The National Pharmaceutical Pricing Authority (NPPA), under the Department of Pharmaceuticals, has clarified that drug manufacturers need not recall or re-label medicines already released in the market before September 22, the implementation date for new GST rates.
The Authority clarified that pharma companies can instead comply by ensuring revised pricing is reflected at the retailer level.
“All manufacturers/marketing companies selling drugs/ formulations shall revise the Maximum Retail Price (MRP) of drugs/formulations (including medical devices). The manufacturers/marketing companies shall issue revised price list or supplementary price list to dealers and retailers for display to consumers, and to State Drug Controllers and the Government, reflecting the revised GST rates and revised MRP,” NPPA’s Office Memoranda said.
At the 56th meeting held earlier this month, the GST Council revised rates on several categories of goods and services, including pharmaceuticals. The revised GST rates reduced tax on various pharma products from 12% or 18% to 5% or even zero per cent.
Notably, the Retail Distribution Chemists Alliance (RDCA) also raised serious concerns over the financial burden the transition will place on pharmaceutical distributors and retailers.
In a detailed letter to pharmaceutical industry partners, RDCA president Sandeep Nangia has appealed for urgent, practical support to ensure a smooth shift and uninterrupted supply of medicines.
The RDCA also expressed concern over the handling of returns saying any product returned after September 22 will be credited at the new 5% GST rate, even if the retailer originally paid 12% or 18%. This discrepancy could result in significant unrecoverable losses for dealers, further straining their operations, it added.