The government of India is likely to limit trade margins paid by companies to retailer at 50%. This would result in the price fall of almost 200 commonly used medicines in the country including the medicines used as analgesics, cough syrups, tonics, antibiotics.
The price of medicines used to treat infectious diseases, bronchial disorders, diabetes, hypertension and anxiety disorders may be reduced by more than half of the rate.
The government has decided to create uniform trade margins to propose marketing expenses, or MAPE in trade jargon to the ex-factory price and trade margin of 50% be calculated on the maximum retail price (MRP).
In many cases, the trade margins generally go beyond 1,500% of the cost at which the retailers purchase medicines from the company.
According to the Times of India report, a chemist takes a strip of 10 tablets of Ceticad at Rs 1.60 from the manufacturer and sales at Rs 26 in the market.
Here the margin is over 1525%. Now, if the government would control the cap margins, the medicine would cost not more than Rs 6.40.
Earlier, the government and the medicine industry have contradicted on the limitation on trade margins. Last year, the industry had agreed to cap margins of 886 formulations of 100-odd drugs, however, the plan was not acceptable from all the medicine companies.
Earlier, chemicals minister Ram Vilas Paswan had ordered for a market survey of prices of three drugs such as Cetrizine, Omeprazole and Nimesulide. The survey disclosed the issue of huge margins taking by the medicine companies.
Now, if the norms would be issued, then the medicine industry including branded generic and generic-generic categories will have to implement the regulations. Further, the National Pharmaceutical Pricing Authority would observe margins charged by these companies, once guidelines are issued.