The drug manufacturers have by and large reduced the prices of non scheduled medicines by 4.58 per cent subsequent to the reduction in excise duty from 16 to 8 per cent in the last Union budget. This is clear from the scrutiny conducted by National Pharmaceutical Pricing Authority (NPPA) recently.
Going by its surveys, ground checks and price lists furnished by different companies and associations, the prices of decontrolled medicines manufactured after March 1 have come down as per the desired levels. There are not gross violations found so far in this regard. The agency also did not get any complaint of violations from the public or other agencies in both the categories, it is learnt.
The NPPA received lots of positive responses from the companies in the non-scheduled category, by cutting the prices voluntarily. The authority has been closely watching the market and the batches of medicines cleared by the Excise and Customs authorities after its notices to the industry to pass on the benefits of duty reduction.
The NPPA, which collects samples at random from the open market apart from other surveys, is sternly implementing the orders to bring down the prices. Though it would take one year for the NPPA to send notices on the grounds of overcharging to an erring company, based on the permissible ceiling of 10 per cent hike in prices annually, it is learnt to be assessing the prices month by month to find out the defaulters. Sources said that the authority would alert the customs and excise authorities if some drug company did not bring down the MRP in proportion to the cut in excise duty, so that Finance Ministry could initiate action.
As the new excise duty came into effect from March 1, NPPA had notified the prices of all formulations under the scheduled category on March 3 directing to pass on the benefits of duty cut to the consumers. In the non-scheduled drugs segment, the agency issued guidelines to the manufacturers to reduce the prices. Based on the reduction of excise duty and abatement rate from 42.5 to 35.5 per cent, the NPPA had worked out the margin of 4.58 per cent to be effected on MRP on both the scheduled and non-scheduled drugs. This was binding on all formulations except in the categories of packs where no excise duty was being actually paid.
However, according to industry estimates, the cut in excise duty could have an impact only on 10 per cent of medicines in the domestic market as the rest of the chunk originated from the excise free zones.