India Implements New Maximum Retail price System for Drugs

The Indian government has issued an order to change the Drugs Prices Control Order (1995) that will change the new maximum retail price (MRP) for drugs. Pharmaceutical companies will now have to comply with the new MRP system as of July 2006—all drugs produced on or after July 1, 2006 will be affected. The new price system will take into account all taxes, and pharmaceutical companies will now be required to sell all drugs as per the MRP.

Currently, drugs are labeled as “retail price” with “local taxes extra.” Lack of uniformity in sales tax throughout various states has been a problem, and more and more states have begun to use value-added tax schemes. Consumers will benefit from the new system since it will eliminate miscalculation or payment of extra charges.

The Indian government has plans to allow a five-year exemption from price control for domestic new drug research and development. Product and process patents obtained through domestic research will also be eligible for exemption. Other initiatives include a proposal to lower excise duties to 8% in those states where it is 16% to level the playing field for drug manufacturers in different states.

In addition, the government has issued a directive suggesting that pharmaceutical companies begin printing drug labels in both English and Hindi to decrease the likelihood of patients to make mistakes when taking their medication.