The Government of Haryana has asked all drug manufacturers, distributors and C&F agents operating in the state to furnish the price structure of the drugs sold by them. The collection of details range from the first point sale to the retailers level and is known to be an attempt to put a curb on "the unethical practice by some unscrupulous elements of printing disproportionately high MRP on drugs/medicines / allied items like surgical goods, infusions and OT kits etc". If the government were to have its way, Haryana would be the cheapest retail market for drugs in the country with prices of many generic formulations coming down by about 50%.
The decision of the authorities to go for a state level drug pricing mechanism has invited wide spread protests from the drug trade sector. They allege that the government is attempting to sideline the existing Drug Price Control Order, which gives the National Pharmaceutical Pricing Authority a central role in regulating drug prices in the country.
As the first step towards introducing its own price evaluation mechanism, the state government has the distributors, manufacturers and C&F agents to furnish details like company name, product, details of ingredients, unit, wholesale price per unit, MRP printed on the pack and annual turnover of the company. The Director General of Health Services, Haryana has made it clear that the information has to be provided for all products irrespective of their being covered under DPCO or not. He has also warned of strict action against all who fail to furnish the information or produce false information.
As part of convincing the drug trade sector of the state, the authorities are known to have initiated direct talks with representative associations.
Commenting on the issue, Sandeep Nangia, organizing secretary, All India Organisation of Chemists & Druggists (AIOCD) said that the apex association has already begun discussions with the government on behalf of their members in the state. "The government is yet to come out with an order or notification in this regard. We are watching the development and may have to resort to direct action, if the government ignores the problems of our members and go ahead with its decision," he said.
The members of the state branch of AIOCD also said that the government has not taken any concrete decision and the deadline to furnish the details, which was announced through a public notice, has been extended due to the request from the trade sector.
However, it's a different story for the manufacturers. With the change in MRP making no difference in their profit margins, they seem to have decided to be with the government in its bid to save the "consumer from being overcharged".
According to P K Gupta, president, Haryana Pharmaceuticals Manufacturers Association, the talks with the association and the government representatives resulted in the government deciding to extend the deadline for furnishing the details to July 2003. "We have decided to sort out all issues before the deadline," he said.
The Association has agreed to cooperate with the government in its attempt to bring down the MRP rates. "The rates will be applicable only for the state of Haryana. However, I cannot comment on the legal implications of such a decision," he said.
Interestingly, the drug trade in Haryana has been going through tough times over the last so many months. One major issue surfaced when the state government announced that it would be charging taxes for drugs based on its MRP rates. While this was the first attempt by the state government to compel the manufacturers to bring down the MRP (thereby cutting on the profit margins of the retail trade), the effect of the government initiative was disastrous. It proved totally anti-consumer as the taxes were additionally charged from the consumer, thus making Haryana the most costly state as far as drug purchase was concerned. The issue met a natural death when the state switched over to Value Added Tax regime (the only state in the country to do so) later. Presently, drugs are having 10% VAT levied in Haryana. This decision was also resented by AIOCD.
The state government now feels to put an end to the whole issue by directly asking the manufacturers to come out with a reduced rate for the state.