Govt committee set to study steep trade margins on medicine brands

By Vikas Dandekar

MUMBAI: A committee set up under the department of pharmaceuticals will study the extent of margins on medicine brands that are supplied to traders and distributors directly and not sold through medical representatives to physicians or hospitals. The committee, which is expected to submit its report within a month, may favour capping the maximum retail prices of such products, officials said.

Several leading drug companies supply a broad range of such low priced brands directly to trade channels, saving on steep promotional expenses in the process. However, these products are in turn sold to the patients at abnormally high margins.

Recent news reports suggest that the government has noticed the growing trend of steep trade margins of as much as 1000% that adversely impact its goal of reaching affordable medicines to patients.

VK Subburaj, secretary, department of pharmaceuticals recently indicated that a committee will study the percentage of trade margins for generic drugs, whether the prices charged by distributors are anti-competitive and whether the practice is unethical.

The newly-appointed committee, to be headed by Sudhansh Pant, joint secretary in the department of pharmaceuticals, will have representatives from leading industry bodies, a non-governmental organisation, a member of the National Pharmaceutical Pricing Authority and a representative of the Competition Commission of India.

In July, while hearing a public interest litigation filed by the All India Drug Action Network, the Supreme Court had termed the existing procedure of controlling prices of medicines on the basis of market-based competition "unreasonable and irrational" and directed the government to review the pricing policy.

Industry experts are of the view that any additional regulatory moves to cap prices of drugs will be detrimental to the patients and the industry alike. "India's attractiveness as a growing pharmaceutical market will be dimmed," said an executive.

However, the government is said to have assured the industry of striking a balance between protecting the interests of patients and those of drug manufacturers.