Domestic medical device industry has asked the National Pharmaceutical Pricing Authority (NPPA) to rationalize trade margins from first point of sales (POS) that is when GST is charged initially in case of imported medical device industry and for indigenous ones based on ex-factory discounted prices.
This representation comes in the wake of NPPA recently capping prices of Pulse Oximeter, Blood Pressure Monitoring Machine, Nebulizer, Digital Thermometer and Glucometer in wake of increase in demand due to pandemic through a Gazette Notification dated July 13, 2021.
“On many medical devices the trade margins over import landed prices have been found to be 10-20 times higher upon investigation. We had been seeking the Maximum Retail Price (MRP) to be capped at 2 to 4 times the imported landed price which is the first POS and not the price to distributor (PTD) which can be the second POS if the government wishes to protect consumers while seeking to arrest the increasing import bill which crossed Rs 45000 Crore last year,” according to Rajiv Nath, Forum Coordinator, Association of Indian Manufacturers of Medical Devices (AiMeD).
NPPA has collected data regarding the trade margins for these five medical devices from the manufacturers, marketers, importers and noted that margins ranging up to 709% from PTD to MRP level have been reported.
Industry has questioned that NPPA has not shared study outcome of trade margin based on import landed price with industry stakeholders. If that data is available then there’s more transparency.
Further, a medical device manufacturer says, “The dominant Importers lobby that controls 85% of market will be applauding this notification while the struggling Make in India lobby will be desolate at once again being put at a competitive disadvantage. It seems the Government has misplaced ideas of protecting consumers while discouraging domestic manufacturing and is against the Prime Minister’s Vision of an Atmanirbhar Bharat. India will continue to be import dependent on medical devices with such superficial policies that seem to be consumer friendly but in long term may deny access to homegrown medical technologies.”
NPPA has capped the price of five medical devices namely Pulse Oximeter, Blood Pressure Monitoring Machine, Nebulizer, Digital Thermometer and Glucometer under Trade Margin Rationalisation (TMR) approach by invoking the provisions of Paragraph 19 of the Drugs Prices Control Order (DPCO) – 2013.
The move is aimed at making these medical devices affordable through price control as per a prescribed formula in the wake of increase in demand due to pandemic.
The formula prescribed for the Maximum Retail Price (MRP) is Price to Distributor (PTD) + (PTD x TM) + Applicable GST, where TM = Trade Margin not exceeding 70%.
It has also directed manufacturers to fix MRP and submit the information containing details of PTD, Retail Price, existing and revised MRP, by using the formula prescribed to NPPA by July 20, 2021.
The revised prices shall come into effect from July 20, 2021. The price so fixed shall remain in force up to January 31, 2022 or until further orders, whichever is earlier. State Drug Controllers shall ensure compliance of this Order.
The manufacturers not complying with the MRP so computed as and notes specified shall be liable to deposit the overcharged amount along with 15% interest per annum (PA) from the date of increase in price in addition to penalty upto 100% of the overcharged amount under the provisions of the DPCO -2013 read with Essential Commodities (EC) Act, 1955.
No manufacturer, distributor, retailer shall sell these five medical devices to any consumer at a price exceeding the revised price, as submitted in Form-V, or price indicated on the label of the container or pack thereof, whichever is less.
As per Para 25(3) of DPCO 2013, every retailer, dealer, hospital and institution shall display price list and the supplementary price list, as furnished by the manufacturer, on a conspicuous part of the business premises in a manner so as to be easily accessible to any person wishing to consult the same.