Govt Plans To Cap Trade Margins For Them At 25-30%
In a move to curtail profiteering on crucial medicines, the government is set to cap trade margins charged by drug retailers and stockists at around 25-30% for over 50 non-schedule medicines for cancer and rare diseases, which are currently exempted from price regulation, official sources said.
The decision was taken in a high level meeting with the prime minister’s office (PMO) earlier this month. The list of around 50 drugs, drawn by the directorate general of health services (DGHS), include 39 anti-cancer medicines and orphan drugs used in treatment of rare diseases. “PMO had asked the health ministry to prepare a list of non-schedule anticancer and orphan drugs which are currently outside price control but requires intervention to make them affordable for common man. The list has been submitted and order in this regard will be issued very soon,” an official told TOI.
He added, the government will use Para 19 of the Drugs Price Control Order (DPCO) to fix the trade margin under “extraordinary circumstances” in public interest.
The move assumes significance as many new cancer medicines, mostly patented drugs, and orphan drugs are exorbitantly priced but remain outside the purview of price regulation. By capping trade margin of such medicines, the government aims to make them affordable while limiting excessive gains made by wholesalers, distributors and chemists.
At present the government caps the trade margin on schedule or price controlled medicines at 8% and 16%, respectively for wholesalers and retailers. However, in case of non-schedule medicines, companies are free to negotiate with traders on margins. Experts say trade margins form a major portion of a medicine’s MRP and companies often pay exorbitant margins to the trade chain to push their drugs through retailers. The proposed move will also override department of pharma’s previous order which exempted orphan and patented drugs from the price control.
Government think tank Niti Aayog had suggested trimming trade margins to bring down prices of crucial medicines, which still remain outside price control. In a presentation to PMO in April last year, Niti Aayog had recommended a maximum trade margin of 24% on first point of sale (i.e. stockist, wholesaler, distributor or hospital) for schedule drugs and 30% for non-schedule drugs.