UPSC Prelims Practice Questions — Bitter pills

Q1. With reference to the legal framework for regulating medicines in India, consider the following statements: Which of the statements given above is/are correct?

  1. The Drugs (Prices Control) Order, 2013 is delegated legislation issued under the Essential Commodities Act, 1955, and not a standalone Act of Parliament.
  2. The authority that fixes and enforces prices under the Drugs (Prices Control) Order, 2013 also grants marketing approval to new drugs.
  3. When a drug sample is declared 'Not of Standard Quality', the recall of that batch is ordered under the Drugs (Prices Control) Order, 2013.
  • A. 1, 2 and 3
  • B. 1 only
  • C. 1 and 2 only
  • D. 2 and 3 only

Q2. With reference to ceiling prices under the Drugs (Prices Control) Order, 2013, consider the following statements: Which of the statements given above is/are correct?

  1. Any brand of a Schedule-I formulation may be sold at an MRP equal to or below the notified ceiling price, plus applicable GST.
  2. The formulations placed in Schedule-I are drawn from the National List of Essential Medicines.
  3. The ceiling price is based on prevailing market prices of the formulation rather than on its cost of production.
  • A. 1, 2 and 3
  • B. 1 and 3 only
  • C. 2 only
  • D. 1 and 2 only

Q3. Consider the following statements: Which of the following is correct in respect of the above statements?

  1. In 2019, to cap trade margins on a group of anti-cancer medicines, the NPPA had to invoke its extraordinary powers in public interest under the Drugs (Prices Control) Order, 2013.
  2. The ceiling-price provisions of the Drugs (Prices Control) Order, 2013 apply only to formulations listed in its Schedule-I, and those anti-cancer medicines were non-scheduled.
  • A. Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
  • B. Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
  • C. Statement-I is correct, but Statement-II is incorrect
  • D. Statement-I is incorrect, but Statement-II is correct

Q4. Consider the following statements: Which of the following is correct in respect of the above statements?

  1. The 2019 cap on trade margins of some non-scheduled anti-cancer medicines lowered the MRPs of many of their brands by around half on average.
  2. Under the Drugs (Prices Control) Order, 2013, a manufacturer may not raise the MRP of a non-scheduled drug by more than a specified proportion over its MRP in the preceding twelve months.
  • A. Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
  • B. Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
  • C. Statement-I is correct, but Statement-II is incorrect
  • D. Statement-I is incorrect, but Statement-II is correct

Q5. Consider the following facts reported about some private hospitals: the hospital decides which brand of a medicine a patient receives; patients are required to buy medicines from the hospital's on-premise pharmacy; and for some medicines the MRP is several times the price at which the pharmacy buys them. Which of the following inferences can be drawn from the above?

  1. The price the patient pays is shaped more by the margin the hospital can earn than by competition among manufacturers for patients.
  2. The manufacturers of such medicines must be selling to hospital pharmacies below their cost of production.
  3. Allowing patients to buy prescribed medicines from outside pharmacies would weaken the hospital's ability to capture the gap between the MRP and the purchase price.
  4. Such pricing must be violating a ceiling price fixed under the Drugs (Prices Control) Order, 2013.
  • A. 1 and 2 only
  • B. 1, 3 and 4 only
  • C. 1 and 3 only
  • D. 2, 3 and 4 only

Q6. With reference to the provisions on dominance in the Competition Act, 2002, consider the following statements: Which of the statements given above is/are correct?

  1. Holding a dominant position in a relevant market is, by itself, prohibited under the Act.
  2. Because dominance is assessed within a delineated relevant market, an enterprise with a small share of the national market can still be found dominant.
  3. Prices or conditions adopted to meet competition are excluded from being treated as 'unfair or discriminatory' under the abuse provision.
  • A. 1 and 3 only
  • B. 1, 2 and 3
  • C. 1 only
  • D. 2 and 3 only

Q7. The only private hospital with cancer-treatment facilities in a district makes every admitted patient buy all prescribed medicines from its own pharmacy at the printed MRP. Under the Competition Act, 2002, this conduct is best examined as which of the following?

  • A. Predatory pricing meant to drive rival pharmacies out of the market
  • B. A combination of enterprises needing prior approval of the Commission
  • C. A horizontal agreement among competing hospitals to fix drug prices
  • D. Abuse of a dominant position by imposing an unfair condition on purchase

Q8. With reference to the Price to Retailer (PTR) and the Maximum Retail Price (MRP) of medicines in India, consider the following statements: Which of the statements given above is/are correct?

  1. The PTR is the price at which a manufacturer or distributor sells to a retailer or hospital pharmacy, while the MRP is the highest price that may be charged to the patient.
  2. The requirement that packages declare the MRP inclusive of all taxes arises from the Drugs (Prices Control) Order, 2013 rather than from legal metrology rules.
  3. In fixing the ceiling price of a scheduled formulation, the calculation starts from the PTRs of brands in the market rather than from their MRPs.
  • A. 2 only
  • B. 1, 2 and 3
  • C. 1 and 3 only
  • D. 2 and 3 only