NPPA justifies 70% trade margin on oxygen concentrators

The National Pharmaceutical Pricing Authority (NPPA), after examining data provided by manufacturers and importers, has found that importers of oxygen concentrators have a trade margin as high as 198 per cent while domestic manufacturers have a trade margin as high as 90 per cent on their concentrators. The NPPA had data from 89 manufacturers and importers of oxygen concentrators for 179 products.

In a recent authority meeting, the NPPA also deliberated and justified its stance of fixing the margins at 70 per cent. The minutes of the authority meeting noted, “The data submitted by 89 manufacturers and importers of Oxygen Concentrators for 179 products shows that for the imported goods, Trade Margin range for PTD-MRP is 7 per cent-198 per cent and in case of domestic manufacturers, the range is 12 per cent-90 per cent. Simulation analysis shows that at a 100 per cent Margin on PTD (Price to Distributor), 16 out of 179 products will be impacted. At 70 per cent Margin on PTD, total 59 out of 179 products reported by manufacturers will be impacted.”

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The authority said that if the margin was capped at 70 per cent, it would boost the government’s ‘make in India’ and help the consumer. It also clarified that price at which the distributor purchases the product is the trade margin. “The Authority further noted that in DPCO, 2013 the word ‘margin’ was used to determine Retail Price from Price to Retailer. Thus, Authority accepted the term ‘margin’ to calculate MRP on PTD,” it was noted in the minutes of the meeting.

Public health experts have not been happy with the way trade rationalisation has been done for oxygen concentrators. They say that just fixing trade margins will not help consumers. “Prices have been artificially inflated for these medical devices and there have been great fluctuations in the price during the second wave. Using the correct starting point for capping margins is absolutely critical so that there is no undue profit-making, especially in a health emergency,” says Malini Aisola from the All India Drug Action Network (AIDAN).

“Yet, NPPA has only capped trade margins and not applied a ceiling price cap,” adds Aisola.

Pharmaceutical pricing regulator National Pharmaceutical Pricing Authority (NPPA) fixed the trade margin for oxygen concentrators at 70 per cent on Friday. In its order, the NPPA has stated that the trade margin rationalisation approach has been taken keeping in mind the need for oxygen due to the pandemic, invoking Para 19 of the Drug Price Control Order (DPCO) 2013.

This allows the NPPA to fix prices of drugs and devices in the public interest. Further, the NPPA has decided to monitor oxygen concentrators manufactured, imported, sold, or exported.

This cap will be in force till the end of November this year.

Before this, one of the instances, where the NPPA used para 19, was to cap the prices of orthopaedic knee implants.