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This story is from March 9, 2006
Govt set to crack whip on pharma firms
Govt has decided to crack the whip on pharmaceutical companies, which are unwilling to bring down the price of anti-cancer and anti-AIDS drugs.
MUMBAI: The ministry of chemicals and fertilisers has decided to crack the whip on pharmaceutical companies, which are unwilling to support its initiative to bring down the price of anti-cancer and anti-AIDS drugs.
The government may bring the shortlisted 69 anti-cancer and 29 anti-AIDS medicines under the National List of Essential Medicines to regulate their price.
"We are meeting pharmaceutical companies producing these drugs. If the situation demands, we may bring these drugs under regulated price control,"said GS Sandhu, joint secretary, ministry of chemicals and fertilisers.
"So far, we have convinced dealers and retailers to bring down their margin. Dealers have agreed to bring down margins to 8% from 10% and retailers have also agreed on 16%, instead of the current 20%. The talks with the manufacturers are on and we will have a formal meeting next week,"Sandhu added.
The ministry of chemicals and fertilisers is working to exempt the drugs from all duties, including customs, VAT, octroi and excise.
So far, the Centre has exempted 10 anti-AIDS and 14 anti-cancer from excise, customs and countervailing duties in the current budget, apart from retailers' and wholesalers' agreement to reduce margins.
"Transaction costs add up to 60% of the base price of these drugs. The cost includes, excise, sales tax, octroi, turnover tax and trade margins,"said Ranjit Shahani, president, Organisation of Pharmaceutical Producers of India (OPPI).
"For global companies, there are no margin on these drugs. After import of these drugs, they also have to incur marketing expenses to promote these drugs,"he added.
According to OPPI, since expenses vary for each company, the government should talk to each company individually.
As of now the companies seem to be in no mood to relent. An MNC spokesperson said that the cost of drugs form only 15% of the total treatment cost in cancer and therefore, the government should look elsewhere to reduce costs.
Says an official: "We are still negotiating with the government and nothing is finalised yet."
The government may bring the shortlisted 69 anti-cancer and 29 anti-AIDS medicines under the National List of Essential Medicines to regulate their price.
"We are meeting pharmaceutical companies producing these drugs. If the situation demands, we may bring these drugs under regulated price control,"said GS Sandhu, joint secretary, ministry of chemicals and fertilisers.
"So far, we have convinced dealers and retailers to bring down their margin. Dealers have agreed to bring down margins to 8% from 10% and retailers have also agreed on 16%, instead of the current 20%. The talks with the manufacturers are on and we will have a formal meeting next week,"Sandhu added.
The ministry is in talks with various stakeholders for reduction of these drug prices since January. The proposed plan is to reduce cost of these drugs and also look after their distribution.
The ministry of chemicals and fertilisers is working to exempt the drugs from all duties, including customs, VAT, octroi and excise.
So far, the Centre has exempted 10 anti-AIDS and 14 anti-cancer from excise, customs and countervailing duties in the current budget, apart from retailers' and wholesalers' agreement to reduce margins.
"Transaction costs add up to 60% of the base price of these drugs. The cost includes, excise, sales tax, octroi, turnover tax and trade margins,"said Ranjit Shahani, president, Organisation of Pharmaceutical Producers of India (OPPI).
"For global companies, there are no margin on these drugs. After import of these drugs, they also have to incur marketing expenses to promote these drugs,"he added.
According to OPPI, since expenses vary for each company, the government should talk to each company individually.
As of now the companies seem to be in no mood to relent. An MNC spokesperson said that the cost of drugs form only 15% of the total treatment cost in cancer and therefore, the government should look elsewhere to reduce costs.
Says an official: "We are still negotiating with the government and nothing is finalised yet."
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