Industry asks govt not to cap margins on unbranded generics

Govt had received complaints from various quarters that trade margins for drugs range between 300% and 5,000%

As the government prepares to cap drug margins, manufacturers, their lobbies and traders have asked the government to only cap trade margins for branded drugs.

In a latest submission, the industry told the Department of Pharmaceuticals (DoP) that total margin of 35 per cent on branded drugs (branded generics and branded drugs) is an ideal number, said a senior official from the department.

This official said that all the stakeholders spoke in unison at a recent consultation meeting held by the government on the issue. “These bodies were also of the opinion that trade margins for unbranded drugs should not be considered, as that would mean non-availability of many crucial drugs in the hinterlands.”

The government had received complaints from various quarters that the trade margins for drugs range between 300 per cent and 5,000 per cent. 

Meanwhile, the NITI Aayog is also involved in the process of capping trade margins on drugs. In a recent submission by the industry to the government think-tank, it has been stated that drugs with inflated margins are pure generics and constitute only four per cent of the industry. 

A senior industry executive remarked that the entire industry should not be punished for the sins of few and the government should consider other options to solve the issue instead of capping margins.

The government began thinking about capping trade margin of drugs in 2015 after the Maharasthra Food and Drug Administration (FDA) raised a complaint against a cough syrup to the NPPA for inflating the MRP by 100- 150 per cent in order to lure the chemist to sell the drug. In fact, the Prime Minister’s Office had, at that point in time observed that at least 60 drugs of one manufacturer had been sold with margins above 1,000 per cent. Of these, nine were scheduled medicines. 

In another observation, the government had found that cancer treatment drugs with a wholesaler price of Rs 1,900 were being sold at Rs 7,600 to the patient. In fact, in the wake of such high prices of unbranded generics, the then NPPA chairman Injeti Srinivas had recommended making prescription of generics mandatory. The recommendation was for single-ingredient drugs. The committee had also recommended de-branding single-ingredient drugs.

During earlier discussions with stakeholders in 2015, the industry had stated that some of the drugs that were under the government’s purview for capping included those to treat HIV, cancer, gynaecological products and vaccines. They also stated that there would be shortage of these drugs.

Along with capping the trade margins in drugs, the government is working on capping trade margins in medical devices as well. The government recently met the pharmaceutical industry to discuss trade margins after the draft pharmaceutical policy was floated for stakeholder consultations.