Government may rationalise drug trade margins in a bid to reduce costs
May 27, 2022:
The government is geared up to apply the trade margin rationalisation (TMR) formula to drugs in order to bring down their prices. At the National Pharmaceutical Pricing Authority's (NPPA's) meeting with stakeholders on the issue last week, the stakeholders were asked to give their suggestions by the end of this week, people in the know told ET.
The meeting was attended by representatives from the Indian Drug Manufacturers Association (IDMA) and Indian Pharmaceutical Alliance (IPA), The Organisation of Pharmaceutical Producers of India (OPPI), and All India Drug Action Network (AIDAN), among others. The All India Organisation of Chemists and Druggists (AIOCD) has suggested a 10% trade margin for wholesale dealers on PTR (price to retailer) and 20% for retailers on MRP.
"The AIOCD has suggested that the government should come out with a clear-cut definition for generic medicines. For generic medicines we have suggested a trade margin of 15% to wholesalers and 35% to retailers on MRP," Rajiv Singhal, general secretary of AIOCD, told ET.
The department of pharmaceuticals (DoP) had earlier proposed a few options to rationalise the trade margins on drugs to policy think-tank Niti Aayog. One suggestion was to restrict trade margins at 43% on non-scheduled drugs, as was done in case of cancer drugs.
The DoP had also suggested that trade margin on all formulations and dosages be capped at 100%. It also proposed that lower-priced medicines - those in the ₹2-5 per unit range - may be exempted from TMR. "We appreciate NPPA on capping the cancer drugs with provision of 30% margin to the trade channel. Similar formula may be applied for capping prices," said Singhal. At present, the NPPA fixes the price of scheduled drugs. ET Health