NEW DELHI: A cap on trade margins at 30% for medical devices is being considered, as India and US move ahead to sign a mutually acceptable trade deal this month, people in the know said.
The government seems to have found a middle ground between demands of the domestic industry and global MNCs investment.
While it has decided to abandon the price cap regime for medical devices (as in the case of stents and knee implants), a limit of 30% trade margin on medical devices is likely to be approved soon, the same people said.
A series of meetings were held between drug pricing regulator National Pharmaceutical Pricing Authority (NPPA), Niti Aayog, Department of Pharmaceuticals (DoP) and the ministry of commerce over the last few days and “the government is likely to replicate the formula it applied for reducing cancer drug prices, which means capping trade margins at 30%,” said one of the persons.
The government is of the view that the maximum retail price (MRP) of a device should be decided by adding the trade margin to the price at the first point of sale (stockist).
The first point of sale is yet to be decided”, added another person. The trade margin is the difference between the price at which the manufacturers / importers sell to stockists and the price charged to consumers.
With this, the government seeks to abandon the current price control mechanism, as it allays the concerns of device makers, particularly importers of stents and knee implants, who have complained that price caps hurt innovation.
The US has since then been pressing India not to extend price caps on other medical devices.
US trade representative Robert E Lighthizer will be in India in the second week of February to finalise the trade deal.