India is set to cap trade margins on medical devices, abandoning the current price control mechanism, as it seeks to curb profiteering as well as allay concerns of device makers, particularly importers of stents and knee implants, who have complained that price restrictions hurt innovation, two people aware of the matter said.
Prime Minister Narendra Modi is likely to accept government think tank Niti Aayog’s recommendation to cap trade margin at 65% for medical devices, the people said on condition of anonymity.
According to Niti Aayog’s formula, the maximum retail price (MRP) of a device will be decided by adding the trade margin to the price at the first point of sale (stockist). The trade margin is the difference between the price at which the manufacturers/importers sell to stockists and the price charged to consumers.
