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RF_DR_35_SUDHA
Explanatory Note on
Peoples Charter for
Withdrawal of the Government from Health Care
A series of policy changes by the government -- including some that arc on the anvil — will have
a direct effect on access to medical care in the country. The Insurance Regulatory Authority Act,
for example, is designed to facilitate the introduction of private health insurance, and also to
allow entry to MNCs in the health sector. It, moreover, allows the government to legitimise its
withdrawal from investing in health care.
Public expenditure on health care has been a major casualty of the process of economic
liberalisation and structural adjustment policies. Central allocation to State governments for
health has declined, thereby forcing many States to procure loans from lending agencies such as
the World Bank. Such loans are invariably associated with conditionalities that are directed at a
transformation of the public health system. Such a transformation is sought to be achieved
through mecahisms such as introduction of user charges, purchase of medicines through global
tenders, farming out of primary health care centres to NGOs — in others words, mechanisms for
privatisation of the public health infrastructure and delivery system.
In many States we already witness the shift of administrative responsibilities in health care
delivery to NGOs and other private organisation, thus minimising the role of elected
representatives. This will further facilitate the privatisation of the health infrastructure.
Implementation of such prescriptions, put forward by the World Bank, has led to utter chaos in
the public health infrastructure in countries in S.America and Africa — a fact that is admitted to
even by the World Bank.
Investment by the government on health care (less than two percent of the budget) in India is one
of the lowest in the world. Per capita investment in health is only Rs.57 a year and 87% of health
care costs are paid for privately. Notwithstanding this the government has not only reduced
expenditure for disease eradication programmes, it has also reduced the number of programmes
covered. We see today a resurgence of communicable diseases, and while old diseases like
tuberculosis, malaria, kalaazar flourish anew, newer diseases have started manifesting themselves
— including the looming threat of an AIDS epidemic. What is urgently required is not a cutback
on existing programmes but a major expansion of discas control programmes.
Abandonment of Price Controls
While access to drugs constitutes only a part of measures required to confront a major public
health crisis, it is still a necessary part. Recent policies that have been announced by the
government are poised to further cut access to essential medicines, especially for the poor. In the
recent budget the government has announced its intention to slash the number of drugs under
price control. Moreover, such changes are being mooted not by the Ministry of Health or even the
Ministry of Chemicals, but by the Finance Ministry.
The move to further reduce the span of price control is directed at improving the health of the
industry and not the Indian people. Since the introduction of the first comprehensive drug policy
in 1978, all subsequent policies have pandered to the needs of the industry. While the 1978 policy
had 343 drugs under price control, this was reduced to 166 in 1987 and further to just 73 in 1994.
Profitability allowed in controlled categories was increased in this period from 40-75% in 1978,
Peoples Charter for
Access to Essential Medicines
Most of the people of our country are deprived from proper healthcare. The government
has ignored this basic necessity for survival. The following are therefore demanded from
the government:
1. No privatisation of the public healthcare system.
2. More per capita budgetary expenditure on healthcare.
3. Increase the number of National Diseases Eradication Programmes and
enhanced budgetary support to each programme.
4. Revitalise public sector drug companies.
5. Develop a public distribution system for cheaper essential drugs.
6. Formulate a rational drug under the aegis of the Health Ministry.
7. Ensure production and availability of all drugs in the national Essential Drug List.
8. Control import of bulk drugs and finished formulations and rationalise duties on
imports. Restrict import keeping in view the needs of domestic producers.
9. All drugs should be assessed periodically, in order to ban hazardous and
irrational drugs.
10. Formulate a new Drug Prices Control Order to bring all essential drugs under
price control.
11. No change in the fundamentals of the Indian Patents Act, 1970 that allow
domestic manufacture of patented drugs to counter monopoly, high prices and
imports.
12. Utilisation of third party licensing by big companies to evade taxes, reduce
employment and utilise cheap labour should be stopped.
13. Uniform tax structure for all drugs, maximum retail price should be inclusive of all
taxes.
14. Strengthen quality control mechanisms to stop proliferation of spurious and sub
standard drugs.
15. Enquire into corrupt practices by drug companies involving tax and duty evasion.
16. All government purchases should be made through a central procurement
system, based on the list of essential drugs.
to 75-100% in 1987 and finally to 150% in 1994. It is now proposed that just 15-20 drugs will be
kept under price control - thereby virtually making the whole policy of price control redundant.
We already have a situation where the prices of essential drugs like anti-TB, anti-lcprotics,
cardiovascular drugs, etc. arc rising at a significantly higher rate than the rate of inflation, and the
situation can only worsen as price control is further relaxed. Many drug companies are known to
openly flout the existing DPCO by not submitting cost-data to the National Pharmaceutical
Pricing Authority (NPPA). The pharmaceutical industry has openly expressed its displeasure over
the NPPA (constituted about 5 years ago) and the new pricing policy might decide to scrap the
NPPA. A new Drug Price Control Order, in fact, needs to do quite the opposite of what is being
proposed — increase the span of price controls, so that all essential drugs are put under price
control.
Skewed R&D Policy
Almost two years back the Govt, had appointed two committees -- one to prepare policy
guidelines towards R&D and the other to review the existing Drug Price Control Order (DPCO).
The committee on R & D, among other recommendations, proposed the setting up of a corpus
fund of Rs. 150 crores for the pharmaceutical industry. In India the private sector had done little
R&D for drug development, while major R&D work has been largely done in public funded
institutions like CSIR laboratories. While the specific mechanisms for setting up the corpus fund
are awaited, it is apprehended that this fund would be created by imposing higher taxes on drugs.
Thus the private sector, in spite of its poor record in R&D, will be allowed another largesse by the
government. Instead it would make much better sense for the government to invest in
strengthening public funded R&D.
Revitalise the Public Sector
Even today there is a large infrastructure for manufacture of drugs in the public sector. Of these,
the production units of Hindustan Antibiotics Ltd. have been rented out to private enterprises,
who are making profit out of it. The Indian Drugs and Pharmaceuticals Ltd. (IDPL), once the
largest company in the pharmaceutical sector in India, has been lying idle since 1996 and the
BIFR had recommended that the company be wound up. HAL and IDPL, in the formative years
of the drug industry in India were the largest manufacturing units in the country and played a
major role in the country become self reliant in the area of production of essential drugs.
Moreover these two companies pioneered production of drugs from the basic stage in the country,
and were the first to challenge the monopoly of MNCs in the early. Unfortunately the same
conditions which led to these companies becoming sick still exist - corrupt and inept
management at the highest levels coupled with a lack of direction, sixties Today, faced with a
change in the patent system and a renewed challenge from the Multinational Sector, these public
sector units (IDPL, HAL as well as Bengal Chemical, Bengal Immunity and Smith Stanistreet)
still have a major role to play. Given the will and the vision these public sector units can be
revitalised and can play an important role in making available life saving and essential drugs at
cheaper prices.
Public Distribution System
'
It is estimated that 60-70% of the Indian people have little or no access to medicines primarily
because they cannot afford such medicines and the public health system is woefully adequate. In
such a situation the government needs to establish a public distribution system for drugs, through
which all essential drugs at subsidised prices (where necessary) should be distributed.
.3
Ensure Rational Drug Use
A large number of hazardous and irrational drugs are sold in the market. Sale of such drugs are
not only a major health hazard, but it also deflects scarce resources away from essential
medicines. Such a situation has been made possible because there is no real drug policy in
existence — merely a pricing and licensing policy. Companies, as a consequence, arc able to sell
these medicines with the help of their high-pressure unethical marketing. A rational drug policy
under the aegis of the Health Ministry (and not the Industry Ministry) is the first necessary step to
remedy this situation. Such a policy needs to prioritorise drug needs of the country on the basis of
a list of essential drugs, ensure production of quality drugs at cheaper prices and minimise import.
The policy should also devise means to ensure rational drug production and usage.
Stop Unethical Promotion
Steps are required to put a check on the unethical promotion of drugs. In spite of assurances the
government is yet to enforce the 'Criteria of Ethical Promotion of Pharmaceuticals' prepared by
the WHO. In the recent years there is a noticeable tendency towards marketing of expensive new
drugs, most of which have little or no advantage over older and cheaper drugs. These drugs, many
of them being imported, are marketed with the help of lucrative inducements offered to a section
of the medical profession and chemists. Therefore a rational drug policy should include
mechanisms to ensure ethical drug promotion and prevent the import of non-essential drugs.
Reverse Import Liberalisation
Following the liberalisation of imports, multinational drug companies arc closing down their
production units in the country. They are either importing their products from their parent
companies or getting them manufactured in the small scale sector. This has led to a sharp increase
in imports in the last two years, while closure of large production units has caused unemployment
of thousands of workers. While mergers, acquisitions and brand selling has flourished, there is no
significant investment in the industry. All these have led to increasing unemployment and loss of
job security in the pharmaceutical sector. Liberalised imports have also forced the closure of
many medium scale bulk drug companies who face competition from cheaper imported bulk
drugs. Urgent measures are required to stop unrestricted import of bulk drugs through appropriate
duty structures that favour domestic manufacturers.
Save the Indian Patents Act, 1970
The Indian Patents Act of 1970 was instrumental in helping the country achieve self reliance in
the production of drugs. It helped Indian companies introduce new drugs within 2-3 years of their
introduction in the global market, that too at prices that were one-tenth or less of global prices. It
also encouraged the development of process technologies for a large majority of essential drugs,
principally in public funded institutions. Today the government is poised to change the Indian
Patents Act in order to "honour" its obligations at the WTO. Changes envisaged will reverse most
of the benefits of the earlier Act. It is of vital importance that the new Act retain licensing
provisions that allow domestic manufacturers to manufacture patented drugs if monopolies are
created, if prices are high, or if domestic manufacture is nit done by the original patentee. Various
other safegaurds need to be built in to see that all the gains of the 1970 Patents Act are not
frittered away. Today many developing countries, who amended their Patent Acts in accordance
with the TRIPS accord are faced with exorbitant prices for new drugs — a situation that has
brought the whole continent of Africa, reeling under the onslaught of an AIDS epidemic, to the
brink of a disaster. Many of these countries are today prepared to come together and unitedly
a
demand a revision of the TRIPS accord. The issue has also led to the building of an unparallelled
global coalition that is prepared to question the TRIPS accord. India has, arguably, the most
developed pharmaceutical industry in the developing world. Instead of rushing in to amend its
Patents Act in a foolhardy manner, India needs to provide leadership to the rising tide of
discontent all over the globe, against the TRIPS accord.
Stop Third Party Manufacture
The government allows large companies to get their drugs manufactured in the small scale sector,
even if they have the capacity to manufacture such drugs. This opportunity is being misused by
many large companies, some of whom have even closed down their factories. This facility for
"third party manufacturing" allows big companies to utilise exemptions provided to the small
scale sector and also to reap the benefits of cheap labour costs in the small scale sector.
Moreover, such manufacturing leads to poor quality control and increases the presence of sub
standard and spurious drugs in the market. Many large companies, however, are content to reap
profits as mere traders, leaving the manufacturing to the large, unorganised and poorly monitored
small scale sector.
Stop Tax and Duty Evasion, Rationalise Taxes
Unregulated manufacturing also allows large scale defaults in the payments of taxes and duties.
This leads to crores of revenue being lost by the government. While the practice is widely known,
the government has refused to act till date. Because the tax structure varies in among different
states, it too promotes illegal trade in drugs across state borders. Moreover, in the absence of a
clear tax structure, consumers are charged in accordance with the arbitrary whims of retail
chemists. This situation can be remedied by having an uniform tax structure, and by clearly
printing the price of drugs on packages, inclusive of all taxes.
Centralised Drug Procurement
The government is a major purchaser of drugs and if government purchases are co-ordinated it
can provide it with a major bargaining handle to push down drug costs. Such a procedure is in
place in many countries, including many developed countries, and should be introduced in India
too.
S’
r
To
The Hon’ble President of India
New Delhi
Sir’
We the people of India note with serious concern the health care situation in our country is reaching a
serious deteriorating condition. We therefore request that the following Charter may please be seriously
considered by the Government of India and necessary policy decisions may be taken at your behest.
