Government likely to cap retailers' trading margin on medicines at 35%
Currently retailers charge trading markets, the margin which wholesalers and retailers earn by selling the medicines, as high as 2,000 to 3,000%.
Drug prices may come down sharply in the coming days as the government is likely to cap the trading margin on medicines at 35%.
Chemists and wholesalers are charging margins as high as 2000-3000% in some medicines. Therefore, there is a huge difference between the costing of medicine to the retailer and its selling price. It needs to be checked, a senior government official told PTI.
"We have come to the conclusion that to check this irrational margin...we have to put a cap. Now we are looking at what levels it should be done. The committee under Department of Pharmaceuticals (DoP) has proposed to cap the margin at 35%. We are looking into that also," the official added.
The trading margin is the margin which wholesalers and retailers earn by selling the medicines.
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Last year, the government formed a committee headed by Joint Secretary in DoP. The committee, which also included members from leading industry bodies, NGOs, National Pharmaceutical Pricing Authority(NPPA) and the Competition Commission of India (CCI), recommended the margin at 35%. According to sources, the Prime Minister's Office had also asked the DoP to address this issue.
A total of 680 medicines is under the National List of Essential Medicines (NLEM) under the scheduled category of Drug Price Control Order (DPCO), 2013. The NPPA has already fixed the ceiling prices in respect of 530 medicines. Out of these 530 scheduled formulations, the price reduction was above 40% in 126 drugs compared with the highest prevailing price prior to the announcement of DPCO.
Above 40% reduction in prices of non-scheduled medicines was also effected for 19 formulations with respect to highest prevailing Maximum Retail Price (MRP) prior to price capping.