 69%, by implant type |
The government put consumer savings at ₹4,547 crore for stents and ₹1,500 crore for knee implants. Ceilings are revised over time, so check the current figure before you quote it. For hospitals the lasting lesson was billing transparency: NPPA required bills to show the stent cost separately, with the brand name, manufacturer or importer and batch number. The same habit helps with medicines: itemise drugs, consumables and implants, show MRP against the billed price, and say upfront whether a package rate includes them.
Primary sources
- Drugs (Prices Control) Order, 2013 (NPPA)
- National List of Essential Medicines 2022 (NPPA)
- 33rd report, Standing Committee on Chemicals and Fertilizers (Sansad)
- Rajya Sabha reply on brand-wise MRPs, August 2026 (Medical Dialogues report)
- PIB on the 2019 trade margin rationalisation of 42 anti-cancer medicines
- PIB on Jan Aushadhi prices, March 2026
This is a general explainer, not legal or medical advice. Rules change; check NPPA notifications for the current position.
Questions people ask
The manufacturer prints the MRP. For essential (scheduled) medicines, NPPA fixes a ceiling the MRP cannot exceed. For other medicines, the manufacturer sets the price but cannot raise it more than 10% a year.
The National Pharmaceutical Pricing Authority is the government body that fixes and monitors medicine prices under the Drugs (Prices Control) Order, 2013.
The Drugs (Prices Control) Order, 2013 is the regulation that sets out how medicine prices are controlled in India, including ceiling prices for essential medicines.
A medicine listed in Schedule I of DPCO 2013, based on the National List of Essential Medicines. Its price is capped by a government ceiling.
No. No seller can charge above the printed MRP. Selling below MRP is allowed.
Each brand is priced by its manufacturer, launched at a different time and sold with a different trade margin. Rules limit increases, not the starting price.
The difference between the price at which the manufacturer sells to the stockist and the MRP. It pays for distribution and retail.
Yes. In 2019, NPPA capped trade margins at 30% for 42 non-scheduled cancer medicines, and prices of 526 brands came down.
No. A hospital pharmacy sells at or below the MRP printed by the manufacturer. It does not set the MRP.
Ask your doctor or pharmacist whether an equivalent brand or generic is suitable. Jan Aushadhi Kendras sell generics at lower prices.
NPPA revises ceiling prices annually in line with the wholesale price index, and can also revise them when the essential medicines list changes.
NPPA publishes price notifications on its website, and its Pharma Sahi Daam app lets you look up ceiling prices and alternatives.
NPPA takes the simple average price to retailer of all brands and generics with at least 1% market share by moving annual turnover, then adds a 16% retailer margin, under paragraph 4 of DPCO 2013. GST is added on top.
Use NPPA’s Pharma Sahi Daam portal or app, which now includes Pharma Jan Samadhan complaints, or call the NPPA toll-free helpline 1800111255 on working days, 10 am to 6 pm. Keep the strip and the bill.
About 18% by market share is scheduled and under a ceiling; the other 82% is non-scheduled, with only a 10% yearly cap on increases, according to the Parliamentary Standing Committee’s 33rd report of August 2026.
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