The new drug pricing policy under the Drug Price Control Order, 2013 covering 348 drugs and their combinations is being implemented in the country by the National Pharmaceutical Pricing Authority from last May. And NPPA has so far fixed prices of over 300 drugs in five batches under the new pricing formula which is still under dispute. As per the new pricing policy, the ceiling prices are fixed based on the simple average of the prices of all brands of that drug having a market share of at least 1 per cent. The newly fixed prices take effect after the stipulated window period of 45 days of their notification. There are reports that profit margins in case of several of these products for the pharmaceutical companies under the new ceiling prices may turn out to be very high. And in case of many other products, margins could be less as their prices are reduced. Increase in the number of drugs under new DPCO to 348 from 74 and cut in prices of many of them can correspondingly affect the overall profitability of the trade. In 45 days of notification of the new prices, the retail trade has to get the stocks with new prices printed or stuck on the packs from the pharma companies. The trade is not allowed to sell the products at the old rates after 45 days. Several pharma companies are not able to comply with this stipulation and that in effect is causing loss of business to the traders besides affecting the availability of certain drugs to the public. For retailers operating in rural and semi urban areas, getting fresh stocks with new prices is proving to be much more difficult.

The stand of the NPPA that the trade has to comply with 45 days time to sell the controlled products at new prices and lower margins from products with reduced prices has been causing some pressure on the pharmaceutical trade. The new DPCO has also reduced the margins for retailers and wholesalers. The retailers’ margin for all the scheduled products is brought down to 16 per cent on price, inclusive of excise duty. Earlier the retailers margin was 20 per cent and was on MRP excluding VAT and excise duty. The margin for stockists and wholesalers on controlled products is brought down to 8 per cent from 10 per cent excluding excise duty. The entire pharmaceutical trade has been agitating and representing to the Department of Pharmaceuticals over the issue of lower margins for some time. Reduced margins under new DPCO indeed affected the viability of the pharmaceutical trade and it is a fact that some wholesalers and retailers have shut their shops in different parts of the country. Realising the plight of the trading community, a few large and medium scale pharma companies have already agreed to maintain old margins of 20 and 10 to the traders. But most of the pharma companies are still offering lower margins notified under DPCO 2013 pushing the traders into serious financial crisis. The Department has to realize the fact that if the viability of the business is affected, the traders will be forced to close down their shops causing shortage of several essential drugs throughout the country. A situation like this should not be allowed to happen considering the worsening disease profile of the country.