Tag Archives: dpco 2013

Why the government wants to cap trade margins on drugs and why it shouldn’t

11 Mar

The abnormally high margin that trade channels are believed to earn on a relatively small portion of the Indian pharmaceutical market has become the latest painpoint for the central government. The  margins in question even cross 1000 per cent in some cases, according to a new report by a committee set up by the Department of Pharmaceuticals (DoP) in the Union Ministry of Chemicals and Fertilizers to investigate the matter.

The committee has now recommended capping trade margins on not just such meds which go by the moniker of ‘trade generics,’ but all drugs.

A cap on trade margins is not only difficult to implement but will do precious little to lower the price that the consumer pays. It might even lead to disputes and litigation between companies, trade, and the government. Besides, trade generics constitute not more than 15 per cent of the overall pharmaceutical market – and that is an outside estimate. Yet, this is being done in the name of the consumer. Continue reading

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