New Delhi: To make medicines affordable, the government will hold talks with stakeholders on Friday to discuss the impact on availability of medicines and prices if trade margins of drugs are capped, said a government official privy to the matter.
The department of pharmaceuticals (DoP), under the ministry of chemicals and fertilizers, will meet representatives of the pharma industry, civil society members, and pharma trade associations to mull over the proposal and recommendations of a high level committee that was formed in the year 2016 with an aim to reduce prices and create a level-playing field for the pharma industry.
The panel had recommended capping the trade margins in sale of drugs at 35% on all the drugs with an MRP of above Rs50. However, the panel proposed no capping of trading margin on medicines priced up to Rs2. Trading margin is what wholesalers and retailers earn by selling the medicines.
DoP had formed the committee following anonymous complaints received by the Prime Minister’s Office (PMO) that drugs are sold to consumers at astronomical prices.
There were complaints that chemists and wholesalers were charging margins as high as 500% for some medicines, another government official said on condition of anonymity.
“We have to take a final call on trade margins and, therefore, discussion with the stakeholders is important tomorrow (Friday),” said the first government official cited above on Thursday.
The meeting will be attended by representatives of pharma industry associations including Indian Drug Manufacturers’ Association (IDMA), Indian Pharmaceutical Alliance (IPA), Federation of Pharma Entrepreneurs (FOPE), Organisation of Pharmaceutical Producers of India (OPPI), and SME Pharma industries confederation, along with civil society members and trade associations.
An industry representative said that the move to cap margins will have an adverse impact on the micro, small and medium enterprises that are engaged in manufacturing medicines and traders working in remote areas.
“In trade generics, distributors appoint medical representatives to market products to doctors in rural areas. The representatives recover their costs through the higher margins at which they sell these drugs to the doctors. With affordability, we have to think about accessibility too. If the trade margins are capped in an arbitrary manner we will kill the industry,” said an industry representative, requesting anonymity.
According to Malini Aisola, an activist of the All India Drug Action Network (AIDAN), a group of healthcare-focused NGOs. “Trade margin capping may not lead to any radical change in itself. The larger issue contributing to high prices remains unaddressed. Pricing is the most rational mechanism to provide affordable access to patients and reasonable profits to companies”.
After the new Drug Price Control Order (DPCO) 2013 came into force, there has been no ceiling on the trade margin of the medicines. The drug price watchdog National Pharmaceutical Pricing Authority (NPPA) fixes prices of medicines based on average cost of all drugs in that particular segment which have a market share of more than 1%.