Peoples Charter for Access to Essential Medicines
1. No privatisation of the public health care system.
2. More per capita budgetary expenditure on healthcare.
Increase the number of National Diseases Eradication Programmes and enhanced budgetary support to each
3.
programme.—h
; r
4. Revitalise public sector drug companies.
5. Develop a public distribution system for cheaper essential drugs.
6. Formulate a rational drug policy under the aegis of the Health Ministry.
7. Ensure production and availabil ity of all drugs in the national Essential Drug List.
8. Control imports of bulk drugs, intermediates and finished formulations and rationalise duties on imports.
Restrict import keeping in view the needs of domestic producers.
9. All drugs should be assessed periodically, in order to ban hazardous and irrational drugs.
10. Formulate a new Drug Prices Control Order to bring all drugs under price control and to reduce prices of
essential drugs.
11. No change in the fundamentals of the Indian Patents Act, 1970, that allow domestic manufacture of patented
drugs to counter monopoly, high prices and imports.
12. Utilisation of third party licensing by big companies to evade taxes, reduce employment and utilise cheap
labour should be stopped.
13. Uniform tax structure for all drugs, maximum retail price should be inclusive of all taxes.
14. Strengthen quality control mechanisms to stop proliferation of spurious and sub-standard drugs.
15. Enquire into corrupt practices by drug companies involving tax and duty evasion.
16. All government purchases should be made through a central procurement system, based on the list of
essential drugs.
17. No Foreign Direct Investment (FDI) be allowed in the pharmaceutical sector, except where there is clear
indication that such investment will be accompanied by transfer of technology not available in the country.
Thanking you,
Yours faithfully,
Place
Name
SL
No.
■
*■
Hr* ’
1
State
Signature
International Symposium on TRIPS
And Access to Medicines
Organised by National Working Group on Patent Laws
& Mcdccins Sans Frontieres (MSF)
New Delhi, June 4, 2001
NEW DELHI STATEMENT
INTRODUCTION
1.
The National Working Group on Patent Laws (India) in association with Mcdccins
Sans Frontieres (MSF), Geneva, jointly organised, on June 4,2001, an International
Symposium on TRIPS and Access to Essential Medicines. Over seventy-five senior
experts including twentythree from abroad participated in the day long Symposium.
Critical issues relating to TRIPS Agreement were deliberated upon in the following
sessions:
Session I
Session II
Session III
Session IV
Session V
International Scnario on TRIPS
Issues of Implementation & Review of TRIPS
Implications of TRIPS for R&D and Technology Dissemination
Pharmaceutical Industry in India and Future Role in Ensuring
Access to Essential Medicines
Implications of TRIPS for Health Care
In the Concluding Session indepth discussions were held on all the issues stated above.
2.
Participants from India, representing various organisations, included Dr. Nitya
Nand, Mr. S.P. Shukla, Dr. Arun Ghosh, Prof. Prabhat Patnaik, Prof. Ashok
Parthasarathy, Dr. Pushpa M. Bhargava, Dr. Vandana Shiva, Dr. Gopakumar Nair,
Mr. Dilip G. Shah, Mr. B.K. Kcayla, Mr. Dincsh Abrol, Dr. Biswajit Dhar, Dr.
Amit Scngupta, Dr. Mira Shiva, Dr. N.N. Mchrotra, and Mr. Amitava Guha.
Partcipants from abroad included Dr. James Orbinski, Ms. Ellen ‘t llocn, Prof.
Jerome H. Reichman, Prof. Fredrick M. Abbott, Mr. James Love, Dr. Graham
Dukes, and Dr. Zafar Mirza. The thrust of most of the presentations at the
symposium was that the TRIPS agreement is singularly insensitive to the needs of
the developing countries. In fact it is an instrument for the preservation and
accentuation of inequalities between the developed and developing countries. Laws
and policies related to health and pharmaceuticals and those related to the patent
system in any country have to be so linked that they cater to the needs of the poor.
India could give a lead in this respect.
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CRITICAL ISSUES
3.
Certain critical issues were identified by experts who spoke at the symposium,
which can form the basis of a common approach in the ongoing review of the
TRIPS agreement. The need for caution was emphasised on the process of
implementation of the TRIPS agreement by developing countries. The need to
introduce amendments in their respective national legislations with utmost care and
necessary safeguards was underlined.
4.
Participants at the symposium expressed concern at the trend in intellectual
property protection, that is increasingly skewing the balance of the rights of patent
holders and consumers; in favour of the former. Speakers noted that the TRIPS
agreement on manifold issues marks a fundamental shift in this balance, as well as
a shift in global attitudes where private profits are put ahead of social benefits. This
is further fueled by dependence of economies in the developed world on industries
that require strong intellectual property protection. Of the fifteen most profitable
industries today at global level, six are from the pharmaceutical sector and five
from the information technology sector. It was also pointed out that intellectual
property protection allows such industries to create monopolies, not only over
production, but also in the control of knowledge.
5.
The net result of this trend, in the pharmaceutical sector, has been high cost of
medicines and the consequent denial of access to medicines to the income poor
across the globe. Further, it has also led to a situation where medicines required to
treat diseases that predominantly occur among the poor arc not researched at all.
Instead drugs that arc being researched arc drugs used for “lifestyle” diseases like
impotence, baldness, obesity, etc. It was underlined that while the pharmaceutical
industry claims that high prices arc explained by the massive expenditure on R&D,
the truth is that drugs they actually research have little relevance to real medical
needs. Moreover, the kind of profits that big pharmaceutical MNCs generate are an
indication of profiteering and not just legitimate profit making.
6.
Speakers at the symposium also stressed on the need to utilise provisions available
in the TRIPS agreement to ensure production of cheap drugs by domestic
manufacturers in the developing countries. For this, legislations in the developing
countries need to have licensing and other provisions that prevent abuse of
monopoly positions by MNCs and also allow imports of drugs from the global
market at competitive prices. It was also pointed opt that the next few years are
going to be crucial, as developed countries challenge laws enacted by the
developing countries like Brazil in the WTO dispute settlement mechanism. The
resolution in WTO of the complaint made by the US against Brazil for violation of
the TRIPS agreement because the former has included provisions that allow it to
produce cheap anti-AIDS drugs by licensing domestic manufacturers, is being seen
as crucial in the context.
2
IMPLEMENTATION OF TRIPS
7.
India is in the process of implementing the TRIPS agreement through introduction
of the Patents (Second Amendment) Bill 1999 — subsequently referred to a
Parliamentiary committee for examination and report. In this regard it was pointed
out that the constitutional guarantees in the fundamental rights to its citizen
regarding “Right to Life” has special significance in the implementation of the
agreement. It was emphatically stressed that the Constitution of India should not in
any way be violated in the process of harmonising the existing Indian patent system
with the TRIPS agreement. It was also pointed out that the August, 2000 Resolution
of the Sub - commission of UN Commission on Human Rights should also be taken
note of. This Resolution requests all governments and national, regional and
international economic forums to take national human right obligations and
principles fully into account in international economic policy formulation. This
Resolution also notes that actual or potential conflicts exists between the
implementation of the TRIPS agreement and the realisation of economic, social and
cultural rights. These cautions needs to be specifically taken note of by the
Parliamentary committee in their dclebrations on the Patents (Second Amendment)
Bill, 1999.
8.
Both foreign and Indian experts pointed out the need to utilise, to the maximum,
“flexibilities” that can be interpreted to be availaiblc in the TRIPS agreement while
amending domestic laws with a view to implementing the agreement. They felt that
such flexibilities are available in Articles 7, 8, 30 and 31, if the said Articles arc
interpreted liberally. The necessity to incorporate the following safeguards, while
amending the patent system, was specifically pointed out:
8.1
The provision in TRIPS where imports are treated at par with domestic
production should not be interpreted to mean that that working of the patent is
a non-issue. While an interpretation of the said provision may absolve the
patent holder from the obligation of working the patent in the country where
the patent is taken, it should also be ensured that the patents are worked by
domestic enterprises by providing them legal rights through compulsory
licences to work the patents;
8.2
The compulsory licensing system for commercial purposes, provided for in
article 31, should be made fool-proof. After an offer of reasonable terms and
conditions and also after waiting for a reasonable period for response from
the patent holder, it should be legally possible for the Controller to
automatically grant a compulsory licence. In order to avoid any ambiguity in
this respect, the quantum of royalty and the maximim waiting period can be
stipulated (say 8% or above of royalty on annual ex-factory sale turnover and
150 days waiting period). If these conditions are satisfied by an enterprise
desirous of taking a compulsory licence, the said licence should be issued as a
legal right for the enterprise and the Controller will issue the licence within
100 days. There should be clear-cut provision in this regard in the Patents Act
3
so as to ensure smooth application of the compulsory licensing system to
achieve the desired objective;
8.3
Article 30 dealing with limited exceptions to the exclusive rights available to
the right holder should be used to provide for total freedom for undertaking
R&D activity on the patented subject matter. Strongest support in this regard,
thus far has come from the WTO ruling in a case involving Canada and the
European Union on the implementation of “Bolar” type exception. The
formulation of the new Section 107A in the Patents (Second Amendment)
Bill in India needs to be reformulated to achieve total freedom for R&D and
for taking marketing approval from concerned authorities on patentable
subject matter. The actual marketing of the patented product will be
undertaken only after the expiry of the patent term or after obtaining
compulsory licence.
8.4. The definitions of ‘novelty’, ‘industrial application’ and ‘inventive step’ to
qualify granting of patent need to be specifically elaborated so that
infructuous claims are not entertained. Similarly, the list of inventions not
patenable as such, should clearly include formulations based upon offpatented molecules. Further, formulations based upon changes in dosage form
and new uses should also be specifically exclude from the scope of
patentability as new products. Patenting of life-forms, including micro
organisms, should also be outside the scope of patentability. The aspect is still
being debated internationally.
8.5
The issue of parallel imports is an important one for developing countries.
Suitable provision has to bo made to ensure that the people have access to
cheaper medicines and also to harness the country’s capabilities to cater to the
needs of other developing countries which do not have a developed
pharmaceutical industry. Availability of medicines from other countries at
cheaper prices should be provided in the law as the cause for parallel imports.
The above are a few issues which need to be specifically provided for in the Patents
Amendment Bill in India. Similarly, these issues arc also relevant for other
developing country for suitably stipulating in their respective laws.
REVIEW OF TRIPS AGREEMENT
9.
As regards the review of TRIPS agreement, the spirit of Articles 7 and 8 should be
specifically reflected in different Articles in the substantive Section 5 of the TRIPS
agreement. This will help in the smooth transfer and dissemination of technology
for developing countries like India. It will also help the application of intellectual
property rights in a manner conducive to social and economic welfare and the
balancing of rights and obligations. Similarly, it would also be possible to
implement provisions necessary to protect public health and nutrition, and to
promote public interest in sectors of vital importance. It will also be possible to
4
provide for appropriate measures to prevent abuse of intellectual property right by
the right holders.
The patent term of 20 years, provided for in the TRIPS agreement, is too long a
period in the context of fast changes in the product cycle making patented products
unimportant within a short duration. This results in ensuring that there is virtually
no role for the generic industry on the expiry of patent term of 20 years. A review
of TRIPS needs to question the 20 year patent period.
BEYOND TRIPS
10.
Speaker also emphatically argued that:
10.1 A rational international system of intellectual property rights and obligations
has, by definition, to represent the interests and aspirations of the people of
each country. Such a system must be in harmony with the entire spectrum of
national laws enacted through national political processes. The system must
have maximum flexibility so as to enable it to realise specific development
objectives of each country concerned. The key to flexibility in the intellectual
property regime lies in providing scope for the strengthening of the
technological capabilities of developing countries. This, in fact, happens to be
one of the stated objectives of TRIPS.
10.2 There can be no uniform set of standards and norms of equal validity or
relevance applicable to a wide range of developing countries that arc obliged
to respond to the imperative of their respective cultural and socio-economic
needs. The holding of a global monopoly of patents, representing a massive
stock of science and technology, by a group of industrialised countries is no
justification for common standards and norms to be demanded from
developing countries as a price for being admitted to a global multilateral
system of trade and exchange. If adequate flexibility is not made available
within the framework of TRIPS, the whole system is likely to become
unsustainable.
