New Delhi, December 22nd, 2017- In continuation to the meeting held on December 18, 2017 between NPPA and some of the member companies of MTaI to discuss various concerns relating to Disposable Hypodermic Syringes and Disposable Hypodermic Needles.
We would like to reiterate that MTaI has been a strong supporter and endorses the recommendations made in the Report of the Committee on High Trade Margins in the Sale of Drug, 2016 prepared by Department of Pharmaceuticals (henceforth refereed as DOP report) with provision of sub-sectorial nuances.
The above mentioned DOP Report rightly indicates escalation of Trade Margin due to competitive reasons and hence leads to an escalated MRP. So instead of capping MRP, Trade Margins should be capped. Further as per the report the definition of Trade Margin is “Trade Margin is the difference between the Maximum Retail Price (MRP) and Price to Trade (PTT)”. Price to Trade as per the DOP Report, is defined as the Price at which the Manufacturer/ Importer will sell to the first point of Distribution/ Sale.
A. Trade Margin Rationalization Vs Cost Based Price Capping (over Ex-factory/ Landed Cost): Till 2012, DPCO 1995, advocated a cost based Price Capping where a
Maximum Allowable Post manufacturing Expense (MAPE) was allowed over Ex-factory/ Landed Cost, This produced a disastrous result andNational Pharmaceutical Pricing Policy 2012 (NPPA 2012) discarded cost based price capping citing the process is manipulative, manufacturing cost varies due to production process, does not have any basis for verification, new companies will not come, innovation will not happen and the same is not good for industry and Patients.
Hence, there is no need to revisit Ex-Factory/ Landed Cost based Price Capping and try to re-invent the wheel.
Further, the IPDMS data submitted in June 2017, available with NPPA and the recent data on prices published on Fortis Hospital by NPPA, clearly indicates the escalation of Trade Margin is the reason for MRP escalation. Hence, the intention of Government of India to make healthcare affordable should be done on “Trade Margin” and not on the periphery of Cost of manufacturing/ landed cost which may be disastrous as envisioned in NPPP 2012.
B. Further Cost of Medical Devices also depends on Services and support required to be provided: Like In-clinic support, Equipment support, Training of Health care professionals. These costs are not covered in the Ex-Factory/ Landing cost.
C. Mandated Traded Margin Rationalization vs Self-Regulation: Self-regulation based on decision of a small group is not sustainable. We have seen out of 26 manufacturers of Syringes and Needles only 12 companies gave “what-s-App” confirmation with already one member dissenting and others non confirming, clearly illustrates that self-regulation will not sustain.
Hence, a more nuanced and sustainable approach will be to mandate a Trade Margin by GOI with necessary changes in DPCO Para 7, considering sub-sectoral nuances, as per the provisions of “Report Of the Committee Of High Trade Margin in the Sale of Drugs” for all notified Medical Devices. We are confident that this will ensure Patient Affordability, bring in more Transparency in the pricing of Medical Devices and enable uninterrupted supply of medical devices in the country. At the same time, Industry will have the flexibility of introducing new technology and continue to invest on Skill Development of Health Care Professionals and In-Clinic Support.