Union Chemicals and Fertilisers Minister Ram Vilas Paswan has decided to ask manufacturers to reveal the production cost of a medicine on the label, in addition to the current practice of printing maximum retail price. This follows the widening gap between manufacturing costs and retail prices of drugs.
The ministry has also insisted that the MRP printed on the labels should include all taxes and it should be the final price to be paid by the consumer. The difference between wholesale and retail prices of drugs have been found to be over 30-50 times in case of many drugs.
Paswan told Business Standard, "A survey has been conducted by the National Pharmaceutical Pricing Authority of 45 drugs which reveals that if a manufacturer sells a drug to the wholesaler at Rs 1.20, its retail price ranges between Rs 25 and Rs 38. This is unfair to consumers. The retail trade is the biggest beneficiary of the unfair practice."
"I have written to the chief ministers of states suggesting abolition of sales tax on drugs. Alternatively, the sales tax may be standardised at 4 per cent, as suggested by the value added tax committee. A meeting with the chief ministers on the issue is scheduled on August 18," Paswan added.
The minister has already met several manufacturers, primarily the major ones in the Maharashtra belt, to discuss the issue. The minister was referring to an NPPA study, which reveals that while the wholesale rate of the generic version of Nimesulide (100 mg), the pain killer, is Rs 1.20 for a 10 tablets, its retail price ranges between Rs 21 and Rs 30.
The same drug, when sold as a branded generic, is priced at Rs 38.61 (Nise, a Dr Reddy's brand) for 10 tablets. A retail chemist buys Cadila Healthcare's Nimfast for Rs 1.76 and sells it at Rs 24 and Cipla's NICIP/Nimesulide 100 mg tablets for Rs 2 and sells them at an MRP of Rs 25. Similarly, a retail chemist buys Cetrizine (10 mg strip), used to treat colds, for 80 paisa and sells it at a retail price of Rs 26.