10.3 The TRIPS proposals aim at reserving the domestic markets of the developing
countries for the manufactured goods of the developed countries.
Implementation of the TRIPS Agreement would arrest the promotion of
indigenous technological capabilities. They would constrain research and
development of frontier technologies in these countries. Educational and
training institutions of developing countries will end up producing graduates
whom these countries will not be able to absorb. The TRIPS proposals would
strengthen the vicious circle of limited scientific and technological activities
creating conditions for brain-drain.
5
11.
For developing countries, in particular, it is essential that:
11.1 The supremacy of national laws on intellectual property protection be
maintained;
11.2 The national laws of developing countries must increasingly influence and
decisively change the international regime of rights and obligations. They
must enable developing countries to breath freely in order to grow and
develop their potential on a continuing basis;
11.3 In their national laws on intellectual property protection, developing countries
must balance rights granted to foreign owners of technology with adequate
obligations on them. Only then will they obtain much needed technology
under fair terms and conditions in conformity with their public interest
requirements
12.
Technology, which is based on both scientific progress as well as accumulated
skills and experience is a common heritage of humanity. The present global patent
regime allows appropriation of technology or private gains. The directions outlined
above will open up the possibilities for a progressive decommercialization of
technology, thereby enabling developing countries to accelerate the pace of their
technological transformation.
13.
In order to demonstrate their good faith, the developed countries should agree to the
resumption of negotiations on the UNCTAD Code of Conduct on Technology and
participate in them with enough political will in order to complete them
expeditiously.
FORGING OF A GLOBAL COALITION
14.
The widely evocative issue of access to anti-retrovirals, i.e. the drugs that are used
to treat AIDS patients, has played a major role in the way the international
community today sees the pharmaceutical industry. Treatment of AIDS with a
combination of drugs - - called Highly Active Anti-retroviral Treatment (HAART)
- has decreased mortality from AIDS by 84% in developing countries.
Unfortunately less that 5% of AIDS infected people across the globe have access to
such treatment currently, because the estimated cost of treatment by HAART is
about $12,000 per person per year. At present rates Zimbabwe, Uganda and Ivory
Coast would require to spend 265%, 172% and 84% of their respective Gross
National Products, just to buy drugs to treat all their AIDS patients! This issue has
been the rallying point of a major global campaign that today is demanding a
closer, critical look at the TRIPS agreement.
15.
Condemnation of the role of transnational pharmaceutical companies reached a
crescendo due to the lawsuit brought against the South African government in
Pretoria’s High Court by 39 pharmaceutical companies. The law suit targeted a
6
legislation by South Africa - the Medicines and Related Substances Control
Amendment Act, No. 90 of 1997 - - which allowed the country access to cheaper
anti-AIDS drugs. The 1998 lawsuit was supported by the US Government, which
placed South Africa on the Special 301 Watch List, and the European Union, which
wrote to then Vice President of South Africa, Mbeki, to express its concern about
the legislation. The move by the pharma majors evoked a massive counter
response across the globe, led by Mcdccins Sans Fronticrcs (MSI7)- The companies
suffered a major defeat when, in April, 2001 the companies capitulated to mounting
anger and disgust over their conduct and agreed to withdraw the case
unconditionally.
16.
About two months back Brazil moved a resolution at the UN Human Rights
Commission, which was approved by 52 votes in favour, 0 against and 1 abstention
(USA). The resolution, among other things called upon States at the international
level, to ensure that “the application of international agreements is supportive of
public health policies which promote broad access to safe, efficient and affordable
preventive, curative or palliative pharmaceuticals and medical technologies.......”
Today many national governments in third world countries arc backing protests and
demonstrations against the WTO in general and the TRIPS regime in particular.
17.
Countries in Africa, Latin America and Asia, as well as organisations campaigning
for access to cheap anti-AIDS drugs sec India as a potential source of cheap drugs.
In March 2001, an Indian company, Cipla announced that it would offer the
combination of anti-AIDS drugs at a cost of $600 per patient per year, and later
announce that they could bring down cost to $ 350 for supply of these drugs to
MSF. Cipla’s offer was matched within weeks by two other companies, Hetero
Drugs and Ranbaxy. These offers are, till date, by far the cheapest that have been
made anywhere in the world. In other words, Indian companies are now offering
drugs to treat AIDS at prices that are one fortieth of global prices! Such a
precipitous fall in prices can revolutionise AIDS treatment in developing countries,
and save millions of lives.
18.
The defeat for the 39 pharmaceutical companies in South Africa is not the end of
this serious issue. Every country that has tried to interpret the TRIPS Agreement in
a manner that allows access to cheaper drugs for its people is faced with a hostile
reaction from the US. But it has led to the building of an unprecedented global
coalition against the use of TRIPS to deny the poor access to drugs.
19.
The issues here are complex. On one side, the WTO has to considered the future of
humanity; on the other hand, there is also the moot question as to who is going to
pay for the highly expensive treatment required for AIDS. The same issue arises in
respect of tropical diseases which afflict a large segment of people across the
world; and the problem herein is intimately connected with the issue of funding
research and development in regard to diseases common in developing countries,
which are least able to afford the expenditure involved in promoting original
research. This issue has also to be specifically addressed to by the World Health
7
Organisation with the World Trade Organisation and the large transnational
corporation.
20.
The Indian Parliamentary Committee which is deliberating on the amending Bill for
changes in the Indian Patents Act 1970 has an important task. It needs to look
beyond the needs of India alone — the new Bill has to be so formulated that it
becomes a model for other developing countries. The Bill must also enable the
Indian pharmaceutical industry to meet, not only domestic needs, but also the needs
of many other developing and least developed countries of access to essential
medicines at competitive prices.
8
Bad Medicine: Impact of TRIPS on Medical Care
Paper presented at the
International Symposium on TRIPS and Access to Medicines
June, 4, 2001, New Delhi
Intellectual property is an explicitly modern notion. The first patent law was enacted in
1623, and the precursor of modern copyright laws - the Statute of Anne - came into being
in 1710 in England. Intellectual Property Rights are state-mandated monopolies. The idea
behind such rights is that the fundamentals of an invention are made public while the
inventor for a limited time has the exclusive right to make, use or sell the invention.
Discoverers and inventors are thought to deserve special reward or privilege because of
the benefit of their discoveries or inventions to society. Public good is not considered a
reward in itself, and, true to classical economic theory, certain incentives are believed to
be necessary to encourage invention or innovation.
It can legitimately be argued that the notion of IPR is built on a contradiction: in order to
promote the development of ideas, it is necessary to reduce the freedom with which
people can use them. This contradiction is a running thread in all debates on IPRs, and is
sought to be resolved in laws related to IPRs by attempting a balance between public
interests and rights of the inventor. Two contrasting interests, that often manifest as
contrasting opinions - as reflected in the following statements.
“The relentless march of intellectual property rights needs to be stopped and
questioned. Developments in the new technologies arc running far ahead of
the ethical, legal, regulatory and policy frameworks needed to govern their
use. More understanding is needed -in every country- of the economic and
social consequences of the TRIPs Agreement. Many people have started to
question the relationship between knowledge ownership and innovation.
Alternative approaches to innovation, based on sharing, open access and
communal innovation, arc flourishing, disproving the claim that innovation
necessarily requires patents.”
UNDP Human Development Report 1999
’’The commercial sector discovers and develops nearly all new drugs and
vaccines, but this is expensive and risky; the patent system provides the
incentive necessary to investigate thousands of new compounds and to invest
an average of several hundred million dollars in R&D".
IFPMA, ASEAN Workshop on TRIPS. Jakarta. May 2000
While IPR laws have always been a compromise between these two contrasting positions,
in the last few decades the resolution of the underlying contradiction has tended to
increasingly favour the latter position. How this has happened is, in a manner, embedded
in the history of the development of human enterprise in the last 300 odd years.
Redefining Property
Throughout much of human history, the possession and distribution of property was
mediated by the use of force. This mediation was later codified in the form of laws which
sanctified the concept of private property. These laws were primarily directed at real
estate, a form of property that is local by definition and, as the name implied, was very
real. The Industrial Revolution and industrial modes of production led to the necessity of
redefining “property”. Tools acquired a new economic value and, thanks to their
development, it became possible to duplicate and distribute them in quantity. To
encourage their invention, copyright and patent laws were developed. These laws were
geared towards getting mental creations into the world where they could be used - and
could enter the minds of others - while assuring their inventors compensation for the
value of their use. The earliest Patent laws were an expression of the need to ensure that
innovations did not die away with the original inventor — in other words they were
designed to promote disclosure and dissemination of knowledge. However, the systems
of both law and practice which emerged were based on physical expression. Thus what
was protected as intellectual property was an expression of an idea — a technological
artifact, a piece of music, a work of literature, etc.
Since it is now possible to convey ideas from one mind to another without ever making
them physical, ideas themselves are sought to be given ownership, and not merely their
expression. And since it is likewise now possible to create useful tools that never take
physical form, there is a move towards patenting abstractions, sequences of virtual
events, and mathematical formulae - the most unreal terrain imaginable.
We are now entering an era where major parts of the world economy arc based on ideas
and knowledge, i.e. goods that take no material form. The central distinction between
information or knowledge or ideas and physical property is that information can be
transferred without leaving the possession of the original owner. Unlike physical goods,
there are no physical obstacles to providing an abundance of ideas. Intellectual property
can thus be conceived as an attempt to create an artificial scarcity in order to give rewards
to a few at the expense of the many.
IPRs today bring into force another kind of dilemma. Open ideas can be examined,
challenged, modified and improved. But IPRs, by converting scientific knowledge into a
commodity, arguably inhibits science. There are innumerable examples to show that IPRs
have been used to suppress innovation. Companies may take out a patent, or buy
someone else’s patent, in order to inhibit others from making use of new ideas. As far
back as in 1875, the US company AT&T collected patents in order to ensure its
monopoly on telephones: an act that is beleived to have slowed down the introduction of
the radio by almost 20 years. In a similar fashion, General Electric used control of patents
to retard the introduction of fluorescent lights, which were a threat to its market of
incandescent lights.
We also see the development of a new contradiction — information or ideas are sought to
be commodified at the same time as technology makes it possible to exchange ideas in a
radically free environment. If ideas are to be exchanged in the marketplace, the basic
assumption of the marketplace as it is with regard to physical objects — that value is
based on scarcity — should hold good. But this is precisely contrary to the nature of
' information, which may — in many cases -- increase in value with dissemination.
2
Monopoly as a Facilitator of Creativity?
Central to the projected utility of Intellectual Property Rights is die notion that creation is
facilitated by the provision of a temporary monopoly. This notion had a certain kind of
validity in the context in which the concept of IPRs developed. The earliest Patent and
Copyright Laws were geared, to an extent, to benefit the individual artisan, or the author
of a literary piece or a musical score. In the last hundred years, however, protection of
IPRs has acquired a radically new connotation. We arc no more talking about protecting
the property of a single, or a group of artisans who have labored to produce an useful
artifact. Intellectual products, today, are social products. With the institutionalisation of
the concept of IPRs individual creators ceased to be the beneficiaries, and were replaced
by large corporate interests. In practice, today, most individual creators do not actually
stand to gain from protection of intellectual property. When employees of corporations
and governments have an idea worth protecting, it is usually copyrighted or patented by
the organisation, not the employee. Since intellectual property can be sold, it is usually
large corporate entities who benefit.
Today, IPRs help create monopolies of a different order, and thereby place enormous
powcr at the disposal of a handful of corporations. It is a power that allows corporations
not only to reap huge profits, but more importantly, to determine the direction of
research. Microsoft, for example, with its virtual monopoly over software that is used on
Personal Computers (PCs) has consistently obstructed the development of new products
by its competitors. A handful of Pharmaceutical corporations, given their monopoly over
the control of knowledge, can decide the kind of drugs that will be developed — drugs
that can be sold to people with the money to buy them. Thus on one hand we have the
development of “life-style” drugs, i.e. drugs like viagra which target illusory ailments of
the rich. On the other hand we have a large number of “orphan” drugs - drugs that can
cure life threatening diseases in Asia, Africa and S.America, but are not produced
because the poor cannot pay for them.
