Govt reviewing pharma industry's proposal on trade margin rationalization on non-scheduled drugs

The central government is reviewing a proposal from the pharmaceutical industry regarding trade margin rationalization on non-scheduled drugs.  

The National Pharmaceutical Pricing Authority (NPPA) under Department of Pharmaceuticals (DoP) that fixes the ceiling price of scheduled medicines as per provisions of the Drugs (Prices Control) Order, 2013 on Tuesday convened a meeting with the representatives of drug associations that have long been proposing "one molecule-one MRP" formula on non-scheduled drugs instead of capping trade margins.

Union Health Minister Mansukh Mandaviya, S Aparna, Secretary at Department of Pharmaceuticals (DoP) and Kamlesh Pant, NPPA Chairman, discussed the proposal with the representatives in a five-hour long meeting.

“The union minister listened to our suggestions on trade margin rationalization and has asked his officials to review and analyze our proposal. We have requested the minister to consider the rising prices of Active Pharmaceutical Ingredients (APIs) that is pushing a need of rise in formulation prices,” said Harish Goyal, Vice President at Himachal Drug Manufacturers Association (HDMA).

According to the industry experts, the Indian pharmaceutical market was pegged at around Rs 1,68,791 crore in the financial year 2021-22. As per NPPA, in case of non-scheduled medicines, a manufacturer is at liberty to fix the Maximum Retail Price (MRP) launched by it, but is not allowed to increase the MRP of such formulations by more than 10% per annum.  

“Capping trade margins of non-scheduled drugs may in fact encourage retailers and wholesalers to sell medicines of higher MRP and may not lead to any realistic reduction in drug prices for the public. This may favour the larger pharmaceutical companies who may be able to tweak their MRPs in order to maintain profits,” argued Nikkhil K Masurkar, Executive Director, ENTOD Pharmaceuticals.  

“For the government, in order to serve its “drug prices affordable for all” motto, it needs to adopt a nation, One molecule, One MRP strategy together with a price control policy on active pharmaceutical ingredients (APIs). Prices of APIs have skyrocketed since the onset of the pandemic and this has led to prices of many of the drugs we are seeing today,” Masurkar claimed.  

NPPA has fixed ceiling prices of 886 scheduled formulations and 4 scheduled medical devices and fixed retail prices of 1,817 new drugs. In addition, it has fixed the ceiling price of Orthopedic Knee Implants in public interest.  

Moreover, under “Trade Margin Rationalisation” Approach, the NPPA has fixed Trade Margin of non-scheduled formulations of 42 select Anti-cancer medicines and recently during covid -19 pandemic, regulated the prices of Oxygen Concentrators, Pulse Oximeter, Blood Pressure Monitoring Machine, Nebulizer, Digital Thermometer and Glucometer.

The industry has called for better margins for research and development purposes. “Pharmaceutical industry does need healthy margins in order to invest in new drug research and development and to innovate in newer medicines, for which we get negligible government support. The momentum in R&D and drug discovery the Pharma industry has gathered since the pandemic will not just allow us to “Make in India” but also “Innovate in India” and that too by keeping patient affordability at its heart,” Masurkar said.

A senior official in the DoP said that the proposal is under evaluation and no decision has been taken so far. Two meetings on trade margin rationalization were earlier convened in December 2019 and on May 20, 2022 by the NPPA with the pharmaceutical industry representatives.

The DoP had also recommended some measures to the government policy think tank Niti Aayog for rationalising drug trade margins. The measures included reducing trade margins to 43 per cent on non-scheduled drugs. It had also recommended exempting drugs from trade margin rationalization which are priced Rs 2-5 per unit.