The proposed move of the central government to amend Drug Price Control Order 1995 for printing MRP inclusive of all taxes on the labels of medicines with effect from July 1, 2006 may face many procedural and operational hurdles for implementation, according to industry and trade sources.

While the intent of the ministry is to ensure uniform prices for drugs throughout the country, industry sources cite that at present VAT is not implemented in states like Uttar Pradesh and Tamil Nadu. Another issue is octroi charged by some states. In Mumbai, the Brihanmumbai Municipal Corporation (BMC) charges 2 per cent octroi on medicines. Industry sources fear unless these anomalies are rectified, the manufacturers will have to suffer losses from the sale of drugs in these states.

Another issue likely to be raised by the industry is the timeframe required for disposing the existing stocks of medicines. The Government's proposal notification has clearly stated that the changes are required only for batches of drugs manufactured after July 1, 2006. Trade sources cite that normally manufacturers make stocks for only one month. It would be possible for the Government to collect data on the existing stocks of medicines and another three month's time could be given for selling the existing stocks at retail shops, they suggest.

"It is a welcome move by the Government to bring in MRP inclusive of taxes as it is a consumer friendly initiative. However, the Government should consider the problems the industry will have to face in implementing MRP inclusive of all taxes. States like UP and Tamil Nadu is yet to implement Value Added Tax. Octroi is charged in Maharashtra. The industry should not suffer by this" notes Ajit Dangi, director general, Organisation of Pharmaceutical Producers of India (OPPI).

"This has been a long pending demand of the trade and we are happy that the industry also has cooperated in realising MRP inclusive of taxes. This will bring in uniform drug prices in all the states. It will also eliminate the complexities in calculating the price of drugs and consumers will be benefited. Since Tamil Nadu and UP also has agreed to implement VAT from October, the difficulties faced by the industry will be for only three months. The Government could give another three months for disposing off the stocks based on the data provided by the industry and trade" said A M Mohan, president, All India Organisation of Chemists and Druggists (AIOCD).