Rent Incomes to the Fore
To understand how IPRs have become a major instrument of Capitalist development, it
would be instructive to trace the changing stance of the US on IPRs. Until 1891 the
United States did not recognize foreign copyrights. The U.S. made the transition from
“pirate” to “police” over the past 100 years and today the United States has become the
international advocate of strong intellectual property protection. This advocacy has been
the motivating force behind the inclusion of intellectual property rights in the GATT, the
United States-Canada Free Trade Agreement, NAFTA, and numerous other treaties.
In the mid-80’s the United States was faced with waning industrial competitiveness,
which hurt U.S. companies and U.S. trade internationally. As a consequence it began
searching for new areas of commerce which would maintain U.S. dominance in the world
market. Around this time several intellectual property dependent industries, namely
information technology, entertainment (records, films, and books) and pharmaceutical
3
who were becoming extremely important contributors to the U.S. economy. All these
sectors were heavily IPR dependant as they dealt in products where the development
costs were high but the replication costs were small These were sectors where, in order
to maintain high levels of returns, monopoly “rent” incomes had to be protected thought
the mechanism of strong Intellectual Property Protection.
The importance of the knowledge based sectors to the US (and global) economy can be
gauged from the performance of large companies today. Among the top fifteen
companies (Table 1) with the highest returns (profits) on Revenues (turnover), six are
pharmaceutical companies — Microsoft, Cable and Wireless, E.I. du Pont de Nemours,
Eli Lilly, Glazo Wellcome, Roche Group, Bristol-Myers Squibb, Novartis and Pfizer.
Five are from the information technology sector — Microsoft, Cable and Wireless,
Telefonos de Mexico, Intel and Textron. Yet, none of these figure anywhere among the
top 100 in terms of turnover. Microsoft is 216th in the list in terms of turnover, but has
the highest return on revenues (39.4%). Clearly rent incomes, today, are one of the major
driving forces of the economies of the developed countries.
Table 1:
Top Performing Companies
(Highest Return on Revenues)
Company
Revenues rank
1999 Profit as
% of Revenue
Microsoft
Cable and Wireless
E.I. du Pont de Nemours
Eli Lilly
Telefonos de Mexico
216
315
123
485
482
305
116
349
239
311
206
436
192
285
428
39.4
38.8
27.6
27.2
26.1
25.8
24.9
21.3
20.9
20.8
20.6
20.6
20.5
19.6
19.2
Volvo
Intel
Glazo Wellcome
Roche Group
Petronas
Bristol-Myers Squibb
R.J.Reynolds Tobacco
Novartis
Pfizer
Textron
Source: Fortune 500
Redifining the Victim
'
Clearly, with Rent incomes becoming important, the legitimisation of a strong IPR
regime became a necessity. How this was done is a fascinating story. In the 1980s the
4
U.S International Trade Commission (ITC) did a study for the USTR which asked
American businesses to estimate the amounts they lost per year to piracy. The ITC survey
“proved” that international “piracy” was costing American industries millions, if not
billions, per year. Countries singled out for action, as a result of these findings, were
largely developing countries in Asian, S.America and Africa. Here a caveat may be
added, that what the ITC termed as piracy was actually Intellectual Property Laws of
sovereign countries, decided upon by their sovereign governments.
The moral high ground was sought to be occupied with the plea for protection of creative
and innovative work. The US now posed the whole issue as an organized effort by
foreign countries, especially those located in Asia (China, India, Thailand, Malaysia,
etc.), to systematically usurp American creativity and technological knowledge. The
innocent victims were American companies, such as Microsoft, or Walt Disney, or
Merck. Gradually the U.S. introduced the concept of unfair trade practices alongside that
of alleged IPR violations in countries like India. It was repeatedly said that the lack of
strong international intellectual property laws hindered international trade. By this virtual
sleight of hand the U.S. (with the support of Europe and Japan) introduced IPRs as an
issue in trade negotiations in the Uruguay Round of GATT negotiations in 1986.
The success achieved by the U.S. in making IPR a trade issue and its subsequent
incorporation in the WTO agreement overturned the very basis of trade negotiations,
where classically the developing nations were considered victims and special
considerations were taken to remedy their problems. In the new version, the roles arc
reversed. The U.S. is a victim and the developing countries arc the hostile aggressors
which threaten the very foundation of America — its creativity and ideas. Finally, large
Multinational Corporations came to be characterised as the victims of Third World
piracy. Thus, the whole concept of Intellectual Property has finally come a full circle from the initial notion of the protection of an individual’s rights and the notion of
disclosure of information, IPRs now mean protection of the rights of corporations and a
bar on the free flow of information.
High Risk Activity?
Let us now look at the pharmaceutical industry in greater detail. The principal arguments
of the pharmaceutical industry that has seduced even neutral observers are related to its
claims that it invests huge amounts in the development of new drugs and hence deserves
returns for such investments. And further that new product development is a risky
business, which needs to be "adequately” compensated. Notwithstanding the initial
controversies regarding inclusion of TRIPS in the GATT negotiations, this argument has
converted IPRs into the "holy cow" of trade negotiations, that nobody dare tamper with.
So, while concerns may be raised about how to ensure a modicum of fairness towards
consumers, the TRIPS accord itself is being projected as being inviolable. Thus attempts
at seeking a better balance between Patent rights and consumer interests are often limited
to looking for possibilities within the TRIPS accord.
5
Suppose, however, we confront the argument squarely. R&D costs on drug development
are difficult to compute as industry would always like to pad R&D costs to get tax
benefits. Industry estimates are that global annual R&D investment is to the tune of $56
billion. Other estimates indicate that this is a gross overestimate. The US National
Science Foundation estimates that R&D expenditure in the pharmaceutical industry, in
the US, was 9.8 billion dollars in 1996 (Table 2). Projecting this to global current
expenditures, we would be looking at a figure of around 20-25 billion dollars. Even this
docs not reflect just drug development costs, as R&D expenditures on company balance
sheets are padded to include a whole range of peripheral costs in order to avail of tax
benefits (which could be up to 40-45% in the US).
R&D Expenditure — US (in million $)
Table 2:
Year
1986
1988
1992
1993
1994
1995
1996
Pharmaceutical
R&D Costs
Total (all sectors)
R&D Costs
3,658
87,823
97,015
119,110
117,400
119,595
132,103
144,667
4,906
7,944
9,146
9,633
10,215
9,773
Source: US National Science Foundation, Division ofScience
Resources Studies, Research & Development in Industry, 1995-96
The quantum of R&D expenditure is a relatively minor issue. In fact what the industry
never says, but is widely known, is that large pharmaceutical companies spend
substantially more on promotion than on R&D. The important point to be underscored is
that after the claimed investments are made on R&D the pharmaceutical sector has
consistently been the most profitable sector. A perusal of the profitability in different
sectors based on data from the top 500 globally, shows that profitability in the
pharmaceutical sector is way ahead of all other sectors (Table 3).
6
Table 3:
Profitability by Industrial Sector (1999)
Sector
Net Profits
as % of Assets
Net Profits
as % of Revenues
Pharmaceuticals
Beverages
Tobacco
Specialty Retailers
Telecommunications
Computers, Office Equipment
Food
Aerospace
Petroleum Refining
Forest & Paper Products
Food & Drug Stores
Chemicals
Wholesalers
Airlines
Electronics, Electrical Equipment
General Merchandisers
Energy
Publishing, Printing
Motor Vehicles & Parts
Utilities: Gas & Electric
Entertainment
Health Care
Diversified Financials
Mail, Package, Freight Delivery
Securities
Industrial & Farm Equipment
Mining, Crude Oil Production
Banks: Commercial and Savings
Insurance: P & C
Insurance: Life, Health
Engineering, Construction
Railroads
Trading
Metals
14.7
11.1
8.0
6.0
5.5
4.9
4.8
4.1
4.0
3.8
3.7
3.6
3.5
3.4
2.9
2.8
2.3
2.3
2.2
2.1
2.0
1.9
1.5
1.1
0.9
0.8
0.8
0.6
0.6
0.5
0.4
0.4
0.4
-0.7
18.3
10.1
8.5
2.6
10.2
6.6
2.2
4.3
3.6
4.2
1.9
3.3
1.2
3.4
3.0
I. 4
2.2
2.5
2.2
2.5
5.6
2.8
II. 1
1.7
10.7
0.9
1.0
5.4
3.5
2.3
0.5
1.3
0.2
-0.4
Source: Fortune 500
Did someone say, high risk? Clearly pharmaceutical companies are able to hedge
whatever risks there may be, very successfully. Profitability in the sector is almost double
that of the sector which is second on the list - telecommunications (a sector which
7
incidentally did much worse in 2000). Such trends mean that profits of individual
companies have soared and the top 14 pharmaceutical companies earned net profits to the
tune of 33 billion dollars in 1999 (Table 4). To look at it in another way, if profit
margins of top pharmaceutical companies were to have been less by a third of current
levels — which would still make them more profitable than any other sector - a benefit
of about 11 billion dollars could have been passed on to consumers. That is in fact more
than the projected 10 billion dollars that arc required to provide access to anti-AIDS
drugs to all HIV positive patients in the world! What we sec taking place in the
pharmaceutical sector is profiteering, driven by rent incomes through Patent protection,
and not legitimate returns on investment.
Table 4:
Profitability of Top Global
Pharmaceutical Corporations (1999)
Rank
Company
Revenues
$ million
Profits
$ million
1
2
Merck
Johnson & Johnson
Novartis
Bristol_Myers Squibb
Astra-Zeneca
Roche Group
Pfizer
Glaxo Wellcome
Smithkline Beecham
American Home Products
Aventis
Abbott Laboratories
Warner Lambert
Eli Lilly
32,714
27,471
21,609
20,222
18,445
18,349
16,204
13,738
13,562
13,550
13,438
13,178
12,929
10,003
5,890
4,167
4,432
4,167
1,143
3,837
3,179
2,930
1,704
-1,227
-1,035
2,446
1,733
2,721
3
4
5
6
7
8
9
10
11
12
13
14
Source: Fortune 500
There is a truism about pharmaceutical consumption — those who need drugs the most are
the least likely to be able to pay for them. So even if it is claimed that efforts by the
pharmaceutical industry places life saving drugs in the market, the mere presence of such
drugs does not ensure access. This is a fact that has been consistently highlighted in the
campaign on ant-AIDS drugs and needs little elaboration here. It needs to be underlined,
however, that as we move towards poorer countries as well as towards the income poor in
rich countries, drug costs form a higher proportion of total medical costs. For example, in
countries such as China, Indonesia, and Thailand, this share ranges from 35-45%. In
several African countries, it is believed to exceed 50% [Public-Private Roles in the
Pharmaceutical Sector, 1997, IVHO]. US Cost of prescription drugs is about 10% of
health care costs but have risen much more rapidly than physician costs and costs of
8
hospitalisation. Moreover, in developing regions, a much larger percentage of drug costs
are paid for privately (Table 5).
Table 5:
Regional Comparison of
Private Expenditure on Pharmaceuticals
Total Pharmaceutical Expend.
Sub-Saharan Africa
Asia
Middle East
Latin America
Mkt.Economies
Per capita (US$)
% GDP
8
12
27
26
138
0.9
0.6
0.7
0.9
0.6
Pvt. as %
of Total
65
81
74
72
40
Source: Selected Topics in Health Reform and Drug Financing, WHO
However high drug prices, as a consequence of strong patent protection, is not an issue
that need divide the developed and developing countries. The pharmaceutical industry
has posed the issue as a contradiction between developing countries that wish to
manufacture "pirated" drugs and developed countries that want to protect legitimate
profits of their pharmaceutical companies. High drug costs concerns people living in
developed countries too, in fact now more than ever before. It affects the poor and
marginalised across the globe. In the US, for example, it has a major effect the aged who
live on welfare. As the population of the aged increases drug costs cut into welfare
budgets, and a crisis situation is not far away. A 1998 report estimated that, in the US,
prices for the 50 drugs most used by seniors increased faster than the rate of inflation in
the past five years, with increases in 1998 four times the rate of inflation. Annual
prescription drug spending has grown from $559 in 1992 to $1205 in 2000.
