Pharma body IPA not in favour of extending trade margin cap to all drugs

Indian Pharmaceutical Alliance (IPA), the lobby group representing large domestic drug makers, has said it is not in favour of government extending trade margin rationalization to all other drugs in the market.

“We welcome the government efforts to make cancer drugs affordable through a cap on trade margins, but we are against applying the oncology experiment to all other drugs,” Sudarshan Jain, Secretary General of IPA, told Moneycontrol.

“Unlike cancer drugs which are sold directly to institutions (like hospitals), most other drugs are sold through a complex trade channel of distributors, wholesalers and retailers,” Jain said.

IPA statement comes at a time when the government has formed two standing committees. One is on the revision of National List of Essential Medicines (NLEM) headed by Balram Bhargava and it is meeting various stakeholders, including IPA, to prepare a new list of essential medicines and medical devices. The other committee is chaired by government’s think tank NITI Aayog and deals with affordability aspect of drugs.

The government had dropped hints of extending trade-margin caps as a substitute for price control, on all other drugs including the essential and life-saving medicines.

So far the government fixed retail prices and trade margins of scheduled drugs or drugs part of National List of Essential Medicines (NLEM), whereas it gave companies the liberty to decide the margin of non-scheduled formulations.

The government in May capped the trade margins of 463 non-scheduled anti-cancer drug brands, to curb profiteering in the pharma trade channel.

A trade margin is a difference between the price at which the manufacturers sell the drugs to stockist or distributors and the final price to patients or maximum retail price (MRP).

Jain added that the price of a pill which is less than five rupees shouldn’t be under price control.

He cited the example of drugs such as folic acid, which are as cheap as few cents of a rupee, and are still figure in NLEM.

“It becomes unviable for companies to produce these drugs,” Jain said.

“We need a stable policy for five years because what is happening now in the industry, more than on focusing on the business at hand, is preoccupied with addressing the frequent policy changes that are happening,” Jain said.

Jain also called the government to expedite the process of joining the Pharmaceutical Inspection Co-operation Scheme (PIC/S) and International Council on Harmonisation (ICH) – two of the largest international pharmaceutical regulatory schemes, to ensure a higher standard for drug quality in India.