761 drugs price declined as NPPA revised the ceiling piece exclusive of applicable GST rates
The National Pharmaceuticals Pricing Authority (NPPA) has recently revised the ceiling price of 761 drugs in order to ensure a smooth implementation of GST for pharma companies. The revision has reduced the price of 761 drugs under GST.
NPPA in its 48th meeting had decided to notify the ceiling price of schedule formulations, exclusive of applicable GST rates, after the GST rates were notified by the government. In the case of scheduled formulations where excise duty is levied on MRP, the NPPA has removed the excise duty and revised ceiling price exclusive of applicable GST rates are calculated by applying the factor of 0.95905 to the existing notified ceiling price.
In case of scheduled formulations, which are exempted from excise duty, no multiplication factor would be applicable. The existing notified ceiling price would be the ceiling price exclusive of GST rates as applicable. In case of non scheduled formulations, para 20 of DPCO, 2013 needs to be followed irrespective of any changes in the tax rates or tax structure. The company will have no option but to absorb the net increase, if any, in the incidence of tax on implementation of GST within the permissible limit of 10 per cent for increase of MRP compared to MRP of preceding 12 months, clears NPPA in its earlier notification.
GST which will be applicable from July 1, 2017 has included the pharma products in the 12 per cent bracket, certain life-saving medicines in 5 per cent and contraceptives, human blood and its components will reportedly be tax free.