Innovations for Whose Benefit?
High prices, driven by rent incomes are just one part of the story. The other part of the
story is that drugs which sell in the market have little to do with the actual medical needs
of the global population. As there is nobody to pay for drugs required to treat diseases in
the poorest countries, or even to treat the poor in developed countries, such drugs are
rarely researched. Research and patenting in pharmaceuticals are being driven by the
search for the next "blockbuster” drug - which in industry parlance means a drug with
global sales of over one billion dollars. This is a major reason for the trend towards
global mergers, as individual Cos. wishing to retain the huge growth rates from the 1970s
to the 90s, try to pool resources for R&D. As a consequence, we are looking to a
situation, where 10-12 conglomerates will survive as “research based” companies. The
bulk of drug manufacturing will be done by smaller companies. In the US today, this
trend is already discernible. While the volume of sales of large pharmaceutical companies
has stagnated in the past decade, the sales of small companies producing generic drugs
9
has shown a double digit growth. However the profitability of these companies have not
suffered — rather they have increased. Clearly these companies arc able to thrive on “rent
incomes” made possible by strong IPR protection, while not enhancing their
manufacturing activities.
The frantic search for the next "blockbuster", consequently, skews drug development in
favour of new drugs for which there arc buyers who are willing to pay prohibitive
amounts. Attempts are also focused at carrying out minor modifications on proven
"blockbuster" in order to maintain dominance over particular market segments after the
patent on the original money-spinner runs out. Thus Schering has recently introduced its
"son of Claritin" to replace its anti-allergic drug, Claritin, (loratidine) that produced
returns to the tune of 9 billion dollars in the last decade. Eli Lily tried the same with its
hugely succesful anti-depressant drug, Prozac, (fluoxetine) by trying to introduce Rfluoxetine — an attempt which failed in the penultimate stage due to the "new" drug's
unacceptably high cardiac effects.
This trend has converted the whole business of new drug development into farcical
exercise with tragic consequences. The basic qualification for the next "blockbuster” is
that it should be possible to sell it in the market, not that it should address real medical
needs. Hence, more and more drugs being introduced are ’’copycat" drugs or drugs like
Pfizer's Viagra that address "lifestyle" needs and not medical needs and do not
significantly alter prevalent therapeutic practices (Table 6).
Table 6:
Assessment of New Drugs Introduced Between 1981-2000
Category
Number
Percent
Major therapeutic innovation
in an area where previously
no treatment was available
7
0.31
Product is an important therapeutic
innovation but has certain limitations
67
2.96
Product has some value but does not
fundamentally change the present
therapeutic practice
192
8.51
Product has minimal additional value,
and should not change prescribing habits
except in rare circumstances
397
17.59
Product may be a new molecule but is
superfluous because it does not add
to the clinical possibilities offered by
previous products available. In most
cases it concerns a me-too product
1427
63.23
10
Product without evident benefit but with
potential or real disadvantages
58
2.57
Editors postpone their judgements until
better data and a more thorough
evaluation of the drug is available
109
4.83
Total
2257
100
Source: Prescrire International
The problem, thus, is not merely one of high prices. Consumers are being forced to pay
higher prices based on the specious plea that these prices are warranted because of high
research costs. But the drugs that are being introduced do not address real medical needs
in an overwhelming majority of cases. What, one may legitimately ask, then justifies such
high research costs — the burden of which are finally passed on to consumers.
It also needs to be noted that many new drugs are initially researched in public funded
institutions. For a major proportion of newly introduced drugs it is virtually impossible to
trace the precise step which is innovative. Beta-blockers, H2-blockers, Taxol, ACE
inhibitors -- therapeutic groups which spawned a host of "blockbusters" were initially
researched in public funded institutions.
It is but natural that an industry driven by rent incomes will bypass the needs of the
income poor across the globe. The most severely affected are the poor living in
developing countries. Tuberculosis kills half a million people in India alone, but the last
new anti-TB drug was introduced more than two decades back. Just four per cent of drug
research money is devoted to developing new pharmaceuticals specifically for diseases
prevalent in the developing countries. Some drugs developed in the 1950s and 1960s to
treat tropical diseases, on the other hand, have begun to disappear from the market
altogether because they are seldom or never used in the developed world. These drugs arc
termed, appropriately, as ’’orphan" drugs.
The pharmaceutical industry argues that patented drugs constitute less than 10% of drugs
that are being used in developing countries. The statement is possibly true when taken at
its face value. But what it hides is the fact that this is because drugs addressing the real
medical needs of developing regions are seldom addressed by pharmaceutical companies.
So the reason why so few commonly used drugs in developing countries are under
patents is not because new drugs are not necessary, but because pharmaceutical countries
do not develop appropriate drugs.
Patents make for Bad Science
Strong patent protection now extends to protection of test data generated by companies
while researching new products. The pharmaceutical industry argues that granting data
exclusivity for test data is crucial, since the development of these data is expensive.
Allowing other companies to rely on data developed by the innovator, instead of having
11
to develop their own clinical data, would give them an unfair economic advantage. But
the net result is that there is less and less disclosure of information when patents arc filed.
We now have an emerging trend that is contrary to the standard argument in favour of
strong patent protection: that such protection ensures early disclosure of innovations and
thus promotes faster dissemination of knowledge.
“Full disclosure” usually means providing enough detail for a “person skilled in the same
or the most clearly related area of technology to construct and operate” the patented
object. Strong patent protection is now moving the pendulum away from the concept of
"full disclosure" and it is a matter of grave concern for the scientific community. Can
information provided by patients acting in the public interest legitimately be considered
the intellectual property of a pharmaceutical company? In practice, to support the
marketing of their new products, most manufacturers make some of their intellectual
property generally available by publishing some of the reports upon which their
successful licensle applications were based. Unfortunately, these reports are not
generally representative of all the evidence. A report in 1980 showed that studies
submitted in support of applications for new licenses for drugs in which side-effects had
been shown were less likely than others to be published. There have been a number of
recent instances of suppression of vital information by companies. Clearly, patents have
ceased to be a vehicle of dissemination of knowledge and have become the tools to
constrain its spread — quite the antithesis of what good science requires.
Patents Retard Domestic Industries in Developing Countries
Domestic industries outside the developed countries have been able to develop in places
where strong patent production has not been allowed. India is representative of such a
situation, where the Indian Patents Act of 1970 allowed the development of a strong
vertically integrated pharmaceutical industry. It was facilitated by the ability of Indian
companies to develop and market generic versions of patented drugs. The issue is not just
that it allowed cheaper versions of patented drugs to be sold in the Indian market. More
importantly, it led to the development of world class manufacturing facilities in a
developing country.
Today the campaign on access to drugs draws strength from Indian companies like Cipla
who are offering anti-AIDS drugs at one tenth to one fortieth of the prices being charged
by large pharmaceutical countries. It also draws strength from the ability of Brazil to
indigenously manufacture 8 out of the 12 anti-AIDS drugs and also to distribute them to
all those who require these drugs. Let us not forget that this could not have happened if
the TRIPS accord had been signed in 1975 and not in 1995! It is this that we stand to lose
as we move towards "harmonised" standards of strong patent protection.
It is also this that is sought to be taken away by large pharmaceutical companies through
the medium of TRIPS. Notwithstanding the rhetoric, the TRIPS accord was not pushed
through to access markets of developing countries. These markets represent just a
fraction of the global market — India, for example, accounts for 0.8% of the market, in
' contrast to 33%, 24% and 20% for the US, Europe and Japan respectively. Rather the
12
TRIPS agreement became a necessity to protect the markets of large pharmaceutical
companies in the developing world against competition from cheaper generic drugs
manufactured in countries like India and Brazil. TRIPS in other words is not about "free"
trade, but has to do with protection of markets in developed countries.
The Way Forward
I have attempted in this paper to suggest that financial returns for large pharmaceutical
companies is evidence of profiteering and not just legitimate profit making. The intent
has also been to show that patenting leads not only to high prices but also to the wrong
kind of research, to inhibition of research, and also to stifling of domestic industries in
developing countries. The next logical step would be to suggest that the patent system
which perpetuates such a situation be taken apart and be replaced by a new system, that
brings back a balance between the rights of the inventor and public interest.
The issue of access to AIDS drugs is, arguably, the weakest link in the TRIPS accord and
the emerging global patenting system. The tremendous evocative appeal of the “Access
Campaign to AIDS Drugs” lends it the potential to delegitimise the TRIPS agreement.
However, to effectively strike at the “weakest link” the campaign for access to cheap
medicines has to look beyond AIDS and beyond the TRIPS framework. The "access
campaign" must eventually extend itself to cover access to all essential medication and
draw in interest groups from across the globe. While, tactically, the foregrounding of the
AIDS issue is correct, there is the danger that the pharmaceutical industry might try a
damage limitation exercise and agree to view the issue as an exception. As evinced by the
recent (April, 2001) WTO/WHO meeting in Norway, such an exercise has already been
initiated. The slogan of "differential pricing" is being used to suggest that the TRIPS
framework may allow lower prices to be charged for ant-AIDS drugs. At some point
there may be a grudging acceptance that exception may be made in a few other cases too.
This is by no means a satisfactory solution. The pharmaceutical industry would still
ensure that the agreement continues to hold in the case of most therapeutic groups, and
also that their prime markets remain secure. The solution only partially addresses just one
part of the many problems associated with the TRIPS accord.
The campaign needs also to look beyond the TRIPS framework. While arguing for a
more “liberal” interpretation of the TRIPS language to ensure better access, it is also
necessary to understand that the TRIPS agreement was arrived at on the basis of
submissions of the pharmaceutical industry. It is an agreement designed to promote
monopolies and hinder competition. The campaign needs to look beyond TRIPS, and use
the present momentum to force its renegotiation. The minimum that such a renogotiation
must demand is the incorporation of provisions that automatically promote competition in
all markets, and curb the monopoly over knowledge that the present TRIPS regime
allows. Such a demand is not really something "revolutionary’'. Prior to the passage of the
Kefauver-Harris drug law in 1962 in the US, Senator Kefauver's original idea was to have
automatic compulsory licensing after three years at 8% royalty. [Richard Harris' "The
13
Real Voice,r]. Though the proposal was shelved, it was something that was seriously
debated upon.
The chink in the armour of TRIPS is visible. The pharmaceutical industry has never been
as much on the defensive as it is today. Never before has public perception been as
hostile to wards the industry. Never before has such a large unity been forged on the issue
of patents in pharmaceuticals. The question really is, can we capture the moment?
Amit Sen Gupta
Delhi Science Forum
B-l, 2nd Floor, LSC J Block, Saket
New Delhi - 110 017
email:ctddsf@vsnl.com
14
5CGKCI
I Nn rW/WOlMI I’l l
C.OVI HNMhNI or INDIA
MINT”.||(Y <>| dll MlCA|JI A I I KIII.I/I.H0
<"•
departmenr or chemicals & petrochemicals
i-.i<l<‘iiiuj .ill lher.o .•ispccH, bulk (lings will ho lu'p! undc'i
price regulation in accordance with the following critera:(i) ’
The total MAT value of any particular bulk drug is
more than Rs.2000 lakhs (Rs. 20 Crores) and the
percentage share of any of the forimilators
lators L
is 50% or
more.
(ii)
The total MAT value of any particular bulk drug is less
than Rs.2000 lakhs (Rs. 20 Crores) but more than
Rs.500 lakhs (Rs. 5 Crores) and the percentage
share of any of the formulators is 90% or more.
The above mentioned modified methodology and criteria are
the best available, keeping in view the inherent constraints with
respect to access to and availability of turnover data of large variety
and range of bulk drugs. This modified methodology meets the
requirement
that the bulk drugs for price control should be
identified on^tRe basis of extent of usage and the absence of
sufficient competition in both high selling and low selling
formulations On this basis, criteria have been enunciated in sub
para (vi) of para 10.D ll(a) the Note.
