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NPPA allows cos to hike retail price of trade margin-rationalised medical devices as GST concession ends

Gireesh Babu, New Delhi
Monday, October 4, 2021, 08:00 Hrs  [IST]

With the Goods and Services Tax (GST) concession rates for the Covid-19 pandemic-related medical devices such as pulse oximeter and temperature checking equipment's ended on September 30, the National Pharmaceutical Pricing Authority (NPPA) has granted permission to the manufacturers of oxygen concentrators and five other related medical devices to increase the retail price accordingly. The decision is for the medical devices for which it has regulated prices through Trade Margin Rationalisation earlier this year.

The NPPA issued an order in the backdrop of withdrawal of GST rate concession for these medical devices, following which some of the manufacturers and marketing companies raised queries on its impact on the regulated price.

Industry sources criticised the Centre's decision not to extend the concession rate, pointing out that the government itself says that the second wave of Covid-19 is still going on and there are speculations about a third wave of the pandemic in the future.

NPPA, through an order in June 3, 2021, has fixed the retail price of oxygen concentrators with a trade margin not exceeding 70 per cent, in view of the extraordinary circumstances arising due to Covid-19 pandemic that has resulted in volatility in the maximum retail price of the product in the market. The ministry of health and family welfare has also recommended such a price regulation from the NPPA.

Similarly, it has also fixed the trade margin under the Trade Margin Rationalisation (TMR) programme at 70 per cent for pulse oximeter, blood pressure monitoring machine, nebuliser, digital thermometer and glucometer, which are also non-scheduled medical devices, through an order on July 13, 2021.

The GST Council meeting in June has reduced the rates of pulse oximeters including personal imports, hand sanitiser, temperature checking equipment’s and others from 12 and 18 per cent respectively to five per cent. Similarly, the oxygen concentrator GST rates were reduced from 12 per cent to five per cent. While in the latest meeting held in September, the GST Council extended the reduced rates for the Covid-19 related medicines and added new medicines into the concession list, it did not mention the rates of these medical devices. This is expected to bring back the GST rates of these products back to 12 and 18 per cent, whichever was existing prior to Covid-19.

“…all the manufacturers and marketing companies may revise the MRP, up to the extent of increase in GST rate, of the medical devices subject to actual payment of GST,” said an office memorandum issued by NPPA on Thursday. The manufacturers and marketing companies are required to issue revised price lists to all the participants in the supply chain besides submitting the price list in Form VI to NPPA. These medical devices shall be monitored as per the regulations in Drug Price Control Order, 2013, it added.

The prices should be revised with reference to the detailed guidelines issued by NPPA on April 13, 2021. The guideline suggests that the manufacturers are responsible to comply with notified prices from date of notification in sale of all available stock including pre-manufactured batches of concerned formulation for which ceiling price or retail price has been fixed or revised by the NPPA. However, it added that recalling or re-labelling or re-sticker it on the label of container or pack of released stocks in the market prior to the date of notification is not mandatory, if the manufacturers are submitting revised price lists, and are able to ensure price compliance at the retailer level.

The Authority has later stated that the decision on the five devices has resulted in reduction of up to 90 per cent of MRP of 526 brands up to 88 per cent price reduction. It has also said that when the Trade Margin of oxygen concentrator was capped in June, 54 per cent of prices came down and there was no issue in availability.

Former NPPA chairman Shubhra Singh, in July, said that if prices come down by Rs. 5,000-15,000 for each device, it will be helpful for people both in hospitals and in home management. It is a win-win situation for manufacturers, traders and customers.


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