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Prices of crucial drugs likely to fall steeply

business Updated: Jan 07, 2016 00:25 IST
Himani Chandna
Himani Chandna
Hindustan Times
Drug prices

The retail price of some of the drugs is 11 times (1000%) higher than their production cost, but the government wants to lower drug prices. (Shutterstock)

Drug prices may see a sharp drop with the government planning to prune the profit margins of chemists and wholesalers, a move that will especially prove to be beneficial to those battling cancer, heart, kidney and liver illnesses.

The retail price of some of the drugs is 11 times (1000%) higher than their production cost, but the government wants to lower drug prices.

“We plan to cap traders’ margin at around 100% across drug categories — generic, branded, scheduled and non-scheduled,” minister of state for chemicals and fertilisers Hansraj Gangaram Ahir told HT on Tuesday.

“Chemists and distributors are currently charging exorbitant margins which are as high as 1000% and above… Controlling and squeezing the margins would bring down the prices…” A notification could be sent out in the next six months, he said.

Pharma firms do not offer big margins on over- the-counter drugs such as Crocin and Disprin due to competition. But, drugs for cancer, heart conditions, HIV, and liver diseases are sold at huge margins.

There is a wide difference in the landing cost — the price at which a drug is offered to a seller — and the maximum retail price (MRP) – landing cost plus the margin — of drugs for these illnesses, the government has found.