The National Pharmaceutical Pricing Authority (NPPA) is likely to take strict action against pharmaceutical companies for offering huge trade incentives.
The high margins being offer to traders are seen as an attempt to grab a bigger pie of the distribution system by phama companies.
According to officials with the Indian Drug Manufacturers Association (IDMA), at a meeting with pharmaceutical associations such as IDMA and the Organisation of Pharmaceutical Producers of India, Arun Kumar, chairman of NPPA, had put the onus for the situation on the manufacturers and called for self discipline among industry players. He also warned of strict action against the drug companies.
IDMA sources said the Drug Price Control Order (DPCO) 1995 specifies that the maximum allowable post-manufacturing expense (MAPE) should not be more than 100 per cent than that the prices prescribed under the DPCO.
However, trade margins and other incentives offered by pharmaceutical firms in several cases account for 500-1,000 per cent more than the cost to the manufacturer.
At the meeting, Arun Kumar said that high trade margins ultimately result in unhealthy competition among drug companies.
Recently, some of the consumer groups have also raised objections against such practices in the light of the wide disparity between the manufacturers' cost and maximum retail prices (MRP).
IDMA officials said that joint efforts from the associations, government agencies and consumer groups are required to control the situation.
For this, they said, NPPA should support drug corporates by allowing additional costs while fixing formulation prices.
On the recent price reductions in some bulk drugs and formulations, the NPPA chairman said that the prices were fixed on the basis of data obtained from companies and other sources.
