Govt to initiate talks with stakeholders on drug trade margins

The Department of Pharmaceuticals along with the Drug pricing regulator, National Pharmaceutical Pricing Authority (NPPA) will discuss the issue of TMR with the stakeholders, in an effort to reduce prices of medicines & medical devices. The trade...

The government will initiate discussions on the contentious issue of Trade Margin Rationalisation (TMR) on drugs and medical devices with the stakeholders in a meeting slated to be held on Friday. The Department of Pharmaceuticals (DoP) along with the Drug pricing regulator, National Pharmaceutical Pricing Authority (NPPA) will discuss the issue of TMR with the stakeholders, in an effort to reduce prices of medicines and medical devices.

The DoP had earlier proposed a few options to rationalise the trade margins on drugs to policy think tank Niti Aayog. One suggestion was to restrict trade margins at 43% on non-scheduled drugs as it was done in the case of cancer drugs earlier this year. The DoP had also suggested that trade margin on all formulations and dosages be capped at 100%. Simultaneously, it also opined that lower priced medicines at Rs 2-5 per unit may be exempted from TMR.

“We have been weighing different options which will now be discussed with the stakeholders. We will see what best can be done for the industry and the patients,” said a senior government official. The meeting will be attended by representatives from the pharma and medical devices associations, Non government Oganisation (NGOs) working in the sector, President, CII, FIICI, among others.


To incorporate any of these options, amendments will have to be made to the National Pharmaceutical Pricing policy, 2012.

The trade margin is the difference between the price at which the manufacturers/importers sell to stockists and the price charged to consumers.

At present, India’s drug price regulator National Pharmaceutical Pricing Authority (NPPA) fixes price of scheduled drugs. Non-scheduled drugs are allowed to increase pric prices by as much as 10% a year.
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To allay the concerns of device makers specially the makers of stent and knee implants that saw a drastic fall in prices after NPPA capped them earlier in 2017, the government is contemplating capping trade margins for medical devices too. "The issue of first point of sale for the domestic makers and multinationals is a concern and has to be discussed. There have been some apprehensions over the same and in this meeting we hope to sort them out," added the official.
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