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Cap profits, cut drug prices: Panel -Sushmi Dey

-The Times of India

NEW DELHI: In a move that could significantly bring down prices of expensive medicines, a high-level committee has recommended capping of trade margins for costly drugs at 35% of MRP (maximum retail price).

The recommendations - part of a report submitted by an inter-ministerial committee - have been put in the public domain by the Department of Pharmaceuticals, inviting comments on the suggestions. The committee was set up to study steep hike in trade margins and suggest ways to increase affordability of expensive medicines and medical devices across the country.

While acknowledging that trade margins fall under the domain of industry, the report highlights "consumer protection" as an area where government interventions and regulations are required, mainly in sectors like drugs or pharmaceuticals, where consumer has little choice.

"The consumer is guided by the prescription/ medicine dispensed by a doctor. He has to pay as per MRP, with or without discount... Capping of trade margins is therefore necessary," the report said.

Though the report suggests capping trade margins on expensive drugs at 35% of MRP, it also recommended a different slab for lesser priced medicines. For products priced at Rs 2 per unit, the margin may be capped at 50%.

While medicines constitute around 60% of the total out-of-pocket expenditure incurred by individuals on healthcare, trade margins contribute to almost 20-25% of a medicine's price. Official sources and experts say trade margins also create a huge disparity in prices of medicine brands available in the market. Pharmaceutical companies often use this window to push their brands through retailers as well as doctors.

The government is now trying to narrow this gap and pass on the price benefit to consumers. After incorporating suggestions, the proposal will take the shape of a Cabinet note and a final decision will be taken after that.

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