However, the move is likely to stimulate retailers to spend more as trade margins on drugs that have somehow bypassed the list and the retailers may push such drugs to earn greater margins.
New Delhi: A relief to patients will soon ensue as the drug price regulator National Pharmaceutical Pricing Authority (NPPA) is expected to cap trade margins of 73 cancer and rare disease drugs. According to a recent media report, a decision in this regard will be taken on Thursday in the official meeting of NPPA.
The move will help expand the range of price control to cut down overcharging on various drugs which are presently excluded from the purview of government regulation.
TOI reports that following the directions from the Prime Minister’s Office in the month of January, the Directorate General of Health Services has prepared the lists of these 73 drugs.
For instance, key oncology molecules like nivolumab used for lung cancer, cetuximab used in colorectal cancer, and breast cancer drug palbociclib are not included in the list.
As per the statistics total oncology market is estimated to be Rs 3830 crore annually while topmost 50 brands contribute 53 per cent of the total cancer market.
Earlier media reports brought to light that the government has been working to cork the trade margins as the PMO felt an immediate need for government intervention to cut down excessive margins charged by stockists and retailers on “commonly used” tumour drugs as well as those for rare diseases.
By regulating trade margin of such medicines, the government aims to make them affordable while restricting excessive profits earned by wholesalers, distributors and chemists.
Trade margins form a vital portion of MRP of a drug and companies often pay sky-high margins to the trade chain to thrust their drugs through retailers.
Though the decision, incase taken in the regulatory meeting to be held on Thursday will ease patients, yet the move has triggered concerns.
Since the list has excluded commonly used medicines with higher market turnovers which entails a potential risk that the retailers may dispense another and cheaper medicine than the one prescribed, sources told the daily.
“By creating a list of drugs, the government has opted for a discriminatory approach where some drugs with same therapeutic efficacy are outside the list. This will lead to market inequities and scope for malpractices,” an industry executive told TOI.
The government’s decision to cap trade margin which is expected to happen shortly will indeed restrict stockists and retailers to overcharge on the drugs enlisted. However, the move is likely to stimulate companies to spend more as trade margins on drugs that have somehow bypassed the list and the retailers may push such drugs to earn greater margins.