|
PHARMACEUTICAL
POLICY-2002 The basic objectives of Government’s Policy relating to the drugs and pharmaceutical sector were enumerated in the Drug Policy of 1986. These basic objectives still remain largely valid. However, the drug and pharmaceutical industry in the country today faces new challenges on account of liberalization of the Indian economy, the globalization of the world economy and on account of new obligations undertaken by India under the WTO Agreements. These challenges require a change in emphasis in the current pharmaceutical policy and the need for new initiatives beyond those enumerated in the Drug Policy 1986, as modified in 1994, so that policy inputs are directed more towards promoting accelerated growth of the pharmaceutical industry and towards making it more internationally competitive. The need for radically improving the policy framework for knowledge-based industry has also been acknowledged by the Government. The Prime Minister’s Advisory Council on Trade and Industry has made important recommendations regarding knowledge-based industry. The pharmaceutical industry has been identified as one of the most important knowledge based industries in which India has a comparative advantage. 2. The process of liberalization set in motion in 1991, has considerably reduced the scope of industrial licensing and demolished many non-tariff barriers to imports. Important steps already taken in this regard are: - Industrial licensing for the manufacture
of all drugs and pharmaceuticals has been abolished except for bulk drugs
produced by the use of recombinant DNA technology, bulk drugs requiring in-vivo
use of nucleic acids, and specific cell/tissue targeted formulations. Drugs and pharmaceuticals manufacturing
units in the public sector are being allowed to face competition including
competition from imports. Wherever possible, these units are being privatized.
The essentiality of improving
incentives for research and development in the Indian pharmaceutical industry,
to enable the industry to achieve sustainable growth particularly in view
of anticipated changes in the Patent Law; and OBJECTIVES 5. The main objectives of this policy are:- Ensuring abundant availability
at reasonable prices within the country of good quality essential pharmaceuticals
of mass consumption.
6. In order to strengthen the pharmaceutical industry’s research and development capabilities and to identify the support required by Indian pharmaceutical companies to undertake domestic R&D, a Committee was set up in 1999 by this Department by the name of Pharmaceutical Research and Development Committee (PRDC) under the Chairmanship of Director General of CSIR. 7. To qualify as R&D intensive company in India, the PRDC has suggested following conditions (gold standards) :- Invest at least 5% of its turnover
per annum in R&D, 9. The Pharmaceutical Research & Development Committee has recommended in its report, submitted inter-alia, the setting up of a Drug Development Promotion Foundation (DDPF) and a Pharmaceutical Research & Development Support Fund (PRDSF). Necessary action in this regard has been initiated. 10. As far as the question of price control is concerned, the span of control has been gradually reduced since 1979. Presently, under DPCO, 1995 there are 74 bulk drugs and their formulations under price control covering approximately 40% of the total market. The functioning of the Drugs (Price Control) Order, 1995, has brought to light some problems in the administration of the price control mechanism for drugs and pharmaceuticals. In order to review the current drug price control mechanism, with the objective, inter-alia, of reducing the rigours of price control, where they have become counter-productive, a committee, called the Drugs Price Control Review Committee (DPCRC), under the Chairmanship of Secretary, Department of Chemicals & Petrochemicals was set up in 1999, which has given its report. The recommendations of DPCRC have been examined and taken into account while formulating the "Pharmaceutical Policy - 2002". 11. It has emerged that the domestic drugs and pharmaceuticals industry needs reorientation in order to meet the challenges and harness opportunities arising out of the liberalisation of the economy and the impending advent of the product patent regime. It has been decided that the span of price control over drugs and pharmaceuticals would be reduced substantially. However, keeping in view the interest of the weaker sections of the society, it is proposed that the Government will retain the power to intervene comprehensively in cases where prices behave abnormally. 12. In view of the steps already taken and in the light of the approach indicated in the foregoing paragraphs, the decisions of the Government are detailed below :- I. Industrial Licensing bulk drugs produced by the use
of recombinant DNA technology, II. Foreign Investment III. Foreign Technology Agreements IV. Imports V. ENCOURAGEMENT TO RESEARCH
AND DEVELOPMENT (R&D) (b) With a view to encouraging generation of intellectual property and facilitating indigenous endeavours in pharma R&D, appropriate fiscal incentives would be provided. VI. PRICING In this context, it may be noted that there is no tailor made data available for the purpose of ascertaining the mass consumption nature and absence of sufficient competition with reference to a particular bulk drug. There is only one source namely, "Retail Store Audit for Pharmaceutical Market in India" published by ORG-MARG, which lists out all major brands and their sale estimates on All India basis. This publication contains data for single ingredient as well as multi-ingredient formulations. However, it does not give complete description of all the ingredients of the pharmaceutical product listed therein. Hence, there is need to obtain information in regard to composition of each brand, dosage form wise and pack wise, from various other publications / sources, viz., (a) Indian Pharmaceutical Guide
(IPG) In view of above, it would be logical to conclude that although ORG-MARG sale estimates available in regard to all single-ingredient formulations of a particular bulk drug would not yield the sale value of that bulk drug in the form of all its formulations, yet it would adequately reflect the mass consumption nature of that bulk drug in the form of single ingredient formulations, which may be used as a practical indicator for formulating the policy. The Department through NPPA, with the help of NIPER has developed the desired database for single ingredient formulations from the retail store audit data as published by ORG-MARG. On this basis, the Department proposes to undertake the exercise of identifying the bulk drugs of mass consumption nature and having absence of sufficient competition according to the following methodology: - The 279 items appearing in the
