It’s good news for consumers in India; the new pharma policy, which is set for Cabinet approval, will slash drug prices by almost 92 per cent.
From October 02, 2006, the new rule that caps trade margins came into effect. The new rule is expected to ultimately lead to a cut in prices of over 1,000 brands of commonly used medicines. The pharma industry has so far given a list of over 1,000 brands of ‘generic-generic’ and ‘branded generic’ drugs, whose retail and wholesale margins would be capped at 35 per cent and 15 per cent respectively. The industry has a month’s time to implement the cap on trade margins.
Two other notifications also came into effect on the same day. Now it is mandatory that drug labels be printed in English as well as in Hindi (the local language). Also consumers will now have to pay only the Maximum Retail Price (MRP) printed on the label, which will be inclusive of all taxes. Till now, taxes were levied additional to the MRP.
Making drugs affordable to the common man is a part of the government’s Common Minimum Programme. Also de-control and liberalisation led to reduction in prices in various sectors but not in the pharma sector. Trade margins in some areas of the pharma industry were unusually high. As a result, several rounds of negotiations between the industry and the government were held to resolve the issue. The new law is the fruit of these discussions.
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