The Hindu : Business : Drug cos. to limit margin on generics

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Friday, Aug 18, 2006

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Drug cos. to limit margin on generics

Special Correspondent

35 p.c., 15 p.c. margins for retail and wholesale trade

NEW DELHI: Chemicals and Fertilisers Minister Ram Vilas Paswan on Thursday announced that the pharmaceuticals industry has agreed to voluntarily fix margins on unbranded generic drugs from October 2 which can reduce drug prices by about 60 per cent. A notitification on the agreement is expected to be issued shortly.

This was decided during a meeting between the government and the industry on the controversial new pharmaceuticals policy, which seeks to widen the ambit of price controls on drugs and formulations.

Speaking after the meeting, Mr. Paswan said "a healthy discussion" had been held with the pharmaceutical industry which had agreed to voluntarily impose margins of 35 per cent for the retail and 15 for wholesale sale of drugs. He said that earlier there were no limits fixed on the margins for unbranded generic drugs and the present move would help reduce the price of those drugs by as much as 60 per cent, These drugs, he said, contributed five per cent to the total pharmaceutical market in the country.) The Minister said the Government would be issuing a notification on the same as per requested by the industry. Referring to the wide divergence of views between the industry and the Government on pricing issues, he disclosed that a 14-member committee had been formed to address various issues to find a middle path. He felt that this would enable the Common Minimum Programme (CMP) of the Government to be followed, while ensuring that the growth of the industry was not hampered.

The committee is expected to examine six issues including public-private partnership to help below poverty line families, concessional prices for government procurement, competition to contain prices, and monitoring of prices to replace the price control regime.

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