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GST rates unlikely to impact essential drugs till August

By Deepika

New Delhi, July 2: The goods and services tax is unlikely to be a very bitter pill for the pharmaceutical industry, as patients can continue to buy essential medicines at the pre-GST MRP, till new batches arrive at pharmacies.

While around 80 per cent drugs were put in the 12 per cent GST bracket (up from the current 9 per cent slab), implying a sharp rise in prices, the National Pharmaceutical Pricing Authority (NPPA) has stepped in to keep medicines affordable after the GST roll-out on July 1.

Image for representation only

The new stocks with revised MRPs are expected to hit the market from August.

The NPPA notification would mean Insulin and critical-care products for kidney ailments and cancer, as well as anti-retrovirals, whose prices have been revised downwards, may be among the first to be rolled out.

Essential medicines (those under the National List of Essential Medicines, or NLEM) are taxed at 12% under GST, and insulin and critical-care products at 5%.

With the implementation of GST, the tax liability of companies will increase, which will lead to a marginal 2.29% spike in prices of NLEM drugs, as calculated by the drug price regulator, National Pharmaceutical Pricing Authority. Many life-saving drugs are part of the NLEM, which comprises around 25-30% of the pharma retail market (by value), reports Times of India.

The NPPA has also finalised post-GST ceiling prices of NLEM medicines, and prices of approximately 78% of all actively-used and traded drugs in the country remaind unaffected after GST rollout from July 1.

The authorities have also informed patients to report issues with availability of drugs via WhatsApp on 9695736333.

Pharmaceuticals have started replenishing medicines wherever the stock is low or over. Supplies are expected by August with the revision in prices.

Apart from 17 days of stockist inventory, there is two weeks of retail inventory so there is no possibility of drug shortage, and all brands of medicine are available in adequate quantities, Ameesh Masurekar, director, AIOCD Awac was quoted as saying.

Although, hospital services are exempt, the outsourced services, aesthetics and outpatient pharmacies are subject to GST imposition. The 5% rate on life-saving drugs that treat diseases like malaria, HIV-AIDS, tuberculosis, and diabetes is expected to marginally increase the prices of medicinal drugs, leading to a domino effect in the cost structures for the healthcare sector.

OneIndia News

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