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Trade margin cap on drugs, devices: Govt asks stakeholders for views on regulation

During a meeting held with various stakeholders on the issue, officials of the National Pharmaceutical Pricing Authority (NPPA) and the Department of Pharmaceuticals sought inputs on how much margins should be allowed for these products across the supply chain, said persons directly aware of the development.

Written by Prabha Raghavan | New Delhi | Updated: November 23, 2019 1:40:46 am
 Trade margin cap on drugs, devices Drugs trade margin, Business news, Economy news Indian Express  AIDAN and Association of Indian Medical Device Industry also had differences with other associations over regulating medical device margins.

The government has asked various pharmaceutical, medical device and chemist associations as well as civil society bodies to submit by November 30 their views on capping the margins taken on medicines and medical devices across the supply chain, The Indian Express has learnt.

During a meeting held with various stakeholders on the issue, officials of the National Pharmaceutical Pricing Authority (NPPA) and the Department of Pharmaceuticals sought inputs on how much margins should be allowed for these products across the supply chain, said persons directly aware of the development. The officials also asked for their views on the scope of such a regulation and what sort of products should be included or excluded in this process, the sources added.

Friday’s discussions focussed on expanding NPPA’s earlier move to cap trade margins of over 40 cancer medicines in February to cover other therapeutic segments. It also brought up a debate on how best to control the prices of medical devices sold in the country, with major differences between multinational device makers and patient groups as well as Indian device associations, sources said.

Stakeholders also debated whether medicines falling within a certain price bracket should be excluded from the process, sources said. As per NPPA’s move to cap trade margins of 42 non-scheduled cancer drugs, the maximum retail prices (MRPs) of these drugs cannot be marked up more than 42 per cent from the price at which the stockist has purchased them from the manufacturer or marketing firm.

“Almost all associations were on the same page when it came to using the same margins in the case of cancer medicines for other drugs. But, it was mentioned (by some stakeholders) that the process moving forward should be done in a phase-wise manner,” said a person present at the meeting on Friday, requesting anonymity.

“There was also a recommendation that all drugs under Rs 5 per unit should be kept out of price control,” the person added. At the same time, there were issues raised with this recommendation by stakeholders like patient activist group All Indian Drug Action Network (AIDAN).

“We support creation of a norm for industry practice in setting trade margins across all non-scheduled medicines. We do not support excluding medicines under Rs 5 per unit (such as a tablet) from this exercise,” said Malini Aisola of AIDAN. “A large population suffers from chronic diseases. Many of the medicines for managing these conditions could come in this category,” she added.

AIDAN and Association of Indian Medical Device Industry also had differences with other associations over regulating medical device margins. While some associations had recommended a 50 per cent margin from price to stockist, they had sought the margins to be capped from the landed cost of the product.

“The combination of an incorrect starting point for the regulation (Price to Stockist) and excessively high margins will lead to high cost escalation in the supply chain and wide disparities in prices paid by consumers,” said Aisola, adding that AIDAN also asked for ceiling price caps on “critical” devices currently regulated as drugs.

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