A committee formed last year and headed by Joint Secretary in DoP, in order to bring down drug prices has recommended putting a cap on trade margins to control exorbitant trade margins which fleece consumers. The committee which also included members from leading industry bodies, NGOs, National Pharmaceutical Pricing Authority (NPPA) and the Competition Commission of India, recommended capping the trade margins at 35 percent on all the drugs with Maximum Retail Price (MRP) of above Rs 50. For drugs priced between Rs 20-50, the panel has proposal to cap the margin at 40 percent and recommended capping the margin at 50 per cent for the drugs priced from Rs 2-20. However, the panel proposed no capping of trading margin on the medicine priced up to Rs 2.
The committee has also recommended capping margins on all drugs including stents and orthopedic implants. Further it has recommended an addition in the Drug Price Control Order (DPCO 2013), so that no manufacturer can sell the drug to the trader, if its MRP exceeds the margins notified by the government from time to time.
Trading margin is the margin which wholesalers and retailers earn by selling the medicines, after the new DPCO 2013 came into force, there has been no ceiling on the trade margin of the medicines and the drug price regulator NPPA fixes prices of medicines based on average cost of all drugs in that particular segment which have market share of more than 1 per cent. Minister of State for Chemicals and Fertilisers, Hansraj Gangaram Ahir has said that the government wants the prices of medicines to be affordable for general public, but at the same we want the industry to grow. So, we have come up with this proposal and will discuss it with all stakeholders.
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