NPPA caps trade margin for 5 medical devices used in COVID management at 70 percent

The revised prices of the five medical devices would be effective from 20th July.

The Authority invoked extraordinary powers under the Paragraph 19 of DPCO, 2013, to put a cap on trade margin of five medical devices. This came after the issue was discussed at the 90th Authority meeting under the DPC0, 2013, held on 12th July, 2021, under the Chairmanship of Shubhra Singh.

The apex drug price regulator, on July 13 tweeted, "NPPA brings pulse oximeter, glucometer, BP monitor, nebuliser and digital thermometer under trade margin rationalisation. Caps Margin at Distributor @70%."

The move comes as a part of an initiative taken by governments at Central and State level to deal with the pandemic effectively and efficiently as all the aforementioned medical devices are essential for diagnostic purposes, in general and specially for COVID management.

These devices are widely used in hospitals for early detection of COVID symptoms as well as for self diagnostics at home by the patients. With the cases continuing under the COVID 2.0 pandemic in the country, demand for these medical devices has gone up considerably, the Authority observed.

"NPPA is entrusted with the mandate to ensure the availability of essential drugs at affordable prices, and keeping in view the evolving Covid 2.0 pandemic, it is necessary to regulate the prices of these medical devices." NPPA said.

Also Read: Eight Medical Devices Including CT, MRI, X-Ray Notified As DRUGS By Health Ministry

Earlier it had capped the price of select Anti-cancer drugs, and vide its Notification S.O. 2161 (E) dated 3rd June 2021, capped the price of Oxygen Concentrators through 'Trade Margin Rationalisation Approach', which resulted in significant savings to the consumer and rationalization in the price of these drugs and medical devices.

After noting that the data collected from the manufacturers/marketers/importers pointed out that the existing trade margins on the five medical devices ranged up to 709 per cent from price to distributor to MRP level, NPPA deemed necessary to regulate the trade margin on these medical devices in order to keep them affordable throughout the changing scenario of the Covid pandemic.

The order so issued read,

" In the exercise of the powers vested by the Government of India in the Ministry of Chemicals and Fertilizers, having been satisfied that in view of the extraordinary circumstances in public interest, as explained above, the Government, hereby, invokes the provisions of Paragraph 19 of the DPCO, 2013 to regulate the price of these five medical devices, namely, (i) Pulse Oximeter, (ii) Blood Pressure Monitoring Machine, (iii) Nebulizer, (iv) Digital Thermometer, (v) Glucometer under "Trade Margin Rationalisation Approach".

The order added,

"By invoking Paragraph 19 of DPCO, 2013, the Government hereby puts a cap on the trade margin of (i) Pulse Oximeter, (ii) Blood Pressure Monitoring Machine, (iii) Nebulizer, (iv) Digital Thermometer, (v) Glucometer at first point of sale of product."

Further, the government has directed manufacturers to fix the Maximum Retail Price (MRP) as per the specified formula:

Maximum Retail Price = Price to Distributor (PTD) + (PTD x TM) + Applicable GST , Where TM = Trade Margin not exceeding 70%.

Accordingly, in the exercise of the powers vested by the Government of India in the Ministry of Chemicals and Fertilizers under Paragraph 9(2) of the DPCO, 2013, has directed manufacturers to submit the information in Annexure-I containing details of PTD, Retail Price, existing and revised MRP, by using the formula prescribed in Table-A, and other details for (i) Pulse Oximeter, (ii) Blood Pressure Monitoring Machine, (iii) Nebulizer, (iv) Digital Thermometer, (v) Glucometer to NPPA by 20th July 2021.

Annexure-I

Format for submission of Revised MRP by the Manufacturers / Importers.

1. Name and address of the Manufacturer/Importer/Distributor:

2. Name and address of the marketing company, if any:

3. Mobile Number:

4. E-mail id:

*Formula to arrive MRP = [Price to Distributor + (Price to Distributor x TM)] + Applicable GST.

Where TM = Trade Margin not exceeding 70%

The information furnished above is correct and true to the best of my knowledge and belief.

(Signature and stamp)

Place:……………………………… Name of authorized person

Date:………………………… Designation

Name of the organization

The order further added,

a) Price to Distributor (PTD) = Sum of Net sales realization of product by the manufacturer as the case may be for the sales during the year from 01.4.2020 to 31.03.2021 / Total Quantity of such product sold during the year from 01.4.2020 to 31.03.2021

b) Net sales are to be worked out considering all sales, namely, Distributors / Stockiest / Institutional / Hospital / Government / E-commerce / E-Pharmacy / Free Samples (incl. under Patient Aid Programme). The quantity to be considered in Note (a) above, shall exclude the quantities, which are not connected with the sales such as products given under Corporate Social Responsibility activity, for regulatory approvals, and to provide hands on training to health care professionals.

c) In case, the medical device has been launched after 31.03.21, MRP will be fixed as per the formula at Table-A based on current PTD.

d) The revised prices shall come into effect from 20th July, 2021.

e) The manufacturers of these five medical devices, namely, (i) Pulse Oximeter, (ii) Blood Pressure Monitoring Machine, (iii) Nebulizer, (iv) Digital Thermometer, (v) Glucometer selling at price higher than the Maximum Retail Price so computed as per Table-A, shall revise the prices downward, not exceeding the Maximum Retail Price computed by using above formula.

f) All the existing manufacturers of (i) Pulse Oximeter, (ii) Blood Pressure Monitoring Machine, (iii) Nebulizer, (iv) Digital Thermometer, (v) Glucometer having MRP lower than the Maximum Retail Price so computed as per Table-A, shall maintain the existing MRP, subject to the provisions of Para 20 of the DPCO, 2013 and not increase the price on the basis of formula as per Table-A.

g) The manufacturer shall submit a price list in Form–V as per Paragraph 25 of the DPCO, 2013 to NPPA and submit a copy to State Drug Controller and Dealers by 20th July 2021.

h) As per Para 25(3) of DPCO 2013, every retailer, dealer, hospital and institution shall display price list and the supplementary price list, as furnished by the manufacturer, on a conspicuous part of the business premises in a manner so as to be easily accessible to any person wishing to consult the same.

i) The manufacturers not complying with the Maximum Retail Price so computed as per Table-A and notes specified hereinabove shall be liable to deposit the overcharged amount along with 15% interest p.a. from the date of increase in price in addition to penalty upto 100% of the overcharged amount under the provisions of the Drugs (Prices Control) Order, 2013 read with Essential Commodities Act, 1955.

j) No manufacturer, distributer, retailer shall sell these five medical devices, namely, (i) Pulse Oximeter, (ii) Blood Pressure Monitoring Machine, (iii) Nebulizer, (iv) Digital Thermometer, (v) Glucometer to any consumer at a price exceeding the revised price, as submitted in Form-V, or price indicated on the label of the container or pack thereof, whichever is less.

k) The price so fixed shall remain in force up to 31st January 2022 or until further orders, whichever is earlier.

l) State Drug Controllers shall ensure compliance of this Order. The manufacturers / Dealers / Hospitals / Medical Institutions shall assist the State Drug Controllers in verifying the compliance to this Order. Any violation of this Order is required to be brought to the notice of NPPA.

m) The manufacturers of these five medical devices, namely, (i) Pulse Oximeter, (ii) Blood Pressure Monitoring Machine, (iii) Nebulizer, (iv) Digital Thermometer, (v) Glucometer shall submit quarterly details of products manufactured / imported, sold and exported, if any, in the prescribed format.

To view the official order, click the link below: