New Delhi: NITI Aayog has recommended a cap on trade margins charged by drug stockiest and chemist in order to reduce the prices of drugs while trimming industry profits, according to recent news in Mint.
If the recommendation gets accepted it will reduce the prices of scheduled and non- scheduled dugs which are under price control or not.
Two people aware of the matter told that NITI Aayog has recommended a maximum trade margin of 24 percent for scheduled drugs on its first point of sale and 30 percent for non-scheduled drugs on its meeting at 11 April in Prime Minister’s Office. For this, the government will need to make suitable amendments to the Drug Price Control Order (DPCO) 2013.
The drug industry has claimed that the scheduled drugs earn 8 percent margin for stockiest and 16 percent margin for retailers whereas for non-scheduled drugs, they are 10 percent and 20 percent respectively.
These margins are used by India’s drug pricing regulator to fix prices of drugs. However, there have been allegations that actual margins are far higher.
As per the Mint, Niti Aayog has also called for expanding the price control basket by adding more medicines, medical devices, consumables and vaccines, among others. It has also proposed forming two panels, one for deciding essential medicines and the other one on affordable medicines and health products.
The first panel will comprise of NITI Aayog vice-chairman and secretaries of Union health ministry and pharmaceuticals department that will examine and recommend on including more products under DPCO schedule 1 which will have special power under para 19 of DPCO that will be used to regulate prices of patented medicines that are not under compulsory licensing. NPPA has previously used these powers to slash prices of stents and knee implants.
The second panel on essential medicines will have the secretary in the department of health research, and director-general of Indian Council of Medical Research.
The move has obviously been opposed by the pharma industry which said the changes will kill competition and hurt small-scale drugmakers.
An industry executive told Mint, “Capping margins will prove to be a death-knell for small-scale units. Small units thrive because they are able to offer high margins. SMEs can’t afford high priced marketing managers and medical representatives. They are the only companies whose products are reaching the rural areas. MNCs and large Indian companies have been discreetly working in this direction and have succeeded in their endeavour. What the Indian pharma earned in the past 70 years will all be lost. We are ourselves going to write the obituary of our pharma Industry so detested by Big Pharma. India will no more be the pharmacy of the world.”
Saying that capping trade margins will harm the interest of traders, All India Organisation of Chemists and Druggists (AIOCD) president Jagannath Shinde told Mint, “If they cap trade margins, surely consumers will gain, but traders will be the most affected party. We have proposed at least 30% margin on scheduled drugs and if our demands are not met, we will agitate.”