The Cabinet on Thursday cleared the national pharma pricing policy finalised by a GoM on Wednesday.
For the drugs figuring in National List of Essential Medicines, the simple average formula of all brands with a market share of more than 1% would be fixed as the ceiling price for the concerned drugs.
Checks would be built in the policy to prevent companies to migrate to non-essential combination drugs and companies would have to inform government before stopping production of essential drugs.
The GoM, which was headed by agriculture minister Sharad Pawar, had faced initial hurdles in its proposal when the finance ministry objected to certain provisions. Subsequently, at a meeting on Wednesday, the differences were resolved.