The determination of the central government to introduce MRP inclusive of taxes on drug labels has threatened domestic pharmaceutical industry with the possibilities of a dual price control under monitoring under Drugs Price Control Order (DPCO) and Weights and Measures Act (WMA).
While DPCO is the current law, which specifically deals with drug price monitoring, WMA is the general legislation binding on all goods where 'MRP inclusive of all taxes' are printed on labels. The change over to MRP inclusive system could technically empower both the regulatory agencies to monitor the pricing aspects of drugs, thereby creating unnecessary headaches to the industry.
Interestingly, the threat of dual pricing, monitoring and possible official harassment, was warded off by the domestic drug makers after continuous representations a few years ago, when the industry started getting notices from both the agencies on questions related to drug pricing. This happened because the labels of de-controlled drugs had printed MRP which also absorbed some of the taxes. The pharmaceutical industry had to carry out extensive consultations with the administrative ministry to make the government issue a clarification that all drugs (controlled as well as de-controlled) have been excluded from the purview of WMA. The changes can renew the old threat unless the central government issues a clarification well in advance.
"The stated opinion of Organisation of Pharmaceutical Producers of India (OPPI) has been that the government should clarify the position with regard to WMA to avoid dual inspections", Z H Charna, director, OPPI informed pharmabiz.com.
The introduction of MRP inclusive of taxes on drugs could also give rise to several other operational and procedural issues as pointed out by pharmabiz.com recently. The absence of uniform VAT implementation even in states where VAT is in place was one of the major problems highlighted. While some VAT compliant states levy VAT on MRP, some others levy VAT on wholesaler's price. With dozens of such issues, popping up, drug makers want an early solution to the visible problems before the change in uniform MRP (inclusive of all taxes) can take effect.