Pharma Pricing Watchdog Asks Drug Makers to Pass GST Sops to Consumers

The National Pharmaceutical Pricing Authority (NPPA) has asked pharmaceutical companies and medical device makers to reduce prices on products on which the GST has been lowered in order to pass on the benefit to consumers.

The drug pricing regulator noted that a change in tax rates has an impact on the fixation of maximum retail prices (MRP) of various drugs and formulations.

According to DPCO 2013, the MRP of drugs and formulations are inclusive of taxes. Therefore, any downward change in tax or GST rates should be reflected in the MRP and benefit of the reduction should be passed on to the consumers, it said.

“In view of the above, all the manufacturers and marketing companies are required to revise the MRPs of drugs/formulations on which tax/GST rates have been reduced taking into effect the revised GST rates,” NPPA said.

Recalling or re-labelling or re-stickering of the container or pack of the already released stocks in the market is not mandatory if the manufacturers are able to ensure price compliance at the retailer level through issuance of a revised price list, it said.

NPPA is mandated to fix and revise the prices of controlled bulk drugs and formulations, and to enforce prices and availability of the medicines in the country. It also monitors the prices of de-controlled drugs to keep them at reasonable levels.

The GST Council, chaired by Finance Minister Nirmala Sitharaman and comprising state ministers, on June 12 slashed tax rates on Covid-19 drugs such as Remdesivir and Tocilizumab as well as on medical oxygen, oxygen concentrators and other Covid essentials.

The finance ministry’s revenue department had on June 14 notified lowering of rates for 18 Covid-related supplies, like hand sanitiser, pulse oximeter, BiPAP machine, testing kit, ambulance and temperature check equipment.

These concessional rates would be applicable till September 30, 2021.

The Council in its June 12 meeting decided to reduce GST on Covid-19 drug Tocilizumab and black fungus medicine Amphotericin B to nil from 5 per cent.

The rate on Remdesivir and anti-coagulants like heparin was lowered from 12 per cent to 5 per cent. The Council also decided to cut the GST rate on ambulances to 12 per cent from 28 per cent.

Tax on medical-grade oxygen, oxygen concentrators (including personal imports), ventilators, BiPAP machines and high-flow nasal cannula (HFNC) devices has been reduced to 5 per cent from 12 per cent.

Also, the tax on Covid-19 testing kits and pulse oximeters (including personal imports) has been brought down to 5 per cent from 12 per cent.

Hand sanitisers, temperature check equipment, gas/electric furnaces for crematoriums will also attract a lower 5 per cent tax, from 18 per cent earlier.

On Tuesday, the finance ministry notified the concessional rate of GST that will be applicable on Covid-19 relief materials till September 30, 2021.

Also, a lower goods and services tax (GST) of 5 per cent is now applicable for work contracts for construction, repair or maintenance of electric furnaces meant for funeral, burial or cremation of the deceased. The earlier tax rate of this service stood at 12 per cent.