GST Impact On Pharmaceutical Industry- Cancer Drugs To Become More Affordable

GST Impact on Pharmaceuticals


The Goods and Services Tax (GST) is all set to roll out from 1 July, 2017. While the GST at 12% is a single taxation system which will reduce the number of indirect taxes, the pharmaceutical industry had feared a substantial rise of at least 80 per cent in drug prices.

However, the National Pharmaceutical Pricing Authority (NPPA) has stepped in, and allayed all fears by making certain that medicines remain affordable even after the introduction of GST across the country from the 1st of July. NPPA chairman Bhupendra Singh said, “To facilitate smooth implementation of GST for companies, we have worked out the provisional ceiling prices of 761 formulations.”

The NPPA pricing regulator has released a notification, and according to it the revised ceiling prices of 761 drugs which are part of the Schedule 1 of the Drug Price Control Order (DPCO) 2013 have come down.

All pharmaceutical firms have been directed to go through the list and inform the NPPA by June 29 if any correction has to be made.

According to the Indian Drug Manufacturers Association (IDMA)  President, Deepanth Roychowdhury, “Ceiling prices of scheduled formulations have come down and are on expected lines.”

The NPPA has followed the following procedure in keeping a check on the prices of drugs without including the GST element:

  • The excise duty element and VAT from the existing ceiling price of the drugs have been deducted.
  • Where a scheduled drug has already been exempted from excise duty the ceiling price has not been revised.
  • Certain life-saving drugs are in the 5 per cent tax slab under the new regime.
  • The prices of stents have not been increased under the new regime.
  • Prices of immunosuppressants like cyclosporine and drugs to treat leukaemia remain unchanged.
  • Prices of medicines including Erythropoietin, Filgrastim and Hepatitis B vaccine will not see any change.

However, the pharmaceutical companies are concerned that while the ceiling price has come down for these drugs, adding the GST element to the new ceiling price will make medicines slightly more expensive than their current rates.

With the base price of the drugs having been lowered, even with the roll out of the GST, the price increase will remain marginal which will come as a solace to the pharma industry. In fact, as per the NPPA notification prices of the following drugs will reduce by a few hundred rupees:

  •  Cancer – Anti-cancer drug Bortezomib has been brought down to Rs 11,160 from Rs 11,637 for a packet of injection powder. The ceiling price for a pack of Docetaxel will come down to Rs 10,326.94 from Rs 10,767.88 at present. Gemcitabine price will come down to Rs 4,813.94 per pack from Rs 5,019.49. Trastuzumab injection pack used for the purpose of treatment of Breast Cancer will see a substantial decrease from Rs 56,912.83 to Rs 54,582.25 after July 1.
  • HIV- The combination drugs of Tenofovir (300mg), Lamivudine (300mg) and Efavirenz (600mg), Lamivudine and Zidovudine as well as the price of a tablet of HIV treatment drug Darunavir have been reduced substantially.
  • Epilepsy drug Levetiracetam price has also been reduced.
  • The price of drug Metformin administered to the Diabetes patients has also come down.
  • Medicines for Crohn’s disease, Pneumonia, Skin-related ailments will also see a marked reduction in price.
  • Regular medicines like paracetamol have also seen price cuts.


Read More About  GST

What is GST?
How to register for GST?
Various Goods and Services Tax forms
GST Rule Changes
Implementation of the GST in India
Costlier Or Cheaper Under GST?