Govt. fixes ceiling profit margin of medicines at 45%

New Delhi

Drug prices are likely to come down sharply in the coming days as government may cap the trading margin on medicines at 45%.Chemists and wholesalers are charging margins as high as 2000-3000% in some medicines. Therefore, there is a huge difference between the costing of medicine to retailer and its selling price. It needs to be checked, a senior government official told PTI.”We have came to the conclusion that to check this irrational margin. We have to put a cap. Now we are looking at what levels it should be done. The committee under Department of Pharmaceuticals (DoP) has proposed to cap the margin at 45%For products priced at Rs. 2 per unit, the chemist margin may be capped at 50%. There may be two more slabs of 45% and 35%.Trading margin is the margin which wholesalers and retailers earn by selling the medicines at a price more than wholesale price. A committee headed by joint secretary in DoP was established last year by government. The committee, which also included members from leading industrial bodies, NGOs, National Pharmaceutical Pricing Authority (NPPA) and the Competition Commission of India, recommended the margin to be at an optimum value of 45%.According to sources, the Prime Minister’s Office had also asked the DoP to address this issue. A total of 680 medicines are under the National List of Essential Medicines (NLEM) under the scheduled category of DPCO, 2013. The NPPA has already fixed the selling prices in respect of 530 medicines. Out of these 530 scheduled formulations, the price reduction was above 40% in 126 drugs compared with the highest prevailing price prior to announcement of DPCO. Above 40% reduction in prices of non-scheduled medicines was also effected for 19 formulations with respect to highest prevailing MRP prior to price capping.

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