The government and pharma companies are responsible for the high prices of generic medicines, and the traders are unnecessarily being accused of making huge profits, according to J S Shinde, general secretary of the All India Organization of Chemists and Druggists said in statement.
At present the generic medicine sales in the country is to the tune of Rs 1600 crores, out of an industry turnover of Rs 22,800 crores. Out of the generic sales, at least 30 per cent, which is about Rs 475 crores, bypasses the trade and is directly sold to hospital pharmacies, which shows that the traders handle roughly Rs 1118 crores. This is very negligible, about less than 5 per cent of the overall industry turnover.
The traders market the products ethically and the margins are controlled by the DPCO. It gives only 8 percent including or and excluding excise duty and 16 per cent excluding excise duty to wholesalers and retailers respectively on controlled category, and 10 per cent and 20 per cent on decontrolled category. Since the margins of the pharma trade are controlled, there is no justification in accusing the traders of making huge profits, said Shinde in Chennai on Sunday.
He said the pharma trade is working with the meager margins since 1984, in spite of increase in fixed expenses like rent, taxes by governments, electricity, wages, license fees and incidental expenses. AIOCD will support the government and NPPA to curb the prices of generic medicines, as they it is sole authority fixing drug prices. In Haryana, the State Government and AIOCD arrived at a suitable formula for sale of generic medicines. The Government and NPPA should act immediately to fix the prices of generic drugs as done in the case of ethical drugs. In ethical products, the margins are calculated as defined in the DPCO while in generic marketing the invoicing to traders includes all overheads except marketing and distribution expenses which includes the margins to be parted to wholesalers and retailers, said Shinde.
He said AIOCD had been demanding the government for the last ten years to make it mandatory to print MRP inclusive of taxes, instead of the 'RP - local taxes extra', and to have uniform prices for medicines throughout the country. The traders have to bear the wrath of the consumers due to their lack of knowledge of the laws governing the prices of medicines like DPCO, Package & Commodities Act and the various taxes attracted at different stages.
Prior to 1995, medicines in the decontrolled category were being sold with 'MRP - inclusive of all taxes'. But the Government substituted the words 'MRP' and 'inclusive of all taxes' with "RP…not to exceed.. local taxes extra' by a gazette notification S.O.643 (E) on 19 July 1995, without considering the difficulties and confusion caused to the traders and consumers. The Government should reverse this notification to the norms existed before 1995 and should get all decontrolled medicines with price label 'MRP' and 'inclusive of all taxes', said Shinde.