Modi government to slash prices of critical drugs fixing trade margin

By fixing trade margins, the Narendra Modi government is planning to bring down the prices of critical drugs, News18.com has learnt.

Trade margins are the difference between the price to trade for manufacturers and the price to patients as the maximum retail price (MRP).

“The efforts are to reduce prices of drugs used for the treatment of diabetic, cardiovascular diseases, and chronic kidney diseases,” said a top official in the ministry of health and family welfare.

In phases

The trade margin will be rationalised in a phased manner as it enables better execution and gives time to the industry to accommodate changes, the source said while hinting that the move is expected to be announced soon.

“For instance, we first slashed the margins in the anti-cancer category. Similarly, this time, we will announce the slashing of the trade margins of a particular category of drugs such as anti-diabetic or for kidney diseases,” said the source.

Drug price watchdog National Pharmaceutical Pricing Authority (NPPA) has been working on the plan for the past several months.

In 2018-19, the NPPA had put a cap on trade margins of 42 select non-scheduled anti-cancer medicines. Union health minister Mansukh Mandaviya had said in the Lok Sabha that the move resulted in reduction of up to 90 per cent of the MRP of 526 brands of these medicines.

This time, the source said, NPPA has conducted a study and the rationalisation will be based on the inputs from the same.

NPPA’S TMR analysis

According to the study on TMR analysis conducted by NPPA, a trader’s margin moves higher with the price of a tablet.

In May, News18.com reported the analysis.

It found that, for instance, if a tablet is priced up to Rs 2, in the majority of the brands, the margin is up to 50 per cent; whereas if its cost is between Rs 15 and Rs 25, the margin is less than 40 per cent.

At least 2.97 per cent of the medicines in the Rs 50-100 per tablet category have trade margins between 50 per cent and 100 per cent, 1.25 per cent in the category have margins between 100 per cent and 200 per cent, and 2.41 per cent have margins between 200 per cent and 500 per cent.

As per NPPA’s presentation, in the case of medicines priced above Rs 100 per tablet, considered the costliest category, 8 per cent have margins around 200 per cent to 500 per cent, 2.7 per cent have margins around 500-1000 per cent, and 1.48 per cent have more than 1000 per cent margins.

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