New Delhi: The central government has put on hold an ambitious project to apply the trade margin rationalisation (TMR) approach to regulate the prices of non-scheduled drugs — including the ones used for the treatment of chronic lifestyle diseases — officials in the Department of Pharmaceuticals have (DoP) told ThePrint.
The move comes amid strong objections raised by medium and small drugmakers in the country, backed by the Rashtriya Swayamsevak Sangh (RSS) affiliate Laghu Udyog Bharti (LUB), said the officials.
The LUB claims to represent micro and small industries working in over 400 districts across the country.
“Laghu Udyog Bharti had reservations regarding the proposal and it was eventually felt that the proposal, if taken forward, will lead to more backlash from the industry than benefit [them], so it has been put on hold at least till general elections next year, unless the Prime Minister’s Office (PMO) wants to give it a push earlier,” a senior official in the DoP said.
The official, however, added that the proposal may not be completely dropped and a presentation is set to be prepared for the PMO, which may take a final call in the matter.
ThePrint reached DoP Secretary S. Aparna for comment via email but has not received any response yet. The report will be updated when a response is received.
For price control, drugs in India are classified into two categories — scheduled and non-scheduled. While the ceiling prices of the scheduled drugs — under the National List of Essential Medicines — are capped every year, there is no price cap for non-scheduled drugs.
More than 80 per cent of drugs sold and marketed in the country are from the non-scheduled category, according to industry estimates.
TMR is a way of price regulation that warrants capping trade margins in the supply chain so that consumers do not have to pay high prices. Trade margin is the difference between the price at which a manufacturer sells the drug to a wholesaler or retailer, and the price (MRP) at which it is sold to the patients.
Last year, the DoP had started meetings with stakeholders to build a consensus around applying the TMR approach to non-scheduled drugs.
“It (the proposal) was first discussed for all critical drugs that are not in the scheduled category but, after initial discussions, it was decided that, in the first phase, TMR formulae will be applied for drugs that cost Rs 100 and above,” said another official aware of the developments.
“However, since a large number of generic drugmakers are opposed to the idea, it has gone on the backburner,” the official added.
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Industry concerns
The Organisation of Pharmaceutical Producers of India (OPPI) — a network of multinational pharmaceutical companies — and the Indian Pharmaceutical Alliance (IPA) had largely backed the proposal. However, the Indian Drug Manufacturers’ Association (IDMA) — a body that represents generic drugmakers across the country — had certain reservations.
“The TMR, according to our members, cannot be across the board and we had submitted our suggestion to the government a few months back,” IDMA president Viranchi Shah told ThePrint.
Rajesh Gupta, who heads the All India Pharma Committee in the Laghu Udyog Bharti, said the initiative would hit small drugmakers hard.
“Small drugmakers function through a number of channel partners and if the trade margin is fixed for drugs, it would absolutely be difficult for them to survive,” he said.
Non-profit organisations have also pointed out what they describe as flaws in the approach, saying that trade-margin-capping being expanded in isolation of other price-lowering measures may be inadequate.
Malini Aisola, co-convenor of the All India Drug Action Network (AIDAN), told ThePrint: “This approach is insufficient in addressing market distortions while uniform ceiling price for life-saving medicines may be far more effective.”
AIDAN is a network of several non-government organisations working to increase access and improve the rational use of essential medicine.
In 2018-19, the National Pharmaceuticals Pricing Authority (NPPA) — the regulatory body that controls the prices of pharmaceutical drugs in India — put a cap on the trade margin of 42 select non-scheduled anti-cancer medicines.
The government, through a reply in the Lok Sabha, had also said that the initiative had cut the maximum retail prices of some medicines by up to 90 per cent in some cases.
During the peak of the Covid pandemic, the government fixed trade margins of crucial devices such as oxygen concentrators.
(Edited by Anumeha Saxena)
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