Chemist body seek old margin in new market pricing system

Here's the latest in the hot debate over drug pricing formula. Trade body All India Organisation of Chemists and Druggists has come out in favour of the proposed market-driven pricing mechanism. But only as long as margins are not compromised, reports CNBC-TV18's Archana Shukla.

Drug stockists and retailers who make up the largest pharma trade body have voted for a market-driven drug pricing formula. But they have one big concern. Currently, these players enjoy a margin of 24% on the 74 drugs that are under price control and a margin of 30% on the drugs outside this list. But with a proposal that 348 drugs come under price control, they say margins will take a hit and ask that this hit be minimised.

Ameesh Masurkar, director of AIOCD, says "Our margins should be maintained at 30%."

They say living with reduced prices of more drugs following their inclusion in the price control list will be easier if the trade margins for the controlled drugs are hiked from 24% to 30%. The trade body is also asking that market pricing be determined not using just the top-3 brands in a category, but by drawing a median of all the brands in that category.

JS Shinde, president of AIOCD says, "All 348 drugs should be brought under the price control and median of all brands should be calculated. It will be a better mechanism and lead to 13% price reduction, than just 8%."

Experts say though this may not be feasible as far as the government is concerned, trade body AIOCD, has always had its way when it comes to deciding on margins. Given the monopoly it holds on drug distribution, industry may have to toe this line after all.