Indian syringe manufacturers to voluntarily reduce trade margins to 75% on ex-factory prices

The decision to self regulate has been conveyed to all the domestic manufacturers through a letter by All India Syringes and Needles Manufacturers Association (AISNMA) in the first ever step taken by any Medical Device Manufacturing Segment

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New Delhi: The All India Syringes and Needles Manufacturers Association  (AISNMA) has decided to voluntarily cap trade margins to maximum of 75 percent on ex-factory prices (including GST) latest by 26th January 2018.

The statement issued by the AISNMA mentioned that the decision is in the background of the various new stories of patients being overcharged and specially convened meeting with NPPA on 18th December 2017, wherein National Pharmaceutical Pricing Authority (NPPA) advised the syringe manufacturers to either voluntarily limit the margins and MRP or the government would have to step in to regulate them.

The decision to self regulate has been conveyed to all the domestic manufacturers through a letter by AISNMA and in the first ever step taken by any medical device manufacturing segment.

To address the serious issue of unreasonable huge margins charged by hospitals on medicines and consumables, the NPPA had earlier called for a meeting with the syringe manufacturers, where the NPPA chairman sought details of market dynamics, product categorization, margins in various market segments and sought suggestions from manufacturers.

As per the AISNMA, the NPPA had advised the syringe manufacturers that they could either voluntarily limit the trade margins on MRP or the government would have to step in to regulate them and cap prices.

NPPA had conducted a probe into the billing practices of Fortis Hospital in connection with a 7-yr-old girl’s death. It found that the hospital had charged up to 1737% margin on medical consumables. Over 900% was charged on some non-scheduled drugs and up to 300% on many scheduled (under price control) drugs.

In the meeting on Monday, the representatives of Indian Manufacturers along with Mr Rajiv Nath, President, AISNMA met NPPA and suggested to Govt. a cap of 75% on trade margins between ex-factory or import prices and the MRP could be considered to cut down the unreasonable huge margins charged by hospitals on medicines and consumables.

They further recommended that this could also be considered for other medical consumables/disposables, other than implants, notified as drugs.

“Hospitals are buying medical devices from those manufacturers who keep high MRP of their products despite low Ex factory prices. This is nothing but profiteering at the cost of patients, this practice is putting a lot of pressure on other manufacturers as market players to do the same,” said Mr Rajiv Nath, President, AISNMA. “While we had been passing on benefits of improved efficiencies in manufacturing as lowered Ex-Factory or discounted Ex-Factory Prices over the years regretfully in most cases the Hospitals were pocketing the advantage and not passing on the benefit to end Consumers so though Hospitals could exercise the option of selling below the MRP, very few did”.

IMA’s President rightly remarked that the root cause of problem is high MRP and we realized that we ourselves needed to correct this, Mr Nath added.

“Hailing Govt’s dialog to self regulate the margins and MRP on syringes to reasonable levels, we have taken immediate cognizance and decided to reduce trade margins to maximum of 75% on Ex-Factory Prices (including GST)” said Mr Vimal Khemka, Secretary, AISNMA.

“We hardly make 10% Margin and our Industry should not be blamed for inflated MRP that we are forced to keep to satisfy Hospital Buyers,” said a Syringe Manufacturer, Ashish Jain.

“This is a landmark initiative by NPPA and by AISNMA which will help benefit the common people at large and simultaneously boosting the idea of domestic manufacturing, reduce motivation to Reuse Syringes, increasing the market size and correct market dynamics to a cost based competitive procurement by Hospitals. We sincerely thank the Government for initiating this dialog with us towards making these essential products available across the country at affordable prices,” concluded Mr Nath.