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The myth and malaise of MRP
The practice of huge mark up in MRP is common for a vast range of consumer products. Thus a vital measure to protect consumers by labeling the maximum retail price has suffered wild distortion.

We come across corporate hospitals routinely charging the MRP for drugs and pharmaceutical products. As bulk buyers they should enjoy fat discounts on buying these products. But when a patient is under the surgeon’s knife,  he is not in a position to look into this breezy practice of pharmacies. 

Two years ago we reported on a curious practice: manufacturers and marketers of fireworks mentioning MRP at very high rates and then offering massive discounts thereon. TUCS, a cooperative retailer, displayed rates that showed massive discounts of 75 per cent and more. If the MRP of a thousand-wala cracker was Rs 800 per box, TUCS offered it at Rs 200.

 

Mark up, mark up and mark up

Marketers explained the reason for the mark up at the levels of the wholesaler, dealer and retailer: there are numerous licences required for setting up  a shop. This is a great opportunity for demanding hefty bribes. Traders also referred to the high cost of transportation of these inflammable materials and the bribes that had to be paid at different check posts.


I cite the instance of firecrackers. But the practice is common for a vast range of other consumer products. Thus a vital measure to protect consumers of exploitation by labeling the maximum retail price has suffered such wild distortion that affects the consumer gradually.


Until 1976 even this protection of MRP was not available. It should go to the credit of the brilliant administrator

T A Pai, who as Minister of

Industry and Consumer Affairs, promulgated the packaged commodities regulation order. This made it mandatory to provide a range of information on labels


printed over packaged products. Despite protests, Pai pushed it through helped by the fact that it was Emergency rules those days. The Indira Gandhi government just passed the act.


The labels list the contents, the ingredients, date of manufacture and expiry date and maximum retail price among other things. Of course, there were several instances where goods are sold beyond the expiry date or the MRP is tampered.

 

Handsome discounts by e-marketers…

There is a welcome change after the advent of E-marketing. Amazon changed the rule of the game with aggressive marketing. Today, large E-marketers like Flipkart and Snapdeal  vie with one another in coming out with special offers. These large marketers, on the American experience, sell products through courier deliveries and in the process save costs on brick and mortar outlets.


Yet such comfort is not available for a range of other consumer products like drugs and pharmaceuticals where it is routine practice to charge the MRP. It has also become increasingly difficult to tackle the issue of arbitrary pricing. This has resulted in a huge increase in prices. The price of band-aid has risen from a few paisa a few years ago to Rs 2.75 today. For a variety of other simple gadgets like thermometers, blood test and pressure measuring equipment, the pricing appears arbitrary with no relation to the cost of manufacturing.


We also come across corporate hospitals routinely charging the MRP for drugs and pharmaceutical products. As bulk buyers of these products they would be enjoying fat discounts. But such discounts are not passed on to the patient and the hospital has the breezy practice of charging the MRP.


In recent months E-marketing of drugs is gaining currency. This received an impetus post demonetisation was introduced. Apollo Pharmacy is offering discounts of 10-20 per cent. But members of All India Organization of Chemists & Druggists (AIOCD) is waging a war with online sale of drugs. AIOCD  with five lakh members across the country, threatens to go on nation-wide strike. While efforts must be taken to ensure delivery on genuine prescriptions, the blind opposition of a measure of immense consumer benefit is unfair.    – SV            

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