The small scale drug manufacturers are likely to accept the offer from the government to exclude them from the purview of the cap on trade margins on generics if they voluntarily reduce trade margins by 25 per cent, only if the government accepts conditions like exclusion from DPCO and high margin drugs reserved only for SSIs.
Since most of the state level associations differ in their views on the proposal, the Confederation of Indian Pharmaceutical Industries (CIPI), the apex organization of SSIs feel they should wait for some more time to inform the government of its views. Conveying the option, the Sandhu committee a few weeks ago had asked a delegation of CIPI to come back with their suggestions during the first week of January, according to SSI sources.
They argue that it was the multinationals that sell drugs with huge margins and profits. The government should bring in a mechanism to penalize these companies by restricting further manufacturing of those drugs by such companies. Instead, it should be reserved only for the small-scale drug manufacturers, who can offer the same drugs at reduced prices.
At present, most of the SSIs lack any mechanism to get correct and timely data on the DPCO prices, and hence, some SSIs may unknowingly manufacture and sell drugs beyond the fixed prices. In order to avoid this, the SSI sector manufacturers should be excluded from the purview of the Drug Price Control Order, as another condition for accepting the offer, they opine.
The SSIs are also planning to suggest the government to exclude the drugs under DPCO from the proposed cap on trade margins.
CIPI leadership is at present in the process of mobilizing opinion from its various state level organizations to work out its opinion to be submitted to the government, said sources.
Those who favour accepting the proposal point out, since the leading industry organizations like IDMA and OPPI agreeing for 20 per cent voluntary reduction in margins, the SSIs will be left with Hobson's choice to follow suit. By agreeing to it, the SSIs could not only escape the proposed notification, but also similar future policy changes citing precedence.