Usha Sharma – Mumbai
With pharmaceutical retailers and distributors incurring loss of Rs 2,600 crore per annum due to Drug Price Control Order (DPCO) 2013, the All India Organisation of Chemists and Druggists (AIOCD) will organise a meeting in Mumbai today. The meeting is likely to be attended by AIOCD’s present secretaries and office bearers who will discuss alternate options to overcome the expected trade loss on an urgent basis.
With an objective to provide affordable medicines to the common man, Department of Pharmaceuticals on May 15 fixed the ceiling prices of 348 medicines moving from a cost-based to a market-based methodology. In India the domestic medicine consumption market is worth Rs 70,000 crores per annum and due to DPCO 2013 medicines worth Rs 15000 crores come under the controlled category which contributes 24 per cent and rest 76 per cent is in the decontrolled category.
As per the earlier DPCO, 74 drugs were under the order based on the manufacturing costs stated by their manufacturers. However, in the current DPCO 2013, ceiling prices have been calculated based on all the drug brands having present market share of more than one per cent. DPCO 2013 provides more profit to pharma companies than the earlier order. The earlier order was based on the cost-based formulations and manufacturers decided to cut margins on price controlled products (74 drugs) at retailer level from 20 per cent to 16 per cent and on distributor level 10 per cent to eight per cent.
J S Shinde, President, AIOCD said, “Our argument is to restore the margins which was taken away in the last DPCO. There are 348 essential drugs under DPCO 2013 and due to market-based formula, the pharma companies are really not getting much affected and generating good profits. If these companies can generate profits than we should also get our previous set margins.”
“Nearly four months back we have submitted a memorandum to DoP, following which we conducted three to four meetings with DoP members and more than 50 meetings with representatives from different pharma companies. However, so far we have not received any assurance either from the government or pharma companies. Hence, we have decided to discuss the matter internally and find a better alternative to overcoming the trade loss of Rs 2,600 crores. We have requested to the DoP to restore 20 per cent retailer margins on MRP for all National List of Essential Medicines 2012 (NLEM) products.”
In the presented memorandum to DoP, AIOCD has requested current margins of 20 per cent on MRP be maintained and increased by two per cent for cold storage items only, which are increasing day by day. AIOCD feels that industry growth needs the support of a healthy distribution channel, which in this case is completely ignored. According to the memorandum, if the retailer’s margin are reduced to 13.8 per cent on MRP (16 per cent PTR) there is a double penalty on retailers in terms of margin per cent reduction as well as lower price and hence lower realisation. In such circumstances it will be impossible for retailers to provide quality and safe medicine to end consumers.
Till now National Pharmaceutical Pricing Authority (NPPA) has fixed the prices of 295 essential drugs prices out of 348 essential drugs prices.