On the basis of the data worked out from the ORG-MARG of
March, 1999 for the application of the above mentioned
methodology and on the basis of the application of criteria stated in
sub-para (f) above, there would be about 37 bulk drugs under price
control and the retail market'coverage on account of formulations of
these drugs is estimated to be around 25% of the total retail trade
reported in ORG-MARG of March 1999. This span of control is
consjdered reasonable keeping in view the overall objective of the
Pharmaceutical Policy -- 2001” aiming at ensuring adequate
availability at reasonable prices and also creating an environment
conducive to channelising new investments into pharmaceutical
R&D and industry.
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GOVLHNMENI Oh INDIA
MINISTRY OF CHEMICALS & FERULIZERS
DEPARTMENT OF CHEMICALS & PETROCHEMICALS
ANNEX. Iv
SOME OF THE MODELS FOR WORKING OUT THE
MAXIMUM ALLOWABLE PRICE
[Refer sub-para (f) of para 10.B.II on P- 0 Qf the Noto}
The DPCRC’s observation that the present methodology of
microanalysis for price determination of bulk orugs through costcurn-tcchno-economic study lu’ecJs to be reviewed in.the context of
the liberalized economic regime, is a profound observation. The
pharmaceutical industry has been averse to such studies for the
reasons of maintaining secrecy with regard to their technology and
process details. Moreover, as the price fixed on the basis of such a
study is a normative price and not the actual price, it creates
problems for some producers of so called “quality drugs. The
industry has been consistently representing against the present
system. Hence, for calculating the "maximum allowable price" of
bulk drugs, it is proposed to allow the working out of the prices of
major manufacturers of a bulk drug, which is under price control, in
a given period of time on the basis of invoices submitted to the
Central Excise Authorities on which the Central Excise Duty is paid.
The data could also be collected from the top 4 or 5 formulators (as
pel ORC) <4 the coiicriiK'd tmlk diug
1 ho avoiago puichaso piico
for the concerned bulk drug could be determined for price
regulation on this basis also. Similarly, for bulk drugs, which are
imported, the average of the landed cost in a given period of time
shall be considered. The National Pharmaceutical Pricing Authority
(NPPA) under the Department of Chemicals and Petrochemicals
can take into account market based data and arrive at an average
"maximum allowable price" for the bulk drug on the basis of this
data.
If this is not possible the NPPA can devise its own
methodology. Once the average price is determined for a bulk drug,
it would be notified and shall be considered for revision from time to
Time. Under the Pharmaceutical Policy-2001, the flexibility to use
'market based data would be available to determine the maximium
allowable price" of bulk drugs. TheDepartment of Revenue and the
' Customs and Central Excise formations all over the country shall
assist the Department of Chemicals & Petrochemicals and its
attached office, the National Pharmaceutical Pricing Authority, to
get the data/invoices/information as deemed necessary for
conducting the above study from time to time. The Department of
Revenue be advised to take necessary steps in facilitating this
procedure.
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i .Hn.fwr/jooo ri.i
GOV! HNMLNr OF INDIA
ministry of chemicals & fertilizers
department of chemicals & petrochemicals
ANNEX.V
STATEMENT ON PHARMACFI ITICAl POLICY - 2001
[Refer paras 9, 11 and 13(ii) on p.4-5 &10 of Note]
INTRODUCTION
S
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 iuse of recombinant DNA technology, bulk
drugs requiring in-vivo use of nucleic acids
and specific
cell/tissue targeted formulations.
• Reservation of 5 drugs for manufacture by the public sector only
.was abolished in Feb.1999, thus opening them up for
manufacture by the private sector also.
’ r?o/ei?n J?XeSlment
automatic .route was raised from
inno/4° 74/o 'n MarCl1, 2000 and the same has been raised to
I UvJ /o.
•
Automatic approval for Foreign Technology Agreements i
is being
given in the case of all bulk drugs, their intermediates
and
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MINISTRY OF CHEMICALS 8. FERTILIZERS
DEPARTMENT OF CHEMICALS & PETROCHEMICALS
r
formulations except those produced by the use of recombinant
DNA technology, for which the procedure prescribed by the
Government would be followed.
•
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.
•
Extending the facility of weighted deductions of 150% of the
expenditure on in-house research and development to cover as
eligible expenditure, the expenditure on filing patents, obtaining
regulatory approvals and clinical trials besides R&D in
biotechnology.
•
Introduction of the Patents (Second Amendment) bill in the
Parliament. It, inter-alia, provides for introduction of product
patent regime and the extension in the life of a patent to 20
years.
3.
The impact of the policies enunciated, from time to time, by
the Government has been salutary. It has enabled the
pharmaceutical industry to meet almost entirely the country’s
demand for formulations and substantially for bulk drugs. In the
process the pharmaceutical industry in India has achieved global
recognition as a low cost producer and supplier of quality bulk drugs
and formulations to the world. In 1999-2000. drugs and
pharmaceutical exports were Rs.6631 -crores out of a total
production of Rs. 19,737 crores. However, two major issues, have
surfaced on account of globalization and implementation of our
obligations under TRIPs which impact on long-term competitiveness
_df Indian industry. These have been addressed in the
Pharmaceutical Policy - 2001. A reorientation of the objectives of
the current policy has also become necessary on account of these
issues:The essentiality of improving incentives for research and
(a)
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
(b)
The need for reducing further the rigours of price control
particularly in view of the ongoing process of liberalization.
4.
It is against this backdrop, that Pharmaceutical Policy - 2001
is being enunciated.
SECRET
I No 5/7/2000-1’1.1
cwriuiMrNr or India
ministry of chemicals a. fertilizers
DI I’All I MI NI or CHEMICALS 8. PETROCHEMICALS
OBJECTIVES
5,
The main objectives of this policy are:-
(a) Ensuring abundant availability at reasonable prices within the
country of good quality essential pharmaceuticals of mass
consumption.
(b) Strengthening the indigenous capability for cost effective quality
production and exports of pharmaceuticals by reducing barriers
to trade in the pharmaceutical sector.
(c) Strengthening the system of quality control over drug and
pharmaceutical production and distribution to make quality an
essential attribute of the Indian pharmaceutical industry and
promoting rational use of pharmaceuticals.
(d) Encouraging R&D in the pharmaceutical sector in a manner
compatible with the country’s needs and with particular focus on
diseases endemic or relevant to India by creating an
environment conducive to channelising a higher level of
investment into R&D in pharmaceuticals in India.
(e) Creating an incentive framework for the pharmaceutical industry
which promotes new investment into pharmaceutical industry
and encourages the introduction of new technologies and new
drugs.
APPROACH ADOPTED IN THE REVIEW
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.
To qualify as R&D intensive company in India, the PRDC has'
suggested following conditions (gold standards)
•
•
I
•
o
o
Invest at least 5% of its turnover per annum in R&D,
Invest at least Rs. 10 Crore per annum in innovative research
including new drug development, new delivery systems etc^ in
Iftdia,
Employ at least 100 research scientists in R&D in India,
Has been granted at least 10 patents for research done in India,
Own and operate manufacturing facilities in India.
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GOVERNMENT OF INDIA
MINISTRY OF CHEMICALS & FERTILIZERS
DEPARTMENT OF CHEMICALS 8. PETROCHEMICALS
8.
The recommendations of the PRDC in so far as they relate to
the Pharmaceutical Policy have been taken into account while
formufating the proposals on pricing aspects.
9.
The' Pharmaceutical Research & Development Committee
has recommended in its repoit, submitted inter-alia, the setting up
of a Drug Development Promotion Foundation (DDPF) and a
Pharmaceutical Research A
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 drucj 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 - 2001".
•
11.
It has emerged that the domestic drugs and pharmaceuticals
industry needs reorientation in order to meet the challenges and
canvass 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•
v Industrial Licensing
Industrial licensing for all bulk drugs cleared by Drug Controller •_
General (India), all their intermediates and formulations will be .
polished, subject to stipulations laid down from time to time in the
Industrial Policy, except in the cases of
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GOVERNMENT OF INDIA
MINISTRY OF CHEMICALS & FERT,L,ZER3
DEPARTMENT OF CHEMICALS & PETROCHEMICALS
-
<
bulk drugs produced by the use of recombinant DNA
technology,
.
, bulk drugs requiring in-vivo use of nucleic acids as the active
principles, and
specific cell/tissue targetled formulations.
0)
(ii)
(iii)
IIForeign Investment
Foreign investment upto 100% will be permitted, subject to
stipulations laid down from time to time in the Industrial Policy,
through the automatic route in the case of all bulk drugs cleared by
Drug Controller General (India), all their intermediates and
formulations, except those, referred to in para 12.1 above, kept
under industrial licensing.
III.
Foreign Technology Agreements
Automatic approval for Foreign Technology Agreements will be
available in the case of all bulk drugs cleared by Drug Controller
General (India), all their intermediates and formulations, except
those, referred to in para 12.1 above, kept under industrial licensing
for which a special procedure prescribed by the Government would
be followed.
IV.
Imports
Impoits ol diugs and phaimaceuticals will be as per EXIM policy in
force. A centralized system of registration will be introduced under
the Drugs and Cosmetics Act and Rules made thereunder. Ministry
of I lealth and Family Welfare will enforce strict regulatory
processes for import of bulk drugs and formulations.
AND
RESEARCH
TO
ENCOURAGEMENT
DEVELOPMENT (R&D)
In principle approval to the establishment of the
(a)
Support Fund
Pharmaceutical Research and Development
,
(PRDSF) under the administrative control of the Department of
Science and Technology, which will also constitute a Drug
Development Promotion Board (DDPB) on the lines of the
Technology Development Board to administer the utilization of the
V.
PRDSF.
Royalty receipts obtained on sales or assignment of Indian
(b)
intellectual property, including a patent held by a research-intensive
company, meeting gold standards, would be fully exempt from income tax.
(c)
Expenditure on consumables as well as on equipment
directly used in R&D by a research-intensive company, meeting
gold standards, would be allowed to be written off for purposes of
Income Tax within a period of one year.
'
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GOVERNMENT OF INDIA
MINISTRY OF CHEMICALS & FERTILIZERS
DEPARTMENT OF CHEMICALS & PETROCHEMICALS
(d)
Exemption to a research-intensive company, meeting gold
standards, from payment of import duties on chemicals, bio
chemicals, special consumables, equipment and spares, as
specified by the Government from time to time, required by it for
R&D in its own facility.
PRICING
Span of Price Control
(a)
The guiding principle for identification of specific bulk drugs
price
regulation should
continue,
as per DPCRC’s
for r
recommendation, to be: (a) mass consumption nature of the drug
and (b) absence of sufficient competition in such drugs. These
principles would be applied for developing the criteria for selection of
bulk drugs for price regulation under the Pharmaceutical Policy 2001. The identification of bulk drugs for price regulation would be
based on the following methodology
VI.
(')
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. would form the total basket out of which selection of bulk
drugs would be made for price regulation.
O')
The ORG-MARG data of March 1999 would form the basis
for determining the span of price control as suggested by
DPCRC.
. "(i'i)
The Moving Annual Total (MAT) value for any formulator in
respect of any bulk drug will be arrived at by adding the MAT ,
values of all his single-ingredient formulations of that bulk
drug, its salts, esters, stereo-isomers and derivatives,.
covering all the strengths, dosage forms and pack sizes
listed against that formulator in all groups I categories of the
ORG-MARG (March 1999).
(iv)
The MAT value for all the formulators, as defined in sub-para
(iii) above, in respect of a particular bulk drug will be added
lb arrive at the total MAT value in the retail trade.
(v)
The MAT value for an individual formulator, in respect of any
bulk drug, as arrived at in sub-para (iii) above, will be the
basis for calculating the percentage share of that formulator
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GOVERNMENT OF INDIA
MINISTRY OF CHEMICALS & FERTILIZERS
DEPARTMENT OF CHEMICALS & PETROCHEMICALS
in the total MAT value arrived at as in sub-para (iv) above,
in respect of that bulk drug.
(vi)
*
Bulk Drugs will be kept under price regulation if:The total MAT value, arrived at as irf sub-para (iv) above, in 1
respect of any particular bulk drug is more than Rs.2000 I
lakhs (Rs. 20 Crores) and the percentage share, as defined
in sub-para (v) above, of any of the formulators is 50/o or
(Vi)1
(a)
more.
