The National Pharmaceutical Pricing Authority (NPPA) has finally woken up to the existence of unreasonable profit margins offered to the trade on generic drug sales by the pharmaceutical industry. Bowing to the pressures from the Union Minister of Chemicals and Fertilizers, Ram Vilas Paswan, who has been vocal since Day One on the need for putting an end to this anomaly, the NPPA has decided to prepare a detailed data on generic drug sales.

The authority has invited applications from agencies who can conduct a study similar to the Retail Store Audit Report published by ORG / IMS (exclusively covering generic drug sales). This one time report is to provide annual estimates of different products marketed by various manufacturers in the domestic market.

According to NPPA, several references have been received regarding existence of wide gap between the retail price and wholesale price of some medicines. They have also come to know that such huge trade margins, offered by the manufacturers to the trade are detrimental to the interest of consumers. The authority feels that it needs to clarify this position by gathering first hand information since the market position with respect to such drugs is not officially available. The matter would be examined with reference to provisions of Drugs Price Control Order 1995.

Interested parties who can provide annual estimated sale of such drugs in the country have been asked to submit their quotations to NPPA with brief methodology and other terms and conditions.

Additional information on retail price printed on the label of the medicines would also be required. NPPA has said that the panel of retailers needs to be selected keeping such sales in view.

It is known that the minister had asked the officials to come out with clear proposals on how to tackle the issue of unreasonable price margin. While the move is not to affect the industry, any reduction on MRP may eat into the profits of the trade.