The Department of Chemicals & Petrochemicals has relaxed some of the provisions in the Government order mandating to print MRP for drugs since 2nd October, 2006. The relaxations include extension of the deadline to March 1, 2007 in the case of imported formulations, allowing manufacturers to print different prices for different regions depending upon local tax structure, allowing abbreviations on labels etc.
In a clarification circular brought out this week based on the issues raised by various stakeholders, the Government said looking at the genuine problems of some imported formulations, further extension is being considered for these medicines for a period of six months. The rule shall become applicable on imported medicines with effect only from March 1, 2007. Pharmaceutical associations like the Organization of Pharmaceutical Producers of India (OPPI) had pointed out that most of its members import formulations from abroad and changes in labels have to be done in the manufacturing locations abroad and therefore require more time.
Commenting on the confusion on whether a uniform MRP should be printed for whole of the country, the circular clarified that though it would be desirable to have a uniform MRP for whole of the country, the manufacturers could fix different prices for different regions depending upon local tax structure of that particular region.
In the case of VAT exempted drugs, unless there is a common list of VAT exempted life saving drugs across all the States, the industry will not be able to implement a uniform MRP in respect of such life saving drugs, which are exempt in one or more states, but not exempt in others. Companies have the option to either have different MRPs for different States by including the applicable tax rates or to have a uniform MRP by including the minimum tax rates.
It also said the abbreviations, as permitted under "Standard of Weights and Measures (Package Commodities) Rules 1977" for other products would be allowed in case of medicines also which are governed by DPCO, 1995. This will allow the industry to print abbreviations like "MRP" inclusive of all taxes" instead of "Maximum Retail Price" "inclusive of all taxes," especially in the case of small packing.
The Government also said that the practice of computing margins to trade exclusive of taxes would continue to be the same for products priced at MRP inclusive of all taxes. The circular said trade margins would be computed on the MRP (net of applicable margins) excluding excise duty & other taxes that may form part of MRP.
The circular also said NPPA will continue to fix prices of medicines as at present, without the element of tax. Necessary amendments have already been incorporated in the notification.
The circular also said the manufacturers would be allowed to print MRP inclusive of all taxes for medicines manufactured prior to 2nd October, 2006 and the notification is being suitably amended. The notification is applicable for the batches manufactured on or after 02.10.06 and there is no question of withdrawing medicines manufactured prior to 02.10.06 from market. These can be sold till the stocks get exhausted.
The circular said manufacturers shall have to calculate and indicate MRP (inclusive of all taxes) for both Scheduled and non-Scheduled medicines. These should be clearly printed on the labels. The break-up of MRP has been given in the notification and Form-V has also been amended. Necessary amendments have been incorporated in the notification regarding data to be submitted to NPPA in Form - III, IV and V. From the notification it is clear that NPPA will continue to fix and notify the ceiling, non-ceiling prices for Scheduled formulations on same lines as is being done at present. The onus to work out Excise Duty, Sales Tax or Value Added Tax (VAT) and resultant MRP will be on the manufacturers, said the circular.