The total MAT value, arrived at as in sub-para (iv) above, in
respect of any particular bulk drug is less than Rs.2000 lakhs
(Rs. 20 Crores) but more than Rs.500 lakhs (Rs. 5 Crores)
and the percentage share, as defined in sub-para (v) above,
of any of the formulators is 90% or more.
(b)1
(vii)
All formulations containing a bulk drug as identified above,
either individually or in combination with other bulk drugs,
including those not identified for price controLas.-bulk ..drug.
wilfbe undeTprice control. The Government shall, however,
retain the following over-riding power:In cases of drugs/formulations listed by the Ministry of Health
and Family Welfare, mentioned in sub-para (i) above, and
those presently under price control, having significant MAT
value as per ORG MARG but not covered under the criteria
in sub-para (vi) above, as a result of this proposal, the
NPPA would specially monitor intensively their price
movement and consumption pattern. If any unusual
movement of prices is observed or brought to the notice of
the NPPA, the Authority would work out the price in
accordance with the relevant provisions of the price control
order.
(b)
Maximum
(MAPE)
Allowable
Post-manufacturing
Expenses
(i)
Maximum Allowable Post-manufacturing Expenses (MAPE)
CO
will be 100% for indigenously manufactured formulations.
(ii)
For imported formulations, the margin to cover selling and
distribution expenses including interest and importers profit shall
no'Sexceed fifty percent of the landed cost.
Pricing of Formulations
For Scheduled formulations, prices shall be determined as
CO
per the present practice.
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GOVERNMENT OF INDIA
MINISTRY OF CHEMICALS & FERTILIZERS
DEPARTMENT OF CHEMICALS & PETROCHEMICALS
F'
(ii)
An R&D intensive company achieving “the gold standards
would qualify for an additional cost of 5% of ex-factory cost in
determination of the prices of Scheduled formulations manufactured
by it.
%
(d)
Ceiling prices
Ceiling prices may be fixed for any formulation, from time to time,
and it would be obligatory for all importers/formulators, including
those in small scale sector or marketing under generic name, to
follow the price so fixed.
(e)
Exemptions
;)
A manufacturer producing a new drug in the country, not
(')
produced elsewhere, if developed through indigenous R&D, would
be eligible for exemption from price control in respect of that drug
for a period of~l5 years from the date of the commencement of its
commercial production in the country.
"’)
A manufacturer producing a drug in the country by a process
(ii)
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 patented
under the Indian Patent Act, 1970, 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)
Any formulator may 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. 21- 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^atient , on the biisis of the proposed revised price,
exceeds beyond the limit of Rs. 2/- per day, obtain the necessary
price approval.
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GOVERNMENT OF INDIA
MINISTRY OF CHEMICALS & FERTILIZERS
DEPARTMENT OF CHEMICALS & PETROCHEMICALS
(f)
Pricing of Scheduled Bulk Drugs
.
(i)
Fot a Scheduled bulk drug, there shall be a price nouned as
the "maximum allowable price” (or being adopted while fixing the
prices of formulations containing that bulk drug.
(ii)
The Government shall, however, retain thfe overriding power
of fixing the maximum sale price of any bulk drug, in public interest,
and also to conduct cost cum techno-economic study, if it considers
it necessary to do so. as per present practice.
(g)
Monitoring
(i)
To have effective monitoiing and enforcement system and to
move away from the “controlled regime" to a “monitoring regime is,
in the present context, extremely important 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, 1997rwould need to be revamped and reoriented for this
purpose. It will continue to be entrusted with the task of price
fixation / piice icvision 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, decided to strengthen the National Pharmaceutical
x Pricing Authority by providing appropriate powers under the DPCO
which would make it mandatory for the manufacturer to furnish all
iiifoimalion as called for by NPPA and also to regulate such prices,
wherever, required.
(b)
Drug Price Equalization Account (DPEA)
Provision would be made in the new Drugs (Prices Control)
Order (DPCO) to ensure that amounts which have already accrued
to the DPEA and those which are likely to accrue as a result of
action in the past, are protected and used for (he purpose stipulated
in the existing DPCO.
secret
10 '
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GOVERNMENT OF INDIA
MINISTRY OF CHEMICALS & FERTILIZERS
DEPARTMENT OF CHEMICALS & PETROCHEMICALS
VII.
QUALITY ASPECTS
The Ministry of Health & Family Welfare would
x
progressively benchmark the regulatory standards against
(i)
those adopted in developed countries, for manufacturing.
(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 qpforcement 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
The National Institute of Pharmaceutical Education and
Research (NIPER) has been set up by the Government of India as
an institute of “national importance” to achieve excellence in
pharmaceutical sciences and technologies, education and training.
Through this institute, Government’s endeavor will be to upgrade the
standards of pharmacy education and R&D. Besides tackling
problems of human resources development for academia and the
indigenous pharmaceutical industry, the institute will make efforts to
maximize collaborative research with the industry and other
' technical institutes in the area of drug discovery and pharma
technology development.
SF.( TIE I
■t1
i Non -1 ou i nr caimni- r cor.i^n rn1 \
ON I COhn )MIC Al l-AIHS
3
SUBJECT:
Pharmaceutical Policy - 2001
INTRODUCTION
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 mere towards promoting accelerated
crowte of the pharmaceutical industry and towards making it more
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; o
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.
Reservation of 5 drugs for manufacture by the public sector only
was abolished in Feb.1999, thus opening them up for
manufacture by the private sector also.
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Foreign investment through automatic route was raised from
51% to 74% in March, 2000 and the same has been raised to
100%.
Automatic approval for Foreign Technology Agreements is being
given in the case of all bulk drugs, tnteir intermediates and
°™lallons except those produced by the use of recombinant
UNA technology, for which the procedure prescribed by the
Government would be followed.
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.
APPROACH ADOPTED IN THE REVIEW
3.
Two major issues have surfaced on account of globalization
and implementation of our obligations under TRIPs which impact on
long-term competitiveness ct Indian industry. These have been
addressed in'the Pharmaceutical Policy - 2001. A reorientation of
u e c^j.^.ixes of the current policy has also become necessary on
c.cccunl of these issues (a)
(b)
4.
The essentiality of improving incentives for research and
development in the Indian pharmaceutical industry, to enable
tne mdustny to achieve sustainable growth particularly in view
Oi anticipated changes in the Patent Law; and
i he need for reducing further the rigours of price control
particularly m view of the ongoing process of liberalization.
in order to strengthen the pharmaceutical industry's research
In
ZSJSl
J° !**',he
"K** by
Indian pharmaceutical companies to undertake domestic R&D
Committee was set up in 1999 by this Department by the
! name of
Pharmaceutical Research ;and' 2
Development Committee (PRDC)
under the Chsirmcinship of Director <
General of CSIR. The
Committee has given its report and its
- ..J recommendatioris are
summarized in Annex. I.
JTo qualify as RSD intensive company in India, the PRDC has '
suggested following conditions (gold standards)
Invesj at least 5% of its turnover per annum in R&D,
ircltdinn1 least Rs-10 Cr°re Per annum in innovative research
including new drug development, new delivery systems etc. in
i nQia,
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©
Employ at least 100 research scientists in R&D in India,
l-las been granted at least 10 patents for research done in India,
Own and operate manufacturing facilities in India.
The recommendations of the PRDC in sc^far as they relate to
G.
the Drug Policy have been taken into account while formulating the
proposals on pricing aspects.
7.
The Pharmaceutical Research & Development Committee
has recommended in its repott, submitted inter-alia, the setting up
of a Drug Development Promotion Foundation (DDPF) and a
Pharmaceutical Research &
Development
Support
Fund
(PRDSF). This Committee recommended that the fund would be
created by collecting a surcharge of 1%ofthe maximum'retail price
of aii the formulations sold. WJlltin. the country anci cbuTcI’be ^xpecte’d—
to generate around Rs. 100 crore annually. I lowever, the Ministry of
Finance has, ict lieu of the surcharge, agreed to allocate Rs. 150
cro.es as Plarl Fund for creation of the R&D fund. This proposal is
being pursued through Expenditure Finance Committee separately.
8.
As far as the question of price control is concerned, the span
of_control has been gradually reduced since 1979. Presently, under
CLr-^0.1995 there are
bulk drugs and their formulations under
price control covering approximately 40% of the tolaLmarket. 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. Ip 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
x^vfew Committee (DPCRC), under the Chairmanship of Secretary,
Department of Chemicals & Petrochemicals was sot up in 1999
which has given its report. 1 he summary of these rc^^
recommendations
■' is at Annex.II. These recommendations have been
— i examined in
this Department.
9The domestic drugs and pharmaceutical industry needs
reorientation in order to meet the challenges and canvass
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 pace control over drugs and pharmaceuticals would
e 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
lca.es where prices behave abnormally. The Statement ^n
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Pharmaceutical Policy - 2001
objectives and measures.
(Annex. V) incorporates these
10.
In view of the steps already taken, as enumerated in
paragraph 2 above and in the light of the approas^j indicated in the
foregoing paragraphs, the proposals for inclusion in the Statement of
Pharmaceutical Policy - 2001 are detailed below
A.
PROPOSALS ALREADY APPROVED
I.
Industrial Licensing
Industrial licensing for all bulk drugs cleared by Drug Controller
General (India), all their intermediates and formulations will be
abolished, subject to stipulations laid down from time to time in the
Industrial Policy, except in the cases of
bulk drugs produced by the use of recombinant DNA
0)
technology,
bulk drugs'requiring in-vivo use of nucleic acids as the active
(ii)
principles, and
specific cell/tissue targelted formulations.
(iii)
II.
Foreign Investment
Foreign investment upto 100% will be permitted, subject to
stipulations laid down from time to time in the Industrial Policy,
through the automatic route in the case of all bulk drugs cleared by
Drug Controller General (India), all their intermediates and
formulations, except those, referred to in para 10.A.I above, kept
under industrial licensing.
III.
Foreign Technology Agreements
Automatic approval for Foreign Technology Agreements will be
available in the case of all bulk drugs cleared by Drug Controller
v General (India), all their intermediates and formulations, except
dhose, referred to in para 10.A.I above, kept under industrial
licensing for which a special procedure prescribed by the
Government would be followed.
IV.
Imports
Imports of drugs and pharmaceuticals will be as per EXIM policy in
. force. A centralized system of registration will be introduced under
the Drugs^and Cosmetics Act and Rules made thereunder. Ministry
of Health and Family Welfare will enforce strict regulatory
processes for import of bulk drugs and formulations.
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B.
PROPOSALS SUBMITTED FOR CONSIDERATION
I.
ENCOURAGEMENT
TO
RESEARCH
AND
DEVELOPMENT (R&D)
(a)
In principle approval to the establishment of the
Pharmaceutical Research and Development Support Fund
(PRDSF) under the administrative control of the Department of
Science and Technology, which will also constitute a Drug
Development Promotion Board on the lines of the Technology
Development Board to administer the utilization of the PRDSF.
(b)
Royalty receipts obtained on sales or assignment of Indian
intellectual property, including a patent held by a research-intensive
company, meeting gold standards, would be fully exempt from
income tax.
(c)
Expenditure on consumables as well as on equipment
directly used in R&D by a research-intensive company, meeting
gold standards^would be allowed to be written off for purposes of
Income Tax within a period of one year.
Exemption to a research-intensive company, meeting gold
(d)
standards, from payment of import duties on chemicals, biochemicals. special consumables, equipment and spares, as
specified by the Government from time to time, required by it for
RSD.in its own facility.
IL
PRICING ASPECTS
Span of Price Control
The guiding principle for identification of specific bulk drugs
for
price regulation
should
continue, ' as per
DPCRC’s
recommendation, to be: (a) mass consumption nature of the drug
and (b) absence of sufficient competition in such drugs. These
principles would be applied foi developing the criteria for selection of
s bulk drugs for price regulation under the Pharmaceutical Policy ;2001. However, the DPCRC’s recommendation regarding the new
criteria for ascertaining the mass consumption nature of a bulk drug
on the basis of the top selling brand is not acceptable as it gives rise
to anomalies. After due consideration of various options in this
regard, the Department proposes that the identification of bulk drugs
for price regulation should be based on the following methodology
(3)
• 0)
The 279 items appearing in the alphabetical list of Essential
Dhjgs 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,'
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(i>)
-'XHLT
therefrom of sera & vaccines, blood products, combinations
etc should form the total basket out of which selection of
hulk drugs be made for price regulation.
