Profit margins in Medicines must be printed on the Medicines being sold

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Profit margins in Medicines must be printed on the Medicines being

sold

Lok Sabha

Profit margins of drug manufacturers, wholesalers and retailers are

included in the maximum retail price (MRP) printed on the medicines

being sold in the country. Government has made it mandatory to print

MRP inclusive of all taxes on medicines manufactured indigenously

after 2.10.2006 and 1.3.2007 for imported medicines vide its

notification SO No. 946(E) dt. 26.6.2006. The MRP also includes the

taxes levied by the Central as well as State Governments. The Central

Government has levied 16% Excise duty on medicines. Almost all State

Government have levied 4% VAT except Assam & Meghalaya who have

levied 6% VAT on medicines. As a result no Pharma company can charge

any additional tax after MRP. The maximum percentage of profit margin

allowed is 100% of manufacturing price of medicines on the scheduled

formulations to take care of post manufacturing expenses and profit

margins of manufacturers, wholesalers and retailers. This is in

accordance of para 7 of Drugs (Prices Control), Order, 1995 (DPCO,

95). No percentage of profit is fixed for Non-Scheduled formulations

under DPCO, 95.

The Draft National Pharmaceutical Policy, 2006 proposes to streamline

the system of trade margins. In respect of Generic medicines trade

margin of 35% to retailers and 15% to wholesalers is proposed while

in case of branded Generic medicines it is 20% for retailers and 10%

for wholesalers. For Scheduled drugs, it is proposed that the trade

margins would be 16% to retailers and 8% to wholesalers. The Cabinet

considered the Draft National Pharmaceutical Policy in its meeting

held on 11.1.2007 and referred it to the Group of Ministers (GOM).

The first meeting of the GOM was held on 10.4.2007. No time frame has

been set for finalizing the National Pharmaceuticals Policy

This information was given by the Minister of State for Chemicals &

Fertilisers Shri B.K. Handique in a written reply in the Lok Sabha

today.

http://pib.nic.in/release/release.asp?relid=30628