Govt Plans to Slash Prices of Critical Drugs for Diabetes, Heart And Kidney Diseases by Fixing Trade Margin

By fixing trade margins, the Narendra Modi government is planning to bring down the prices of critical drugs, has learnt.

Trade margins are the difference between the price to trade for manufacturers and the price to patients as the maximum retail price (MRP).

“The efforts are to reduce prices of drugs used for the treatment of diabetic, cardiovascular diseases, and chronic kidney diseases,” said a top official in the ministry of health and family welfare.

The trade margin will be rationalised in a phased manner as it enables better execution and gives time to the industry to accommodate changes, the source said while hinting that the move is expected to be announced soon.

“For instance, we first slashed the margins in the anti-cancer category. Similarly, this time, we will announce the slashing of the trade margins of a particular category of drugs such as anti-diabetic or for kidney diseases,” said the source.

Drug price watchdog National Pharmaceutical Pricing Authority (NPPA) has been working on the plan for the past several months.

In 2018-19, the NPPA had put a cap on trade margins of 42 select non-scheduled anti-cancer medicines. Union health minister Mansukh Mandaviya had said in the Lok Sabha that the move resulted in reduction of up to 90% of the MRP of 526 brands of these medicines.

This time, the source said, NPPA has conducted a study and the rationalisation will be based on the inputs from the same.

According to the study on TMR analysis conducted by NPPA, a trader’s margin moves higher with the price of a tablet.

It found that, for instance, if a tablet is priced up to Rs 2, in the majority of the brands, the margin is up to 50%; whereas if its cost is between Rs 15 and Rs 25, the margin is less than 40%.

At least 2.97% of the medicines in the Rs 50-100 per tablet category have trade margins between 50% and 100%, 1.25% in the category have margins between 100% and 200%, and 2.41% have margins between 200% and 500%.

As per NPPA’s presentation, in the case of medicines priced above Rs 100 per tablet, considered the costliest category, 8% have margins around 200% to 500%, 2.7% have margins around 500-1000%, and 1.48% have more than 1000% margins.

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