Trade margin rationalization will bring in predictability and transparency in pricing regulations: MTaI

New Delhi, July 28, 2021:

National pharmaceutical pricing regulator National Pharmaceutical Pricing Authority (NPPA) has fixed the trade margin for five medical devices like Pulse Oximeter, Glucometer, BP monitor, Nebulizer and Digital Thermometer at 70 per cent through a TMR formula to ensure availability of these devices.

Medical Technology Association of India (MTaI), an association of research-based medical technology companies, has hailed Government’s trade margin rationalization (TMR) and stated that this will bring in predictability and transparency in medical devices pricing regulations.

National pharmaceutical pricing regulator National Pharmaceutical Pricing Authority (NPPA) has fixed the trade margin for five medical devices like Pulse Oximeter, Glucometer, BP monitor, Nebulizer and Digital Thermometer at 70 per cent through a TMR formula to ensure availability of these devices.

According to NPPA, 620 products or brands have reported downward revision of MRP by up to 88% after the trade margin rationalization of these 5 medical devices.

Industry experts have suggested that it is important to note the consistency in the mechanism adopted by the NPPA to regulate prices of these 5 medical devices as it is the second time this mechanism of trade margin rationalization (TMR) has been affected after the successful implementation on Oxygen concentrators.

In its order dated July 14, 2021, the NPPA had stated that the TMR approach has been taken keeping in mind the extra-ordinary situation as the country is fighting the COVID 19 pandemic.

In order to monitor availability, the manufacturers and importers of medical devices have been directed to submit quarterly stock details to NPPA.

Pavan Choudary, Chairman, MTaI said, “This predictability and transparency in pricing regulations could, we contend, help us retain our attractiveness of India as a destination for both domestic as well as international investments. This is crucial especially in the backdrop of the drastic fall in FDI in this sector from 248 million USD in Jan-March 2020 to 21 million USD in Jan-March 2021”

According to an industry source, “Any price control can bring some distortions in the market, however in our estimate the TMR which was the considered recommendation of the ‘Report of the DOP Committee of High Trade Margins in Sale of Drugs, 2016’) which the NPPA has implemented to reduce high margins, will make things fairer for the patients by bringing in affordability and accessibility, which is surely the objective of all concerned stakeholders. This mechanism of price control in our estimate will have the least unintended and adverse consequences and will ensure continued supply of quality critical devices,”.

“Though we disagree with the definition of ‘margin” in the order and feel that the margins (mark ups) specified in the current formula may be inadequate for a few of the sub-segments (which are very widely spread), it is still a step in the right direction and will circumscribe, without completely asphyxiating, the players who bear the cost of innovation, training, more weighted fluctuations in exchange rates and logistics cost and after sales service cost, while at the same time ushering in a dramatic improvement in affordability for patients,” Choudary concluded. Financial Express