Central Govt Plans 75% Trade Margin Cap On Imported & Domestic Medical Devices

PTI
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Mumbai : In a bid to protect patients from being fleeced by exorbitant 1000%-3000% mark up on maximum retail prices (MRP) of medical devices, the central government is considering a proposal to bring down prices of the devices by putting 75% trade margin cap on the first point of sale of imported and local devices.

The announcement to this effect was made by Union minister of state for health and family welfare Ashwini Kumar Choubey on the sidelines of global conference on medical devices in Visakhapatnam recently.

At present, only few devices– cardiac stents, drug eluting stents, condoms, intra uterine devices, knee implants have been brought under price control thus leaving thousands of devices out of price control.

Welcoming this, Rajiv Nath, Forum Coordinator, Association of Indian Medical Device Industry (AiMeD) stated that 75% trade margin cap on the first point of sale of both imported as well as domestic devices will benefit patients and encourage ethical manufacturing and marketing of devices.

Indian manufacturers have to be equated with overseas manufacturers and not with importers. Importers are traders and by seeking first point of sale to be incorrectly defined as price to distributor by importers they seek to be kept out of trade margin rationalization and this will be a very big competitive disadvantage for Indian manufacturers who seek level playing field with overseas manufacturer, he added.

Earlier AiMeD in a representation to Union health ministry had sought rationalization of trade margin of imported and domestic medical devices to make them affordable for consumers.

AiMed had urged the ministry to take up the proposal with department of pharmaceuticals, NPPA, NITI Aayog & Prime Minister’s Office so that devices can be brought under DPCO for price control.

The medical device market in India which is over Rs. 70,000 crore at retail and institutional level is mainly dominated by imports.

Corporate hospitals and MNCs have lobbied for 0% import duty in name of affordability and accessibility of medical devices over the last 10 years without any proof of passing reduction of MRP to consumers who have actually suffered by artificial inflation.

Retailers and hospitals prefer to use imported devices with derived higher profitability as in many cases imported unit packs do not carry MRP but this is labelled only on their shelf box which enables them to charge any price as per their discretion and also for many medical devices the importers by claiming goods are for institutional sales and not for sales over the retail counter so MRP not applicable. Domestic manufacturers needed to print MRP on unit pack and complied.

On the devices that did carry MRP, the market has witnessed huge disparities in MRP between brands of various suppliers for similar products as a higher MRP (and higher trade margin) strategy to induce retailer and hospital to push their brand. The market is not operating based on open competition to drive down prices but is skewed leading to rapid artificial inflation as domestic manufacturers also increase their MRP to catch up and offer similar profitability.

Taking serious note of this, department of consumer affairs vide notification no. 629 (E) dated June 23, 2017 had made it mandatory for all medical devices including those notified as drugs to have MRP on unit Pack and if sold by a hospital to patient then they can’t claim the status of institutional customer. Additionally, country of origin is now mandated to labelled on the unit pack.

The implementation of above rules needs to be enforced by ministry of consumer affair & ministry of finance at the time of import by deputing a port officer for checking each shipment of consumer goods (including medical devices), said Rajiv Nath.
SOURCE : Pharmabiz

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