The final recommendations of the Sandhu Committee on Drug Pricing may not augur well to the union minister for chemicals and fertilizers Ram Vilas Paswan if it sticks on its opinion given in the interim report with regard to the profit margins. The minister is known to be in favour of allowing almost the same profit margins for both generics and branded drugs, as the 'manufacturing cost' of the drugs remains the same.
Sources close to the minister said that Paswan would rather see the branded and generic drugs differentially priced depending on the differences in their cost of promotion and other post manufacturing expenses but with same profits.
The interim report of the Sandhu committee had suggested bringing in separate profit ceilings for branded and generics thereby bringing down the high trade margins existing for control-free drugs. The committee had proposed 35 per cent and 15 per cent trade margins for retailers and wholesalers respectively for branded generics.
In the case of generic-generic drugs, where trade margins are particularly high - roughly in the 500 per cent - 2,000 per cent range - the committee proposed maximum allowable margins of 20 per cent for the retailer and 10 per cent for the wholesaler.
The minister is likely to find other recommendations agreeable as he has been voicing for a much larger role of National Pharmaceutical Pricing Authority (NPPA) in the price control of all drugs, irrespective of their DPCO status.
The minister's idea to seek self-declaration from the manufacturers and allow them to fix the prices of control free drugs on their own after complying with the broad guidelines outlined by the ministry has also found space in the committee report, it is learnt.