In the wake of a demand for 10% margin price raised by the pharmaceutical distributors and wholesalers of Tamil Nadu (members of TNPDA and TNCDA), the former director of the TN Drugs Control Administration, Dr. J. Selvaraju said there is no specified margin money or fixed rate of percentage for the wholesalers as per DPCO 2013.

Similarly, the retailers cannot ask for more than 16% margin as the DPCO does not allow anybody to increase the percentage above 16%. While they are receiving 16% for new products, nowhere it is specified a margin rate for other drugs. Most of the drugs fall under the category of ‘new drugs’. So, the retailers’ margin should be fixed to 16% only, he said.

“The wholesalers are not entitled to ask for a fixed percentage of margin money. As per DPCO 2013 there is no percentage mandated for wholesalers”, said Selvaraju whose specialization for research was ‘Pharmaceutical Marketing and Prospects of Indian Pharma Companies’. Currently he is consultant for pharma manufacturing and marketing companies in Chennai.

According to him, the drugs price control order DPCO 2013 fixes the ceiling price and margin to the retailers as 16%. It is not mentioned there whether it is the minimum rate or the maximum rate. This means that a retailer is entitled to receive only 16% profit margin for new drugs. But, for other drugs other than new products, the retailers are now getting around 20% margin. The DPCO does not fix any set of percentage for the wholesalers, he told Pharmabiz.

Section 7 of the DPCO (margin to retailer) says, “while fixing a ceiling price of scheduled formulations and retail prices of new drugs, 16% of price to retailer as a margin to retailer shall be allowed”, he quoted.

Demand by the TNPDA and TNCDA members for increase in profit margin has recently become a central concern in the pharma manufacturing and trade industry in Tamil Nadu and it is a key subject of debate among the traders. The manufacturers association, TN IDMA, is silent over the issue and not any comment has come out from the office-bearers yet.  The small scale manufacturers are having membership with the marketers’ association, CIPMMA, which supplies medicines to the entire state.

Further commenting on the issue, Selvaraju has pointed out that the Union government is trying to reduce the cost of medicines in various forms like capping of MRP on drugs, medical devices including cardiac stents and orthopaedic implants. Further, the government is stepping ahead for better healthcare measures by starting medical stores for generic medicines (Jan Aushadhi Stores) on affordable rates. The government has also directed the medical practitioners to prescribe drugs only in their generic names. All these measures are to reduce the cost of medicines and thereby to help the people. But, the traders’ demand for increase in margin money will create opposite result and put the poor patients in trouble.