Venus Safety And Magnum Health Hiked Prices By More Than 4 Times, Says Govt Report

Mumbai, 9 Dec 2020:

Maharashtra-based Venus Safety & Health Pvt Ltd and Magnum Health & Safety Pvt Ltd, hiked prices of their N95 masks by more than four times compared with last year prices reveals a government report. The committee observed that in some instances, prices of certain types of masks were increased by 437% and 575% compared to the past year.

The report prepared by the state government committee headed by Dr Sudhakar Shinde, the chief executive (CEO) of State Health Assurance Society, says, "...the manufacturers increased the maximum retail price (MRP) of N95 masks exorbitantly and irrationally. Such greedy increase in MRP caused undue hardship to end users. The jump in MRP from Rs25 to Rs172 is beyond the buying capacity of small and medium scale healthcare units and common citizens, indicating a clear need for regularisation for prices of these masks."

"The increase seems to be on the background of an increasing demand-supply gap in the market due to large scale requirement of masks to control the spread of COVID-19 through droplet infection," the committee noted, adding, "...regarding purchase of filter media used in CN95 masks from March to August 2020, it is evident that there was no change in case of major raw material. it can be noted that during the same period, the items were under essential commodities act and the prices were increased manifold. Such price manipulation by manufacturers has resulted in windfall profits at the cost of essential commodities act."

A statement attached with the report on trend in changes of mask prices between April 2018 to August 2020, shows considerable increase in the MRP of N95 masks after the onset of COVID19 pandemic in March this year.

It says, "The MRP of N91 (V shape) masks was steady at Rs40 per unit from April 2018 to January 2020. It shows an increase of Rs35 per unit in February while there is a steep hike in prices from March 2020 onwards. The difference is more than Rs100 per unit. For other varieties of N95 masks, there is no data available between April 2018 to January 2020. But the MRP from May-June 2020 shows a steep hike. It appears that the MRP of N95 mask was reduced by Magnum on the basis of an office memorandum (OM) dated 3 June 2020 from National Pharmaceutical Pricing Authority (NPPA)."

Talking about N95 mask prices of Venus Health & Safety, the committee observes that there is no rationale for the difference in cost and price of N95 mask before COVID in March and in May 2020.

"It appears that the only motive behind such price differential is earning windfall profit by way of cartelling. Moreover, on perusal of summary of follow ups by field team and cost of cost auditors for details with the manufacturer, it appears that they have deliberately delayed submission of documents for the cost determination.

Prices of masks and sanitizers were regulated by the union government after the lock-down was announced in March. However, the Centre removed masks and sanitizers from the category of essential commodity through an order released on 30 June 2020.

In October, the committee submitted its report.

Earlier in June, the Bombay High Court (BHC) had asked the NPPA to relook and pass an appropriate order within 10 days about capping the price of N95 masks, in accordance with the law, as per clause 20 of the Drug Price Control Order (DPCO). The time limit set by the Court ended on 23rd June. However, instead of following the order, the NPPA has sent out a letter seeking to collect information from manufacturers about capping the prices of N95 masks, effectively buying a lot more time and avoiding the capping of prices.

What is worse, an office memorandum (OM) of the NPPA actually allows manufacturers to use the April 2020 prices, as the base for reducing prices, knowing full well that prices had soared exponentially – often by as much as 10 times – after the hard lockdown in March. This suggests tacit support for the profiteering, even while it seems to claim that manufacturers have voluntarily reduced prices of these masks, whose use is crucial to healthcare workers working with COVID-19 patients.  

The bench was hearing a public interest litigation (PIL) filed by Sucheta Dalal, founder-trustee of Moneylife Foundation and Anjali Damania, founder-trustee of Voice of Indian Taxpayers, a non-government organisation (NGO).

The PIL had sought relief from black marketeering, hoarding and profiteering of N95 masks in Maharashtra, despite N95 masks being declared as essential commodity under the Essential Commodities Act, 1955. The petition also alleged that Maharashtra state had failed to take adequate measures to ensure sufficient availability of surgical masks and other masks at fair prices.

In its reply, the NPPA submitted before the BHC that, on 15 May 2020, it had organised a meeting for a holistic understanding about the types and standards of N95 masks that are available and concomitant pricing issues and that representatives from the ministry of textiles, BIS (Bureau of Indian Standards) and HLL Life Care Ltd attended the meeting.

Also, during the meeting, HLL had informed that it procures N95 masks from eight manufacturers, with majority coming from Venus Safety. The price of CV N95+ mask with expiratory valve is Rs60 plus GST and that of N99 mask is Rs68 plus GST, the minutes of the meeting reveal, NPPA says. 

 On 21 May 2020, NPPA contended that it issued an advisory, following which major manufacturers and importers of N95 masks have reduced their prices significantly up to 47%.

However, the HC had pointed out that the NPPA, has not taken into consideration a statutory provision as mentioned in DPCO.

Later, the department of consumer affairs in the union ministry did an about-turn and removed masks and sanitizers, including N95, from the list of ‘essential commodities’. But this has only endangered people, by unleashing a flood of low-priced fakes or wrongly certified masks into the market even as the pandemic rages across India and many cities have imposed a fresh lock-down.Moneylife News And Views