HYDERABAD: Notwithstanding severe industry backlash, India’s drugs price controller is showing no signs of backing down. On Wednesday, the National Pharmaceutical Pricing Authority (NPPA), for the first time, capped trade margins on 42 non-scheduled, anti-cancer drugs at 30 per cent. The move comes a month after the government constituted a seven-member committee under NITI Aayog to recommend medicine prices, which critics feared would dilute NPPA’s role.
In hindsight though, it seemed to have given impetus to go after price regulation, exploring uncharted areas. NPPA’s latest decision, which sources said has NITI Aayog panel’s imprint, is rolled out as a pilot and will be valid only for one year.
Trade margin is the difference between the price at which drug makers sell to stockists (dealers, medical stores and hospitals) and the final price to patients (or MRP).
Currently, there are no laws controlling MRP and hence, NPPA believes capping of trade margins was necessary. It noted that trade margins of companies, on some drugs, was as high as 1,800 per cent or more. Such unreasonably high margins contribute to high drug prices, leading to higher out-of-pocket healthcare expenses, it noted. Hence, the NPPA used a never-before ‘Trade Margin Rationalisation Approach,’ to regulate non-scheduled drugs capping prices of select anti-cancer drugs, identified by the Ministry of Health & Family Welfare as essential. Currently, 57 anti-cancer drugs are already under price control as scheduled formulations.
The prices will come into effect from March 8 and companies have seven days to recalculate prices and inform the NPPA, state drug controllers, stockists and retailers.
However, healthcare activists assailed Wednesday’s decision as inadequate. Reason: Unlike other essential drugs where the NPPA imposed price caps on drugs in general, the latest move caps trade margins alone. This, sources said, was to give a breather to the pharma industry, which has been complaining about profit erosion due to price controls. “The mechanism being suggested to bring down prices is faulty and inadequate. This is because prices of some medicines that are being imported are so high that trade margin capping would have negligible impact on making them affordable,” said All India Drug Action Network.
According to NPPA, the MRP will be reduced up to 25 per cent for 45 brands, 25-50 per cent for 43 brands, 50-70 per cent in case of 12, brands and 70-85 per cent for five brands.