The All India Organization of Chemists and Druggists (AIOCD) has come forward to strongly support the Sandhu Committee interim report recommendations on generics, though it has demanded not to disturb the existing trade pacts and margins. AIOCD has written a letter to the Sandhu Committee in this regard, it is reliably learnt.

Talking to Pharmabiz, R Srinivasan, chairman, Trade Reforms Study Committee and Drugs Regulatory Committee of AIOCD, said the association recommended that it was not averse to a ceiling of margin on generic medicines at 15 per cent for wholesalers and 35 per cent for retailers. AIOCD is neither a party for the prices of generic medicines nor for present levels of margins enjoyed on generic products. The trade contributes less than 30 per cent of generics market and the rest is sold through hospitals and medical profession.

He said the representation had made it clear they were not favouring any reduction in trade margins, and the existing pacts should be allowed to continue giving the background and rationale for fixing the present trade margin at the rate of 8 & 10 per cent for wholesalers and 16 & 20 per cent for retailers on controlled and decontrolled categories of drugs as DPCO 1995.

While margin at the rate of 16 per cent less Excise Duty was fixed under DPCO, on controlled category, margin for retailers on decontrolled drugs at the rate of 20 per cent and for stockists at the rate of 8 and 10 per cent were arrived at mutually between trade and the industry, as recommended by Dr. Kelkar, at the tripartite meeting, held prior to DPCO 1995.

Further, AIOCD suggested there was no need to mandate label conditions for minimum or maximum price, with a view to discourage unhealthy practices. Instead, AIOCD suggests the label condition should read as "Retail Price Rs..." to ensure uniformity and transparency. Trade margin should be inclusive of Excise Duty for all categories and retail price should be arrived at inclusive of all taxes to maintain the present level of margins, AIOCD suggested.

It may be noted the interim report of the Sandhu Committee had suggested bringing in separate profit ceilings for branded and generics thereby bringing down the high trade margins existing for control-free drugs. The committee had proposed 35 per cent and 15 per cent trade margins for retailers and wholesalers respectively for branded generics.

However, the union minister for chemicals and fertilizers, Ram Vilas Paswan has been in favour of allowing almost the same profit margins for both generics and branded drugs, as the 'manufacturing cost' of the drugs remains the same, and would rather see the branded and generic drugs differentially priced depending on the differences in their cost of promotion and other post manufacturing expenses but with same profits, Pharmabiz had reported earlier.