The Haryana Government has decided not to lock horns with the drug retail trade sector of the state. Its attempts to curtail the profit margins of the drug trade sector and pass on the benefits to the consumer seems to have stopped mid-way, with the state health department settling for a verbal assurance from the trade sector to "reduce the profit margin of the generic drugs by 100%".
Speaking to Pharmabiz.com, Ram Kumar, Secretary, Health, Government of Haryana informed that the representatives of the retail drug traders in the state have agreed to bring down the profit margins for the benefit of the patient population. However it is a voluntary decision and the government is not in a position to enforce it, he added.
The secretary said that the government had plans to bring down the profit margins of the medicines. "However we are not clear about the legal implications of such a move. As of now, we know that the retail drug segment, especially when it comes to generic sales, enjoy a profit margin of 100 to 2000 percent. We would be happy to bring about any legislation, if possible, to have a control over this exorbitant price margins", he said.
The trouble started for the chemists of the state when the government issued a public notice asking all drug manufacturers, wholesale distributors and C&F agents operating in the state to furnish the price structure of the drugs sold by them. The collection of details ranged from the first point sale to the retailers level and was highlighted as 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".
The attempt for data collection was part of the government's plan to bring in the chemists to the negotiating table and work out some sops for the consumers at large. However, its plans didn't materialize as the chemists, under the banner of All India Organisation of Chemists and Druggists (AIOCD) were swift to post their protest against the official move. In successive meetings, the association managed to convince the government on the legal complications of going for a state level price regulating mechanism.
Though the public notice had made it clear that the information has to be provided for all products irrespective of their being covered under DPCO or not and warned of strict action against all who fail to furnish the information or produce false information, the government later realized the fallacies behind its move.
The Haryana government had, almost a year ago, attempted to levy taxes for drugs based on its MRP rates. This attempt by the state government to compel the manufacturers to bring down the MRP (thereby cutting on the profit margins of the retail trade), had no effect as it kept the drug prices even higher. Currently, Haryana has introduced Value Added Tax regime and the drugs are having 10% VAT levied in the state.