A media report claimed last week that three major pharma industry associations have asked their member companies to limit the trade margins on generics at 15 per cent to wholesalers and 35 per cent to the retailers from October 2. This is what the industry representatives had assured the Union chemicals minister, Ramvilas Paswan in one of their meetings with the minister in Delhi. Generic formulations are those products using chemical names of the molecules and are promoted by the pharma companies directly through trade. These products are also essential drugs used mainly by weaker sections of the society. Generics are far cheaper for the companies than the branded drugs as there is no cost of brand promotion. Worldwide, generics are sold far below the branded products but in India generics are sold almost at the same price of branded products and the entire cost advantage of the manufacturers goes to the trade as margins. Paswan has been raising the issue of huge trade margins ranging from 500 to 2000 per cent offered by the pharma companies for generics in various forums. His ministry had made some investigations into this practice last year by collecting actual figures of sales between the companies and trade. The minister, then, had appointed a committee under G.S. Sandhu, joint secretary, department of chemicals, to make appropriate recommendations in this regard. The Sandhu Committee then, after a thorough probe into generic trade, proposed a sharp cut in trade margins on the basis of their actual manufacturing and promotion costs. Now, even if the industry chooses to implement the lower margins for generics, its impact on drug prices should be marginal as these products constitute hardly 3 to 4 per cent of the total pharmaceutical market. The larger issue here, therefore, is how to control the huge margins offered by the companies for decontrolled drugs which constitute 70 per cent of total market. A large number of essential drugs are currently outside price control. The trade margins for drugs, outside price control, are agreed upon by the industry and trade and there is no cap on these margins. Even for the 74 drugs which are under price control, much higher margins are being offered by the industry as there is no restriction on paying a higher margin than what is fixed for controlled drugs. Besides this, there are a number of units in excise free states which are straightaway violating the ceiling prices fixed by the NPPA and offering 100 per cent and more margins to the trade outside these states. NIPER has confirmed such price violations in excise free states and has reported to the Paswan's ministry. If this is the state of price and margin regulation in this industry, the offer of margin control on generics by the pharma companies is nothing but a joke.