Attempt of the Department of chemicals to evolve a mechanism to impose a ceiling on trade margins to reduce prices of decontrolled drugs may not materialize that easily. The responses from various industry associations are vastly divergent and may not lead to any consensus in the near future.

While the Government wanted to fix trade margins on generic-generic and branded generics at 15 per cent for wholesalers and 35 per cent for retailers, some associations called for raising the margin upto 75 per cent in comparison to the brand leader, even as the National Pharmaceutical Pricing Authority (NPPA) preferred more consultations with the department on chalking out a feasible and fool-proof mechanism.

Over and above the conflicting stands, the industry bodies bargained for more time and insisting on further talks on the matter. As a consensus is hardly possible now, the Department now has to wait for long to take the industry along with it or should work out a formula in consultation with the NPPA, it is learnt.

The All India Organisation of Chemists and Druggists (AIOCD) has supported the proposed trade margin limits, but wanted the government to hold detailed discussions with the various stakeholders instead of implementing it unilaterally.

SME Pharma Industries Confederation (SPIC) suggested that 300 per cent mark-up on ex-factory price of a medicine be provided which would cover all expenses including proposed ceiling of trade margins. ``For calculation of ex-factory price of a medicine, the price of raw materials should be monitored every six months and published and manufacturers may be requested to file returns of their ex-factory prices on that basis for examination by the NPPA. For this purpose up-to-date custom data available may be utilised. Prices should be fixed with 300 per cent mark up on the ex-factory price reported by a company to the NPPA on the basis of price of raw materials published by the government on six monthly or a yearly basis,'' the SPIC has conveyed to the Government.

The other way out is that the price of generic-generic and branded generic medicines may be fixed at 50 per cent of the price of brand leader in that group. Brand leader may be identified on the basis of maximum turnover in its group as reported in ORG, a SPIC leader said. The Confederation of Indian Pharmaceutical Industries is also in favour of 300 per cent mark-up on ex-factory prices or fixing prices at 75 per cent of the brand leader.

However, Indian Drug Manufacturers Association (IDMA) has strongly opposed any sort of cost-based price control. Claiming that high percentage of trade margins was only in respect of a few medicines, IDMA advised the government to impose ceiling on trade margins on a molecule to molecule basis, instead of clamping it in general.
"In some cases, trade margins are lower than the proposed limits and if the proposal is implemented, manufacturers will be forced to offer higher trade margins and in that case prices of medicines may increase. The MRP in respect of generic-generic should be fixed at 70 per cent of brand leader identified on the basis of its turnover as per ORG,'' it suggested.

It is learnt that the NPPA is against the 300 per cent mark-up on ex-factory cost or fixing of price at 70 per cent of the brand leader. If brand leader was identified on the basis of turnover as reported in ORG may lead to anomalies in prices since in some cases there is wide gap in the ex-factory costs and MRP printed on the label. Besides, new medicines are being introduced at very high prices, according to the NPPA.

The Government was planning to impose ceiling on trade margins after the voluntary cut in the MRP promised by the companies on 886 drugs. Most of these medicines were either not available at reduced prices or their production has been discontinued, the government sources said.