Union Chemicals Ministry is likely to announce the deadline for implementation of uniform maximum retail price (MRP) inclusive of taxes on drugs as October 2, 2006. The extension of the date by three months from the proposed date of July 1 would be finalized after a meeting with the stake holders, especially the drug traders represented by All India Organisation of Chemists and Druggists (AIOCD). The meeting is to be convened within two weeks, it is learnt.

The extension has become inevitable after the ministry failed to find an effective solution to the concerns voiced by industry associations like Indian Drugs Manufacturers Association (IDMA) and Organisation of Pharmaceutical Producers of India (OPPI). Lack of uniform VAT system across the country, existence of local taxes and levies of varied nature etc were some of the issues highlighted by the industry. The extension is also necessary as it is too late to notify a deadline as close as July 1 for a major nation-wide-change like MRP inclusive of taxes on drugs. Once the meeting happens, the ministry may come out with a notification declaring the change to be effective from October 2, 2006.

According to AIOCD sources, the organization is likely to accept the ministry proposal if it would help allay all the present apprehensions within the industry. The executive committee meeting of AIOCD scheduled for June 26 at Khandala would discuss the fall out of the ministry proposal before resorting to direct action, they informed.

The Chemicals Ministry had recently come out with a "proposed notification" meant to amend Drug Price Control Order 1995 for printing MRP inclusive of all taxes on the labels of medicines. The ministry had also invited comments on its proposed draft before it can be notified. The proposed Drugs (Prices Control) Amendment Order, 2006 talked about changes to be made in Paragraph 14 of DPCO 1995 to insert terms like "maximum retail price" and "inclusive of all taxes".

It should be noted that the Pronab Sen Committee, which looked into the pricing aspects of medicines last year, had emphasized the need for MRP inclusive of all taxes. The committee had noted that under the provisions of Packaged Commodities Rules1977, all commodities sold in pre-packaged form are required to have a label declaration of retail sale price in the form of MRP inclusive of all taxes and wanted it to be made applicable to medicines also.

The draft Pharma Policy 2006 (Part A) also makes specific mention about MRP inclusive of taxes. "DPCO requires 'Retail Price not to exceed Rs……local taxes extra,'' so that basic MRP is strictly followed and only actual taxes, which vary, are charged extra. However, in practice, this often leads to wrong calculations, extra charges and debate between the dealer and the consumer. From the consumer's point of view it is most desirable that the total price should be absolutely clear on the pack and uniform all over India. It has now been decided that the concept of MRP inclusive of taxes would be made applicable to medicines sold in the packaged form" It has stated. The draft policy states that the introduction of VAT in several states at the uniform rate of 4 per cent (with remaining states to follow suit ) and CST likely to be made 2 per cent for the time being and soon to be abolished time has now come to introduce MRP inclusive of all taxes to drugs and medicines . It had also hinted that the industry should be given three months' time to switch over to the new system.