An Increase in Trade Margins Recommended by DoP

The Department of Pharmaceuticals (DoP) has recommended an increase in trade margins, or what wholesalers and retailers earn on the sale of medicines, on all drugs with maximum retail price (MRP) above Rs.2 per unit—i.e. per tablet, capsule, vial, tube, bottle, injection, etc.—while retaining it at the current level of 30% for those priced below Rs.2, two.

DoP has now placed the proposal before the minister of chemicals and fertilizers for final approval.

Through the proposed regulation, the government aims to prevent profiteering and provide medicines at a reasonable cost. Rising drug prices have inconvenienced people, particularly the uninsured, as a broken public healthcare system has forced them to seek private care.

For scheduled drugs, the current stated margins are 8% and 16% for stockists and retailers, respectively, whereas for non-scheduled drugs, the margins are 10% and 20%. Although it is not mandated under the Drug Price Control Order, 2013, the National Pharmaceutical Pricing Authority uses these margins to fix the price of drugs. However, there have been allegations that in practice, the margins are higher than what is claimed by the industry and traders.

Effectively, the current margins are 30% on all drugs above Rs2 per unit.

After the new Drug Price Control Order, 2013, came into force, there has been no ceiling on prices of medicines.

In its proposal, DoP has recommended graded trade margins with higher margin cap for lower value drugs and lower margin cap for higher value drugs.

2/15/2018 8:34:42 PM