alphabetical list of Essential Drugs in the National Essential Drug List (1996)
of the Ministry of Health and Family Welfare and the 173 items, which are
considered important by that Ministry from the point of view of their use
in various Health Programmes, in emergency care etc., with the exclusion.,
as in the past, therefrom of sera & vaccines, blood products, combinations
etc. should form the total basket out of which selection of bulk drugs be
made for price regulation. (b) The total MAT value, arrived at as in sub-para (iv) above, in respect of any particular bulk drug is less than Rs.2500 lakhs (Rs.25 Crore) but more than Rs.1000 lakhs (Rs.10 Crore) and the percentage share, as defined in sub-para (v) above, of any of the formulators is 90% or more. All formulations containing a
bulk drug as identified above, either individually or in combination with
other bulk drugs, including those not identified for price control as bulk
drug, will be under price control. The Government shall, however, retain the
following over-riding power:- (b) Maximum Allowable Post-manufacturing
Expenses (MAPE) (c) Margin for Imported Formulations (d) Pricing of Formulations (ii) The present stipulation that a manufacturer, distributor or wholesaler shall sell a formulation to a retailer, unless otherwise permitted under the provisions of Drugs (Prices Control) Order or any other order made thereunder, at a price equal to the retail price, as specified by an order or notified by the Government, (excluding excise duty, if any) minus sixteen percent thereof in case of Scheduled drugs, will continue. (iii) The present provision of limiting profitability of pharmaceutical companies, as per the Third Schedule of the present Drugs (Prices Control) Order, 1995, would be done away with. However, if necessary so to do in public interest, price of any formulation including a non-Scheduled formulation would be fixed or revised by the Government. (e) Ceiling prices (f) Exemptions (ii) A manufacturer producing a drug in the country by a process developed through indigenous R&D and patented under the Indian Patent Act, 1970, would be eligible for exemption from price control in respect of that drug till the expiry of the patent from the date of the commencement of its commercial production in the country by the new patented process. (iii) A formulation involving a new delivery system developed through indigenous R&D and patented under the Indian Patent Act, 1970, for process patent for formulation involving new delivery system would be eligible for exemption from price control in favour of the patent holder formulator from the date of the commencement of its commercial production in the country till the expiry of the patent. (iv) The DPCRC has suggested that the low cost drugs measured in terms of "cost per day per medicine" may be taken out of price control. Any formulator can represent to NPPA with proof of per day cost to consumer-patient. NPPA will be authorised to exempt such formulation from price control if its cost to consumer-patient does not exceed Rs. 2/- per day, under intimation to the Government. All orders passed by the NPPA will be prospective in operation. Whenever the concerned formulator wishes to revise the price, he, before effecting any change in price, would be bound to inform NPPA and seek fresh exemption and in case the cost to consumer-patient, on the basis of the proposed revised price, exceeds beyond the limit of Rs. 2/- per day, obtain the necessary price approval. (g) Pricing of Scheduled Bulk Drugs For a Scheduled bulk drug, the
rate of return in case of basic manufacture would be higher by 4 per cent
over the existing 14 per cent on net worth or 22 per cent on capital employed.
The time frame for granting price approvals will be 4 months from the date
of the receipt of the complete prescribed information. (i) The DPCRC’s recommendations to have effective monitoring and enforcement system and to move away from the "controlled regime" to a "monitoring regime" is in the present context an extremely important recommendation as imports will increasingly compete with local drugs and pharmaceuticals in the domestic market. A new system based on solely market prices data is required to be evolved and controls applied selectively only to cases where, either profiteering or monopoly profit seeking is noticed. The National Pharmaceutical Pricing Authority, set up in August, 1997, would need to be revamped and reoriented for this purpose. It will continue to be entrusted with the task of price fixation / price revision and other related matters, and would be empowered to take final decisions. It would also monitor the prices of decontrolled drugs and formulations and over-see the implementation of the drug prices control orders. The Government would have the power of review of the price fixation/and price revision orders/notifications of NPPA. (ii) Although the prices of some bulk drugs have been steadily decreasing, yet the same do not get reflected in the retail price of non-Scheduled formulations. Also, there is need to check high margin/commission offered to the trade by printing high prices on the labels of medicines to the detriment of the consumers. It is, therefore, proposed to strengthen the National Pharmaceutical Pricing Authority by providing appropriate powers under the DPCO which would make it mandatory for the manufacturer to furnish all information as called for by NPPA and also to regulate such prices, wherever, required. (iii) The other recommendations of DPCRC like giving powers to drug control authorities to dispose of small and petty offences etc., will require an amendment to the Essential Commodities Act. This suggestion is considered not practicable. Monitoring price movement of drugs sold in the country as well as that of imported formulations will require developing appropriate mechanism in the NPPA. (i) Drug Price Equalization Account
(DPEA) VII. QUALITY ASPECTS (ii) progressively harmonize standards for clinical testing with international practices, (iii) streamline the procedures and steps for quick evaluation and clearance of new drug applications, developed in India through indigenous R&D, and (iv) set up a world class Central Drug Standard Control Organisation (CDSCO) by modernizing, restructuring and reforming the existing system and establish an effective net work of drugs standards enforcement administrations in the States with the CDSCO as a nodal center, to ensure high standards of quality, safety and efficacy of drugs and pharmaceuticals. VIII. PHARMA EDUCATION AND
TRAINING |