Margins earned by wholesalers, distributors and retailers will be capped in a phased manner. The Department of Pharmaceuticals and drug price regulator National Pharmaceutical Pricing Authority (NPPA) are finalising a proposal in this regard following consultations with the Prime Minister’s Office (PMO) and multiple stakeholders.
Trade margin is the difference between the price at which a manufacturer sells the device or product to a distributor or stockist and the price paid by the end consumer (MRP).
While prices of over 355 medicine formulations that are part of the National List of Essential Medicines are capped directly by the government, the idea behind trade margin rationalisation is to bring under the scanner other drugs that are not part of NLEM but are commonly used and are expensive, contributing substantially to health expenditure.
“There is need to maintain required balance between interest of patients, manufacturers, innovators and distribution supply chain. Our objective is to make medicines affordable for patients, while also ensuring that it remains viable for other stakeholders,” a senior official said.
In February 2019, the NPPA capped trade margins of 41 anti-cancer medicines at up to 30% on a pilot basis. This was done using extraordinary powers under the Drugs Price Control Order (DPCO) in public interest. Besides, it also fixed prices of coronary stents and knee implants.
During Covid-19, the government capped trade margins of several commonly used medical devices such as pulse Oximeter, Glucometer, Oxygen concentrators and digital thermometer. This lowered prices of most of the brands by up to 89%, the Economic Survey 2022 said.
The NPPA is now conducting an elaborate study to assess the impact of trade margin rationalisation on such drugs and other pharmaceutical products. Findings of the study will be assessed before arriving at a final decision, the official said.