The National Pharmaceuticals Pricing Authority (“NPPA”) brings out the “Trade Margin Rationalisation Approach” (Approach) considering the high trade margin in the sale of drugs which is leading to a lot of out of pocket expenses on healthcare; effective 27th February 2019.
Background:
The Indian Pharmaceutical Industry is called the “Pharmacy of the World”, but recently due to the prevalent amount of inequalities, out of pocket expenditure on medicines contributes a large amount towards pushing families beyond poverty limits for due to medical needs. Henceforth, for ensuring affordable drugs, it is an absolute necessity to achieve an overall goal of affordable healthcare.
Hence, to undertake the matter of price control, the NPPA brings forward the “Trade Margin Rationalisation Approach” solely to fix and bring out the formula for fixing the MRP of the drugs and puts forward certain responsibilities upon the drug manufacturers.
Key Highlights of the Approach:
- The manufacturers may add Goods and Service Tax (GST) as needed to arrive at the MRP.
- The hospital will be treated as stocklist if the manufacturers are supplying the medicines directly to the hospitals.
- The revised prices of the medicines shall come into effect on 8th March 2019.
- The manufacturers of non-scheduled medicines selling branded or generic formulations at higher MRP shall revise their prices and make sure the prices do not exceed the retail price computed.
- All the existing manufacturers having MRP which is lower than the retail price (Plus GST) shall maintain the MRP.
- The manufacturer shall issue a price list and submit the copy of the same to the State Drug Controller and Dealer.
- It is directed to every retailer, dealer, hospital and institution shall display a price list and supplementary price list as furnished by the manufacturer at a conspicuous part of the premises where the business is carried on.
- The manufacturers of medicines are needed to maintain the present production levels. If such manufacturer is intending to lower the average monthly production, must obtain a permission from the NPPA.
- The manufacturers who are not complying with the retail prices, shall be needed to deposit the over charged amount with that of interest.
- The prices that will be fixed shall be valid for 1 year from the date of publication of this notification.
- The manufacturers are compulsorily required to report the MRP and PTS of their medicines in the SUGAM portal of Central Drugs Standard Organization (CDSO)
Source: National Pharmaceuticals Pricing Authority
