Trade Margin Capping Needed To Make Healthcare Affordable For All

The Government is expected to walk the fine line between making healthcare affordable and promoting Make in India or Make outside India, writes Rajiv Nath, Forum Coordinator of Association of Indian Medical Device Industry (AIMED) for Elets News Network (ENN).

- Rajiv Nath

Domestic medical device industry hails Government’s move to rationalise and cap trade margins in medical devices to achieve the overall goal of affordable healthcare for all by making all critical and life saving medical devices available at affordable prices.

However, we suggest that the Government should tread the fine line carefully between affordability and boosting domestic manufacturing or suffocating domestic medical device industry and allowing importers to create artificial inflation.

If the Government plans to bring down prices of commonly used medical devices by capping the trade margin at 30 percent on the first point of sale as reported in media, then it is unrealistically low and won’t allow delivery to last mile.

It is pertinent that the Government brings down trade margins from irrational to rational level to reduce overall healthcare cost. However, to lower it to irrationally low level may be disadvantageous to the patients and consumers.

Medical devices usually go through with different hands along the supply chain route from a distributor to a wholesaler to a retailer and a hospital before they reach a consumer in a distant village.

Each point in supply chain incurs various costs such as freight, inventory carrying, rental, salaries, marketing and sales overheads and service and statutory expenses of compliance and then there is also a need of net profit by a reseller.