Draft pharma policy calls for trade margins cap

New Delhi: The government is mulling fixing trade margins on drugs to bring down costs and create a level-playing field for the pharma industry.

Seeking opinion from stakeholders on the Draft Pharmaceutical Policy 2017, it has also proposed ending "unethical marketing practices" of pharmaceutical firms and marketing companies by luring doctors to recommend particular brands through all-expenses-paid 'educational conventions' and other incentives.

The key objectives of the policy are to make essential drugs accessible at affordable prices to common people while providing a long-term stable policy environment for the pharmaceutical sector, the draft policy said.

Calling for cap on "unreasonable trade margins", it said the issue along with bonus offers by various stockists, distributors and retailers have been adversely affecting both the industry as well as consumer interest.

"After detailed stakeholder consultations, the level of trade margins will be prescribed to create a level-playing field for the industry and to bring down prices," it added.

According to the draft policy, institutions receiving supplies directly from manufacturers, distributors or retailers would also be covered under the trade margin reforms.

At present, the government fixes ceiling prices of all drugs under the National List of Essential Medicines (NLEM) and price fixation of these drugs is carried out by the National Pharmaceutical Pricing Authority (NPPA).

The draft policy also said that regulation for marketing practice which is at present voluntary will be made 'mandatory' and an agency for the implementation would also be assigned.

"An area of concern is unethical marketing practice deployed by the drug manufacturing and marketing companies," it said, adding "doctors are lured to recommend a particular brand trough all expenses paid trips often disguised and called 'educational conventions' and such other incentives".

While the Drugs & Magic Act prohibits any advertisement of a drug, the draft policy said, "Such educational conferences are used to circumvent and play the trick."

"These add to the overhead cost of the drugs. It is assuming menacing proportions and needs to be addressed through the new pharmaceutical policy," it added.

Further, to provide a level-playing field, the draft policy said, "The regulation for marketing practices which is at present voluntary will be made mandatory. Penalty for violations and an agency for implementation would also be assigned."

On the NPPA role, it said the drug price regulator would fix price ceilings of list of medicines prepared by the Department of Pharmaceuticals.

Moreover, the Drugs Prices Control Order (DPCO) which is implemented by the NPPA will be modified and its schedule 1 shall contain only medicines name in NLEM without referring to strength and dosage forms, all of which would be under the price cap, it added.

The DPCO will include only 'off-patent' medicines. In- patent medicines will not be subject to price ceiling by the NPPA.

"The regulator and the government would be two distinct agencies. The government shall not be the regulator and the regulator shall not be the government," it said.

Prices once fixed by the NPPA shall not be revised by it unless directed by the government or a higher court, the draft policy added.

Any appeal against decisions of the NPPA shall be with the government and against the decisions of the government with the higher judiciary, it added.