Imported drugs get six-month extension for MRP compliance

NEW DELHI: It will take six more months before you see the maximum retail price (MRP), inclusive of local taxes, printed on consumer packs of imported drugs. The chemicals ministry has decided to give a six-month extension to all drug importers to comply with the system of printing MRP inclusive of local taxes, reports in

The norm was to come into force on October 2 this year, but will be delayed by six months now. The new deadline for compliance would be March 1 next year. The government will notify the ceiling and non-ceiling prices of price controlled drugs and the industry has to add the total tax burden to arrive at the MRP to be printed.

The levies include excise duty, value added tax (sales tax in the case of UP and Tamil Nadu) and other local levies like octroi.

So far, companies used to print the MRP fixed by the drug price regu-lator National Pharmaceutical Pricing Authority (NPPA) and suffix it with a ‘local taxes extra’. This has been a major cause of confusion for consumers and of inconvenience to the chemist. The new norm of printing MRP inclusive of local levies is applicable to both price con-trolled and control-free medicines.

The ministry has also addressed in a circular the issue of different ap-plicable MRPs for the same medicine in different states as some states have exempted medicines from VAT, while some others have given a tax holiday.

Companies have to either print separate prices for those states or print a uniform MRP applying an average of the tax burden. The government has also clarified that stocks manufactured before October 2, ’06, need not be withdrawn as the norm is applicable only to medicines manufactured on or after that date.

The new norm, however, would not result in any increase in trade margins. The present way of computing trade margins as a percentage of MRP excluding excise duty and other taxes would continue.