The All India Organisation of Chemists and Druggists (AIOCD) are planning to support the draft pharma policy 2006 suggestions on trade margins for generics, provided the government is ready to fix a ceiling on maximum retail price, it is learnt.

As per the policy suggestion, the government had suggested 15% margin for wholesalers and 35% for retailers for generics at present outside price control, as part of the effort to enforce control on trade margins. At present, these margins are decided between the manufacturer and the traders, and vary largely across various drugs. Generics account for 5% to 7% of the total market.

Talking to Pharmabiz, AM Mohan, president, AIOCD noted that the association would back the government's plan to fix trade margin for generics, provided the government is able to fix a ceiling on maximum retail price. The MRP also should be inclusive of all taxes, including excise duty. The suggestion is likely to be forwarded to the government within a few days.

"We are ready to accept the margin fixed by the government based on the ceiling on MRP. There is a general perception and campaign among the public that the traders are looting the consumer, not the manufacturer. In fact, this allegation is baseless and totally wrong. Let the government work out a formula and an acceptable ceiling price. If the government enforces the rule, naturally all will toe the line and the consumer will be benefited," said Mohan.

He noted that not more than 25 to 30 common molecules like paracetamol and NSIDCs come under the category and it would be easy for the government to work out a ceiling price. Already there is precedence as happened in the case of IV sets. Earlier, the IV manufacturers were charging exorbitant prices ranging between Rs 50 to Rs 70 while the manufacturing cost was around only Rs 10. The government brought IV fluids under price control and fixed a ceiling of Rs 17 for plastic IV sets and Rs 19 for glass IV sets. Such a practice could be adopted in the case of generics, said Mohan.

Mohan said that the government had accepted most of the demands of the traders. As per the policy suggestion, both branded and generics, which are under cost based price control, would be given a margin of 8% for the wholesaler and 16% for retailer. In the case of drugs not under price control, the government suggestion is to give 10% for the wholesaler and 20 % for retailer in the case of branded generics.