The government has fixed caps on manufacturing, wholesale and retail margins for generic, branded generic, and branded medicine.
NEW DELHI/MUMBAI: The government on Thursday announced steps to bring down the prices of drugs by fixing caps on manufacturing, wholesale and retail margins for generic, branded generic, and branded medicine. All manufacturers will also have to mandatorily print the maximum retail prices (MRP), inclusive of all taxes, on all drugs from July 1, 2006.
Announcing these decisions, Union chemicals and fertiliser minister Ram Vilas Paswan said the government would be unveiling its new pharmaceutical policy to lower medicine prices in about three months.
The policy draft would be sent to other ministries for their comments by June 15, he added.
Paswan said that wholesale margins for generics should not exceed 15 % and retail margins 35%. As for branded generics and branded drugs, the manufacturers’ margin should not exceed 150 % of the production cost, according to a PTI report.
“Earlier, there were no caps on margins and some drugmakers were even charging 1,000-2,000 %, which made medicines unaffordable for many consumers,” a ministry official said.
According to Paswan, the National Pharmaceutical Pricing Authority (NPPA) had, over the last two years, reduced the prices of 59 bulk drugs and 531 formulations.
J S Shinde, general secretary of the All India Organisation of Chemists and Druggists, told DNA Money that generic products like cetzine (anti-allergic), nimesulide (painkiller) and albendazole (wormicide) carried huge margins because wholesale prices were as low as Rs 2, but maximum retail prices were as high as Rs 22.
He said chemists could do little about this since these drugs were often being sold directly to doctors and nursing homes, bypassing the trade.
According to Shinde, the ideal margin cap for generics should be 18% for wholesale trade and 40% for retail as against the minister’s announcement of 15% and 35%.
As far as trade margins for branded drugs were concerned, the margin for the wholesaler had been fixed at 10% and the retailer at 20%. For prices controlled by the NPPA, margins were at 8% and 16%.
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