Capping Trade Margins of pharma would save Rs 984 crore, Ashwini Kumar Choubey informs LS

New Delhi: The Minister in the Ministry of Health and Family Welfare (MoHFW), Ashwini Kumar Choubey recently informed the parliament that on the basis of data submitted by the manufacturers, it has been analysed that there would be an annual saving of approx. Rs. 984 crores to the patients under 'Trade margin Rationalisation Approach' by the National Pharmaceutical Pricing Authority (NPPA).

This came while responding to a query raised by S. Muniswamy during the Lok Sabha session. The member asked whether the Government is aware that some private and Government hospitals and the physicians prescribe costlier branded drugs to patients to benefit the respective drug companies under some sort of nexus between drug companies and medical practitioners despite similar drugs being available at cheaper rates in the market thereby resulting in heavy financial burden on patients and their families.

He further asked about the steps taken by the Government to determine the maximum retail price for similar drugs and if the Government has any plan to set a cap on trade margins on drug sale to check profiteering.

Responding to the question, Choubey stated that Clause 6.8 (Code of Conduct for doctors in their relationship with pharmaceutical and allied health sector industry) of the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 prohibits doctors from taking gifts, travel facilities, hospitality and cash or monetary grants from pharmaceutical and allied health sector industry. Violation of these norms prescribes severe punishment as laid down in the said regulations.

Clause 1.5 also prescribes that every physician should prescribe drugs with generic names legibly and preferably in capital letters and he/she shall ensure that there is a rational prescription and use of drugs. Further, the Medical Council of India has issued Circulars from time to time directing all the Registered Medical Practitioners to comply with the aforesaid provisions, he added.

Elaboration further, the Minister stated that the Department of Pharmaceuticals (DoP), Ministry of Chemicals & Fertilizers informed that in accordance with the provisions of the Drugs (Prices Control) Order, 2013 (DPCO, 2013), Government regulates the prices of medicines listed in Schedule I of the order. The National List of Essential Medicines 2011 (NLEM-2011) and subsequently NLEM-2015 have been incorporated as Schedule- I of DPCO, 2013. As per para 8 of DPCO, 2013 the MRP of the formulations shall be fixed by the manufacturer on the basis of ceiling / retail price notified + local taxes as applicable.

Ceiling prices of medicines included in Schedule- I are fixed on the 'Market-based pricing' methodology. National Pharmaceutical Pricing Authority (NPPA) has fixed the ceiling prices of 530 scheduled medicines under Original Schedule-I (NLEM-2011) and has also fixed the ceiling prices of 860 formulations under the Revised Schedule-I (NLEM-2015). 

The Department of Pharmaceuticals, Ministry of Chemicals & Fertilizers informed that the National Pharmaceutical Pricing Authority capped the Trade Margin of all the non-scheduled formulations of select 42 Anti-Cancer drugs, recommended by Expert Committee of Ministry of Health & Family Welfare, under the 'Trade margin Rationalisation Approach' vide order S.O. 1041(E) dated 27th February 2019.

Also Read: NPPA Caps Trade Margins To 30 Percent For 42 Cancer Drugs

"The decision has been taken up as Pilot for Proof of Concept, under the laid down provision of paragraph 19 of DPCO, 2013, under extra-ordinary circumstances in public interest. On the basis of data submitted by manufacturers, it has been analysed that there would be an annual saving of approx. Rs. 984 crores to the patients" the Minister informed.

NPPA has issued necessary directions to State Drug Controllers and Superintendents of Hospitals / Medical Institutions to ensure compliance of the order issued so that the benefits under this measure be available to the patients, Choubey added.

Also Read: Price Cap: NLEM Committee To Now Target Intraocular Lens, Dialysis Fluid, Hearing Aids;