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BusinessPost GST, drug firms must cut prices: NPPA

Post GST, drug firms must cut prices: NPPA

Published: 16th Jun 2021 11:41 pm

New Delhi: Drug pricing regulator NPPA has asked pharmaceutical companies and medical device makers to reduce prices on products on which the GST has been lowered in order to pass on the benefit to the consumers. In a notification, the National Pharmaceutical Pricing Authority (NPPA) noted that a change in tax rates has an impact on the fixation of maximum retail prices (MRP) of various drugs and formulations.

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As per DPCO 2013, MRP of drugs and formulations are inclusive of taxes. Therefore, any downward change in tax or GST rates should be reflected in the MRP and benefit of the reduction should be passed on to the consumers, it noted. “In view of the above, all the manufacturers and marketing companies are required to revise the MRPs of drugs/formulations on which tax/GST rates have been reduced taking into effect the revised GST rates,” NPPA said.

Recalling or re-labelling or re-stickering on the label of the container or pack of the already released stocks in the market is not mandatory if manufacturers are able to ensure price compliance at the retailer level through issuance of a revised price list, it noted. The NPPA is mandated to fix and revise the prices of controlled bulk drugs and formulations, and to enforce prices and availability of the medicines in the country.

It also monitors the prices of de-controlled drugs in order to keep them at reasonable levels. The GST Council, chaired by Finance Minister Nirmala Sitharaman and comprising state ministers, on June 12 slashed tax rates on Covid-19 drugs such as remdesivir and tocilizumab as well as on medical oxygen, oxygen concentrators and other Covid-19 essentials.

The finance ministry’s revenue department on June 14 notified the lower rates for 18 Covid-related supplies, like hand sanitiser, pulse oximeters, BiPAP machine, testing kits, ambulances and temperature check equipment. These concessional rates would be applicable till September 30, 2021.

The Council in its June 12 meeting decided to reduce GST on Covid-19 drug tocilizumab and black fungus medicine Amphotericin B to ‘nil’, from 5 per cent. The rate on remdesivir and anti-coagulants like heparin was lowered from 12 per cent to 5 per cent.

The Council also decided to cut the GST rate on ambulances to 12 per cent from 28 per cent. Tax on medical-grade oxygen, oxygen concentrators (including personal imports), ventilators, BiPAP machines and high-flow nasal cannula (HFNC) devices has been reduced to 5 per cent from 12 per cent.

Also, tax on Covid-19 testing kits and pulse oximeters (including personal imports) has been brought down to 5 per cent from 12 per cent. Hand sanitisers, temperature check equipment, gas/electric furnaces for crematoriums will also attract a lower 5 per cent tax, from 18 per cent earlier.

On Tuesday, the finance ministry notified the concessional rate of GST that will be applicable on Covid-19 relief materials till September 30, 2021. Also, a lower goods and services tax (GST) of 5 per cent is now applicable for work contracts for construction, repair or maintenance of electric furnaces meant for funeral, burial or cremation of the deceased. The earlier tax rate of this service stood at 12 per cent.

PHDCCI seeks support for domestic vaccine industry

New Delhi: Industry body PHD Chamber of Commerce and Industry (PHDCCI) has urged the government to play an enabler’s role for the vaccine sector, and sought clarity on the status of the segment under the ambit of the production-linked incentive (PLI) scheme announced for the pharmaceutical sector. In a letter to the Prime Minister’s Office, PHDCCI President Sanjay Aggarwal noted that the PLI documents do not give information regarding specific allocation of the sector which is critical for the country amid the ongoing coronavirus pandemic.

He noted that although vaccines have been put under the biopharmaceuticals category, there is not much clarity as to how vaccine manufacturers could benefit from the PLI scheme. “This pandemic has taught us the importance of vaccines and has highlighted the capability of the Indian vaccine manufacturing industry to shoulder not only this pandemic but any health related calamity that the world can potentially face. Therefore, it is critical for the Government of India to support this industry through initiatives like PLI, to enable this industry in maintaining its global leadership,” Aggarwal noted.

He added that the government announced a PLI scheme for promotion of domestic manufacturing of critical key starting materials (KSMs)/ drug intermediates (DIs) and active pharmaceutical ingredients (APIs) with an investment outlay of Rs 6,940 crore and a separate PLI for pharmaceuticals with an incentive outlay of Rs 15,000 crore. “Despite a total allocation of Rs 21,940 towards the pharmaceuticals sector, the allocation to Indian vaccine manufacturers has not been clear,” Aggarwal said.

He noted that it is critical that the central government plays the role of an enabler for this sector. “We would urge the Department of Pharmaceuticals (DoP)…to appropriately consider inclusion of vaccines under the eligible product category while formulating detailed guidelines for the scheme,” he noted.

Vaccine manufacturing, being a highly capital-intensive industry, continues to face limitations in process optimisation, adequate funds, lack of adequate logistics and cold chain infrastructure, Aggarwal said. “High cost of raw materials, resources required for continuous R&D (research and development) and state-of-the-art technology are other key bottlenecks faced by the manufacturers,” he added.

Aggarwal noted that governments across the globe have been supporting various initiatives in vaccine development and manufacturing. “For instance, the European Commission launched the biggest R&D innovation programme, Horizon 2020, under which 650 million euro out of the total allocation of 80 billion euro has been allocated towards vaccination research and innovation,” he said.

Elaborating on the importance of the sector, Aggarwal said India is among the global leaders and is currently exporting vaccines to as many as 150-170 countries worldwide. India contributes 40-70 per cent of the WHO’s demand for Diphtheria, Pertussis and Tetanus (DPT) and Bacillus Calmette-Guerin (BCG) vaccines, and 90 per cent of the demand for the measles vaccine. The country has also initiated Vaccine Maitri, a humanitarian initiative to provide Covid-19 vaccines to as many as 95 countries so far, he added.

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