Centre yet to decide trade margin of expensive drugs despite providing assurance in 2016

Parliamentary panel expresses displeasure over Union Ministry of Chemicals and Fertilizers not fulfilling promise to cap trade profits of expensive drugs  

By Raju Sajwan
Published: Saturday 27 May 2023
Centre yet to decide trade margin of expensive drugs despite providing assurance in 2016
Photo: iStock Photo: iStock

It is a case of promises not being kept. The Government of India is yet to formulate a comprehensive policy on the trade margin of expensive medicines despite assuring Parliament it would do so six years ago.

It was on April 26, 2016, that the Union Ministry of Chemicals and Fertilizers had admitted in response to a question that a high-level committee had proposed a graded trade margin on the price to trade of medicines.

The proposals of the high-level committee were placed on the department’s website and comments were invited from stakeholders.

The ministry’s reply was considered as a government assurance by the Parliamentary Committee on Government Assurances. The panel started seeking a response from the ministry and after not getting it, the committee submitted its report to the Lok Sabha on February 9, 2023.

In this report, the Assurance Committee strongly objected to the delay in fulfilling parliamentary assurances.

It recommended that the ministry finalise the trade margin for expensive medicines without any delay, so that medicines are available to people at the cheapest rates and at the same time, the assurance given to Parliament can be fulfilled.

What happened?

The Assurance Committee of Parliament examines the assurances and promises made by ministers in the House from time to time and submits a report on the extent to which these promises have been kept.

Once an assurance on something is given in the House, it is required that progress on what has been assured takes place within three months. If this does not happen, the concerned ministries have to seek an extension of time from the Assurance Committee.

If the ministries express their inability to fulfil those assurances, they have to request the committee to drop the assurance. The committee considers such requests and if it is satisfied with what the ministry has submitted, it approves to drop those assurances.

After April 2016, the committee continued to seek a response from the ministry on its assurance to cap trade profits on expensive medicines.

In August 2022, the Department of Pharmaceuticals under the ministry informed that the matter was under active consideration and that extensive consultations were being held with various pharma companies for the same.

The department secretary told the committee that since the subject was related to pricing of medicines, there was a lot of discussion after the comments of stakeholders.

In February 2019, a pilot project was launched on an experimental basis in which trade margin rationalisation was imposed on cancer drugs. A year later, an effort was made to know whether or not drug prices had come down after rationalisation.

The secretary claimed that the results of this one-year experiment were successful and prices of about 526 different brands of cancer drugs came down by 50 to 90 per cent.

The secretary also informed that based on this experiment, trade margin rationalisation (limiting trade profits) was implemented during the COVID-19 pandemic when the prices of medical devices such as oxygen concentrators were controlled.

Apart from this, the prices of pulse oximeters, glucose meters and BP monitors, etc, were controlled.

The positive results have been conveyed to the Union Minister for Chemicals and Fertilizers. Since it is a policy decision, a policy decision will be taken only after looking into all aspects.

The committee, however, said little has been done by the ministry towards limiting the trade benefits of expensive medicines. And the assurance that the government gave in April 2016, remains incomplete.

The committee expressed displeasure over this, saying that there is no practical reason for this delay, as different industry stakeholders have also been consulted and ministry officials themselves have said the experiments done so far have been successful.

The assurance committee also said ministry representatives have not able to give any time frame by when this assurance will be fulfilled. This, even as there is a dire need to reduce the maximum retail price of medicines to give relief to the common man.

The report was submitted in February. However, no major step has been taken by the ministry since then.

However, a report in Business Standard on May 16, 2023, shows that ministry officials have held a meeting with representatives of the pharmaceutical industry on trade margin rationalisation.

That is, the conversation is still going on. When a concrete decision will be taken on this, cannot be said.

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