NPPA to probe wide gap in wholesale, retail drug prices

The National Pharmaceutical Pricing Authority (NPPA), the government body that monitors drug prices, has decided to probe the wide gap between the retail and wholesale price of medicines.

The drug-price watchdog feels that such huge trade margins offered by the manufacturers to the trade is detrimental to the consumers.

This could emerge as one of the key factors behind pushing up the price level of medicines. The objective is also to curb the manufacturers' strategy of inducing retailers to push their products by offering high margins.

It has been brought to the notice of the NPPA that manufacturers are offering a much higher margin than the stipulated rates.

As per the Drug Price Control Order (DPCO) 1995, for scheduled (controlled) drugs, the margin to be offered to a retailer is fixed at 16 per cent and wholesalers at 8 percent.

For non-scheduled formulations, while the companies are at liberty to decide the margin, the prevailing normal trade margin in respect of some decontrolled formulations is 20 per cent for retailers and 10 per cent for wholesalers.

P V Appaji, director NPPA- ministry of chemicals & fertilisers, said in a notice seeking quotations from research agencies, "NPPA has been receiving references and complaints regarding huge margins offered to the trade by the manufacturers to the detriment of consumers. In this context, it has become necessary to have detailed data on generic sale drugs.

"It is therefore, proposed to sponsor a study on the subject. Mobile infotainment braced for takeoff proposes to examine the matter with reference to provisions of DPCO 1995."

The primary task of NPPA is to fix and revise the prices of controlled bulk drugs and formulations and to enforce prices and availability of the medicines in the country, under the Drugs (Prices Control) Order, 1995. It also monitors the prices of decontrolled drugs in order to keep them at reasonable levels.

At the same time, the organisation is entrusted with the task of recovering amounts overcharged by manufacturers for the controlled drugs from the consumers.