India's New Drug Rules Explained: Medicine Pricing, Stem Cell Therapies Get Major Regulatory Update

Last Updated:July 03, 2026, 07:44 IST

One amendment changes how essential medicine prices are regulated. The other formally brings stem cell products, gene therapies and xenografts under India's drug laws.

The Centre has notified two significant amendments to India’s drug regulatory framework – one changing how the prices of medicines are regulated and the other formally bringing stem cell products, gene therapies and xenografts under the country’s drug laws. One deals with the prices patients pay for essential medicines, while the other concerns some of the most advanced treatments now being developed for diseases such as cancer and rare genetic disorders.

But together, they update two important parts of India’s drug regulation – one governing affordability and the other governing innovation.

So what changes for drugmakers?

The first amendment, notified by the Ministry of Chemicals and Fertilizers on June 30, modifies the Drugs (Prices Control) Order (DPCO), 2013 — the law through which the drug regulator National Pharmaceutical Pricing Authority (NPPA) fixes ceiling prices of essential medicines. The amendment changes how those prices are implemented and enforced.

For years, the industry has argued that certain provisions of the DPCO created practical difficulties. Manufacturers faced different interpretations by regulators, uncertainty over pricing of different pack sizes, and disputes over liability when older stock remained in the market after a new ceiling price was notified.

“…case of any drug for which a ceiling price or retail price has been fixed, the Government may fix and notify separate ceiling price or retail price on an application made by the manufacturer or otherwise, for such drug with specified therapeutic rationale, considering the type of packaging or pack size or dosage compliance or content in the pack, namely, liquid, gaseous or any other form, in the unit dosage…"

The latest amendment attempts to address some of these issues while tightening compliance in others.

One of the biggest changes is that the government can now notify different ceiling or retail prices for the same medicine depending on its pack size, packaging or dosage form.

The amendment states that the government may “fix and notify separate ceiling price or retail price" after considering the type of packaging, pack size or dosage form. This gives regulators greater flexibility where medicines are sold in different presentations.

Another important change concerns overcharging. Earlier, manufacturers could face liability even for stock that had already moved into the distribution chain before a revised ceiling price came into effect.

The amended rules now provide some relief. They state that “the liability of the manufacturer for overcharging shall be restricted to the quantity of stock traded through the distributor or retailer found to have effected such overcharging."

In effect, liability will be linked to the stock actually found to have been sold above the notified price, provided manufacturers can demonstrate that they took the required steps to communicate the revised prices.

The amendment also simplifies procedures for existing manufacturers.

Companies launching the same new drug within twelve months of the first retail price fixation will no longer have to seek fresh approval from the NPPA. Instead, they will only need to intimate the launch through the newly introduced Form IA within one month.

At the same time, the government has made it clear that manufacturers cannot use this procedural relaxation to charge higher prices.

The notification says, “No existing manufacturer… shall launch such a new drug at a price higher than the latest retail price… fixed by the Government." Companies violating this provision will have to deposit the overcharged amount with interest, apart from any penalty.

The amendment also increases compliance obligations.

Whenever prices are revised downward, manufacturers must communicate the changes more widely. They will have to circulate revised price lists to dealers and retailers, advertise the reduction in at least two national newspapers, update a dedicated DPCO section on their websites and issue revised statutory price lists.

Manufacturers will also have to preserve sales and production records for at least seven financial years. Where proceedings under the DPCO are pending, the records must be retained until the case is finally decided.

Second notification: “Cell or Stem Cell" derived drugs

The second notification, issued by the Ministry of Health and Family Welfare, deals with a very different issue. India has witnessed growing research and clinical development in advanced therapies such as stem cell products and gene therapies. However, the Drugs Rules, 1945, explicitly referred only to recombinant DNA-derived drugs, leaving newer technologies without clear mention in the regulatory framework.

The latest amendment addresses that gap.

It formally brings Cell or Stem Cell derived products, Gene therapeutic products and Xenografts within the same regulatory framework that already applies to recombinant DNA-derived drugs.

In practical terms, these products will now follow a clearly defined pathway for approval, manufacture and import under the Drugs Rules.

The Health Ministry said the draft amendment had been placed in the public domain in October 2025 and no objections or suggestions were received before the rules were finalised.

What does the industry say?

The pharmaceutical industry has largely welcomed the DPCO amendments.

Sudarshan Jain, director general of the Indian Pharmaceutical Alliance, representing the lobby of domestic drug makers, told News18, “This is a welcome development. It will enable a standardised approach to evaluation rather than different states approaching differently."

Ashok Madan, executive director of the Indian Drug Manufacturers’ Association described the changes as “long-awaited" in his post on social media platform X. He said that the amendments provide a “balanced framework" by strengthening consumer protection, improving regulatory clarity and promoting ease of doing business for the pharmaceutical industry.

About the Author

Himani ChandnaSenior Associate Editor

Himani Chandna, Senior Associate Editor at CNN-News18, tracks healthcare, pharma and medical research, bringing clarity to complex science and policy.

News explainers India's New Drug Rules Explained: Medicine Pricing, Stem Cell Therapies Get Major Regulatory Update

Read More