The Union Ministry of Chemicals & Fertilisers may soon bring all branded generics under price control and has reached at a formula to fix a cap on maximum retail price, it is learnt.

The government is considering to impose a cap on MRP of branded generics which is likely to be in the range of 200 to 300 per cent on the stockists price. If the government is able to come up with a notification based on this formula, most of the popular cough and cold drugs and many other antibiotics numbering about 50 molecules and about 150 popular brands would be cheaper by at least 30 per cent to 50 per cent, informed sources told Pharmabiz.

The formula follows a suggestion from the trade to accept the draft Pharma Policy 2006 recommendation of 15% margin for wholesalers and 35% for retailers for generics at present outside price control, provided the government fixes a reasonable cap on prices of branded generics. As per the formula, if a manufacturer is giving the stockiest an albendazole tablet strip at a price of Rs 2, the MRP could be Rs 4 to Rs 6, instead of the current selling price of about Rs 10 to Rs 12. In the same way, a cetrizine tablet sold at 20 paise to the stockiest will not cost more than 50 to 60 paise, instead of the market price of about Rs 2 to Rs 3 per tablet.

As reported in Pharmabiz earlier, the trade had given data on the stockist price of around 50 molecules outside price control to the government, following a recent interaction with the Union Chemicals & Fertilisers minister Ram Vilas Paswan. While the government thought of bringing de-controlled generics under price control, the government's drug price watchdog National Pharmaceutical Pricing Authority (NPPA) had informed the government of its inability to collect data on such drugs on a continuous basis. While discussing the pharma policy, the trade suggested they would provide the data, if the government is ready to fix a reasonable trade margin.

Trade sources point out that branded generics are the main cause for the confusion and misunderstanding that manufacturers and traders enjoy huge margins on drug prices. It is generally regarded that they reap profits often up to 1000 per cent, in the case of de-controlled generics, which constitute around Rs.2500 crore domestic sales, contributing about 5% to 7% of the drugs market. However, 90 per cent of the branded generics come from leading drug makers, contrary to the belief that SSIs, who normally market through the Propaganda Cum Distribution (PCD) route, are selling such drugs and are making huge profits.

As per the Pharma Policy 2006, the government had suggested 15% margin for wholesalers and 35% for retailer 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.