The Chennai-based Pharma Care Foundation has demanded to the National Pharmaceutical Pricing Authority (NPPA) to initiate measures to provide price list in Form V to the retailers indicating retail prices so that the drug consumers in Tamil Nadu are not exploited further.

In a letter, the Foundation has urged the authority to assess the total amount collected in excess from medicine consumers in Tamil Nadu from 2006 when retail prices of all medicines were brought under uniform selling price throughout the country. After this price revision, it was mentioned on the pack/cover that retail price should not exceed “the fixed price” which was inclusive of all taxes. Pharma Care Foundation was established to create awareness about safe use of drugs and encourage ethical trade and promotional practices.

In the letter, one of the trustees of the Foundation R Sreenivasan said that till 2006 retail prices of all medicines used to be printed on the pack/cover with additional information about extra local taxes complying DPCO para 14 & 15. Until then when these drugs were sold to consumers, local taxes were not collected as taxes were not levied when they were sold to retailers.

He informed NPPA that the government of Tamil Nadu had exempted certain drugs from sales tax in 2002 and they were classified as life saving drugs. These were the drugs for treatment for tuberculosis, cancer, kidney transplants, etc. and prescribed for long term treatments.

In April last, the government of Tamil Nadu included Insulin products under VAT exempted category. Though the manufacturers and wholesale suppliers stopped collecting VAT from April 2012, these medicines continued to carry retail prices printed on the packs which were inclusive of all taxes. But the consumers and retailers of Tamil Nadu were not informed about retail prices without VAT that is applicable in the state.

In the absence of retail prices printed on the packs without taxes, exclusively for Tamil Nadu, alternative provision was made under DPCO, para 15 & 16 which states that no dealer/retailer can sell medicines at the price exceeding the prices printed on the Pack or Price List whichever is less. Therefore, it is mandatory on the part of manufacturers/dealers supplying a drug to a retailer to provide price list (Para 16 of DPCO) indicating the retail price without VAT, Sreenivasan wrote in his letter to the NPPA.

He further brought to the attention of the NPPA that while going through the retail prices of other life saving drugs, already exempted under VAT, it was found that all the life saving drugs were sold at retail prices inclusive of taxes crippling the very purpose of tax exemption. “Patients were paying taxes while the Government was losing the tax revenue. Even though the government is claiming that strict instructions are given to the concerned authorities, no solution has been made to the issue,” he pointed out.

Pharma Care Foundation wants total sales of the life saving drugs sold to patients with local tax/VAT from 2006 must be assessed from Commercial Taxes Department from the sales returns filed by manufacturers and distributors. Besides, the extent of loss to the government and the amount paid in excess by the patients must also be counted.

According to Sreenivasan, the manufacturers are supposed to provide price list in Form V to retailers under DPCO. In the absence of the price lists, both retailers and consumers are unable to find out the original prices of VAT exempted life saving drugs.

He says that the industry associations had arrived at an understanding with All India Organisation of Chemists & Druggists (AIOCD) to provide price lists through trade associations whenever new products are marketed to be circulated to retailers. But price lists for price revisions are not made available to the traders.

The manufacturers pay an amount of Rs.2500 per product per pack to each state association and Rs.25,000 to the association in Maharashtra. These payments are made under the pretext that the trade associations will circulate price lists to the members. But this is not happening as agreed between industry associations and AIOCD, Sreenivasan wrote to NPPA.