AIMED Applauds Delhi Govt, IMA for advisory on Capping of Profit Margin

An expert committee set-up by the Delhi govt. has suggested capping of the profit margin for drugs and devices at a maximum of 50% above the procurement cost or the manufacturers (MRP) price, whichever was lower.

Rajiv Nath, Forum Coordinator of Association of Indian Medical Device Industry (AiMeD)  said “We applaud the steps taken by Delhi Govt and the advisory given by IMA to consider capping of profit margin to 50% over the procurement cost of a hospital.”

A nine-member committee was set up five months ago to suggest the scope of profit margins on medicines and consumables. The committee comprised of members of Delhi Medical Council, Indian Medical Association and some bureaucrats in the health department. It is also reported that Delhi government will issue a policy based on the recommendation of the committee in next few days.

“This will result in consumers access to medical devices at prices below inflated MRP. If this happens game over to artificially keep MRP at exhorbitant levels by any of us manufacturers and importers as an inducement to push medical devices sales to hospitals.” said Mr. Nath.

Of course lobbying forces for high priced  medical devices suppliers will be worried as they will loose the competitive advantage of inducing procurement bodies based on higher margins as the cap becomes a leveller . This will bring back the focus to cost reduction and operational efficiencies by hospitals to remain competitive and profitable.

Let’s hope other State Health Ministers follow this lead by Delhi Govt and NPPA and DoP consider this as a possible reform in the regulations for Price Controls of Medical Devices.