The ORG-MARG data of March 1999 would form the basis
DPCRcrminin9 ,he :;pan °f Pr'Ce conlr6Uas suggested by
(iii)
(iv)
(v)
(vi)
(a)
(b)
-
The Moving Annual Total (MAT) value for any formulator in
respect of any bulk drug will be arrived at by adding the MAT
values of all his single-ingredient formulations of that bulk
drug, its salts, esters, stereo-isomers and derivatives
covering all the strengths, dosage forms and pack sizes
S?
lhat formu,ator in a" groups / categories of the
ORG-MARG (March 1999).
The mat value for all the formulators, as defined in sub-para
in) above, in respect of a particular bulk drug wilt be added
to arrive at the total MAT value in the retail trade.
The MAT value for an individual formulator, in respect of any
bulk drug, as arrived at in sub-para (iii) above, will be the
basis for calculating the percentage share of that formulator
m the total MAT value arrived at as in sub-para (iv) above in
respect of that bulk drug.
Bulk Drugs will bo kept under price regulation if The total MAT value, arrived at as in sub-para (iv) above, in
respect of any particular bulk drug is more than Rs 2000
laKhs (R^20 Crores) and the percentage share, as defined
in sub-para (v) above, of any of the formulators is 50% or
more.
The total MAT value, arrived at as in sub-para (iv) above, in
rasPect of any particular bulk drug is less than Rs.2000 lakhs
(Rs. 20 Crores) but more than Rs.500 lakhs (Rs 5 Crores)
and the percentage share, as defined in sub-para (v) above
of any of the formulators is 90% or more
(rne rationale for indicating threshold values of MAT and thQ
•
above is given in Annex, til.)
C er,a enunciated in sub-para (vi)
■> (vii)
retain the following over-riding power:cases of drugs/ronnulalions listed by the Ministry of Health
anfl Family Welfare, mentioned in sub-para (i) above and
those presently under-price control, having significant MAT
value as per ORG-MARG but not covered under the criteria
NPPA P3'3, iVl) ab0VG' 33 3 result of this Proposal, the
NPPA would specially monitor intensively their price
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(b)
movement and consumption pattern. If ’ any unusual
movement of prices is observed or brought to the notice of
the NPPA, the Authority would work out the price in
accordance with the relevant provisions of the price control
order.'
^^'murn Allowable Post-manufacturing
Expenses
(')(■'
________________________________________________________________________________________
Maximum Allowable Post-manufacturing Expenses (MAPE)
will be 100% for indigenously manufactured formulations
(ii)
F
For 'imported formulations, the margin to cover selling and
distribution <expenses including interest and importer's profit shall
not exceed fifty percent of the landed cost
(c)
■
Pricing of Formulations
(■)
For Scheduled formulations, prices shall be determined as
per the present practice.
(ii)
An R&D intensive company achieving "the gold standards"
would qualify for an additional cost of 5% of ex-factory cost in
determination of the prices of Scheduled formulations manufactured
by it.
(iii)
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
QXk'S^ Id^’ 'f any) mirius sixteen Percent thereof in case of
Scheduled drugs, will continue.
(iv) 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, in case of non-Scheduled formulations, DPCRC has
recommended that the difference between the first sale price of a
"
™rmU aJ°rf ^nd.the relai1 price prinled on the label be ''mited to forty
percent of the latter. The matter was considered and it was felt that
' such a ceiling may not be made obligatory but be enforced through
internal guideline to NPPA.
(d)
Ceiling prices
Ceding prices may be fixed for any formulation, from time to time
and it would be obligatory for all importers/formulators including
!oS;^Pz sT^ec,or or
(e)
Exemptions
omriurOdmrU?CtUrer producin9 a new drug in. the country not
produced elsewhere, if developed through indigenous R&D, would
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be eligible for exemption from price control in respect of that drug
for a period of 15 years from the date of the commencement of its
commercial production in the country.
(ii)
A manufacturer producing a drug in the CQuntry by a process
developed through indigenous R&D and patented under the Indian
Patent Act, 1970, would bo 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 patented *
under the Indian Patent Act, 1970, 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 controj. 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. 2Z- 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. ,
Pricing of Scheduled Bulk Drugs
For a Scheduled bulk drug, there shall be a price notified as
the '’maximum allowable price” for being adopted while fixing the
prices of formulations containing that bulk drug.
(0
(0
v
(Some of the models for working out the 'maximum allowable price’ are detailed in Annex. IV.)
(ii)
The Government shall, however, retain the overriding power
of fixing the maximum sale price of any bulk drug, in public interest,
and also to conduct cost cum techno-economic study, if it considers
it necessary to do so, as per present practice.
(9)
Monitoring
(i)
^he 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
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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 oLpnedicines 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 v.'ould 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.
\
v
, 01)
Drug Price Equalization Account (DPEA)
Provision would be made in the new Drugs (Prices Control) Order
•x(DPCO) to ensure that amounts which have already accrued to the
DPEA and those which are likely to accrue as a result of action in
the past, are protected and used for the purpose stipulated in the
existing DPCO.
HI.
QUALITY ASPECTS
. (a)
The DPCRC’s recommendation that the requirements of
"Good Manufacturing Practices'’ prescribed under the Drugs &
Cosmetics Act and Rules made thereunder be upgraded to the
levels prescribed for WHO/GMP certification is acceptable. The
■Ministry of Health & Family Welfare will be advised
(i).
to progressively benchmark the regulatory standards against
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those adopted in developed countries, for manufacturing.
(ii)
to progressively harmonize standards for clinical testing with
international practices.
(iii)
to streamline the procedures and steps for quick evaluation
and clearance of new drug applications, developed in India through
indigenous R&D.
(b)
to ensure high standards of quality, safety and efficacy of
drugs and pharmaceuticals.. Ministry of Health and Family Welfare
would (a) set up a world class Central Drug Standard Control
Organisation (CDSCO) by modernizing, restructuring and reforming
the existing system and (b) establish an effective net work of drugs
standards enforcement administrations in the States with the
CDSCO as a nodal center.
11.
On the assumption that the proposals indicated above will be
approved, a Draft Statement entitled "Pharmaceutical Policy -2001"
has been prepared (Annex.V ) for the public announcement.
12.
Comments of the Departments of Industrial Policy &
Promotion, Biotechnology, Health, Indian Systems of Medicines
and Homeopathy, Scientific & Industrial Research, Science &
Technology, Revenue, Economic Affairs. Expenditure and the
Planning Commission were called for and their views alongwith the
comments of this Department thereon are at Annex. VI.
13.
The approval of the Cabinet Committee on Economic Affairs
is requested to the following :
(i)
'(ii)
14.
Proposals contained in para 10 B above relating to
Encouragement to Research and Development (R&D),
Pricing and Quality of Drugs and Pharmaceuticals.
Draft Statement titled “Pharmaceutical Policy - 2001” (at
Annex.V) for public announcement.
A Statement on
Appendix -I.
15.
Implementation Schedule is given
at ’
This note has been seen and approved by the Minister (C&F).
( Sharad Gupta )
Joint Secretary to the Government of India
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ANNEX. I.
RECOMMENDATIONS OF PRDC
[Refer para 4 on p.2 of the Note]
S.N.
Action Point
1.
Establishment of a Drug Development
Promotion Foundation_________
Revamping
and
modernization
of
CDSCO________________________
Establishment of the Pharmaceutical
R&D Fund._______ __________________
Establishment and operationalisation of
GMP/GLP/GCP Monitoring Authority
2.
3.
4.
Responsibility for
action____________
Dept, of C&PC
Min. of Health and
Dept, of C&PC_____
Min. of Finance and
Dept, of C&PC.
Dept, of Science
and
Technology,
ICMR, DCG (I)
Min. of Industry and
Dept, of C&PC.
Min. of Finance &
Dept, of C&PC.
5.
Amendments to the Indian Patent Act.
6.
Establishment to the Income Tax Act for
tax exemptions on royalty and licensing
from abroad and export of pharma R&D
j Amendments to the custom duty Mm. of Finance .&
| structure to exempt imports for pharma Dept, of C&PC.
■ R&D from costom_duty______________
Amendments to legislation etc. for Min. of Welfare &
contract research use and import of Dept, of C&PC.
animals for pharma R&D.____________
Establishment of a tenable system of Dept, of ISM
quality assurance for indigenous system
of medicines.________________________
Establishment of a new drug discovery Dept,
of
C&PC,
infrastructure
CSIR, ICMR, DST,
DBT, & Dept.: of
ISM,
Documentation
and
digitization
of CSIR, ISM, ICMR
indigenous knowledgt?_systems________ and Dept, of C&PC
Human Resource Development for New CSIR, ICMR. Dept,
Drug Discovery and ISM.
of ISM, DBT, DST,
Universities & Dept,
of C&PC.
7.
8.
9.
10.
11.
12.
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ANNEX.II
DRUG PRICE CONTROL REVIEW COMIW^TEE
SUMMARY AND RECOMMENDATIONS
[Refer para 8 on p. 3 of Note]
The Committee held detailed deliberations to review the existing
drug price control mechanism in the country keeping in view the terms of
reference assigned to it by the Government. Apart from studying details in
regard to pricing systems prevalent in various countries, two separate
teams visited (a) Canada, France and Egypt and (b) U.S.A, and Mexico to
have first hand information on the price regulatory systems operating in
these countries. Bolhjhe teams had extensive discussions with various
interest groups namely manufacturers, trade,
pharmacists and
Government officials' of these countries. Also, the Committee constituted
a group consisting of Dr. Rakesh Mohan, Dr. Amit Mitra, Dr. S. M.
Jha.rwal, Shri Sharad Gupta, Shri K. M. Kaul and Dr. P. V. Appaji to look
into the present criteria of selection of drugs for price control and the
current
price
determination
mechanism
and
to
suggest
modifications/alternatives to make the system of price control simpler and
more transparent.
Based on the suggestions received from industry
associations, consumer interest groups, voluntary health organisations,
trade, State Governments and some experts, and .inputs received from
teams and the group mentioned above, the Committee makes the
following recommendations alongwith relevant observations :'
1.
The- committee noted that the Indian Pharma Industry has
registered an impressive growth over the years and has been expanding
its rri&rket beyond the national frontiers. But in the changing trade and
regulatory scenario at the international level mugh more needs to be done
to make available the required medicines in abundance to the masses Of
laTe? increasing incidence has been observed of the diseases such as
malaria, Diarrhoea, T. B., Sexually Transmitted Diseases (STDs),
Hepatitis-B, Whooping cough (pertussis), measles, amoebiasis, diabetes
mellitus and mood disorders. To deal with the various diseases, the public
funding available in India for healthcare facilities and products is
abysmally inadequate. Currently only about 3.5% of the total outlay of the
states is spent on health needs. The available data reveal that the
per capita expenditure on medicines is less than Rs.5.00 in many states.
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DEPARTMENT OF CHEMICALS & PETROCHEMICALS
The role of the state assumes special significance since the proportion of
the people below poverty line is more than one third of the total
population. The fact that these people do not have the means to meet the
expenditure even on'minimum caloric level require# implies that the
expenditure on medicines which is of emergent nature is much beyond
their capacity. Further, for the large segment of the population above
poverty line, the problem is compounded in the absence of rational private
health care, adequate and affordable public health care and
health
insurance cover because they are not able to meet the entire expense out
of their pocket.
2.
The Committee noted that in most other countries, the regulation of
the drug prices is considered necessary to contain public expenditure due
to government’s role in funding social health and insurance schemes that
cover hospital and out-patient drugs. The price regulations are used as an
instrument to keep their health budgets within reasonable limits. In these
countries, a substantial proportion of the population is covered through
health insurance and public healtli schemes. As a result, the consumers
are not affected directly by the high prices of drugs or high costs of
medical services, but are made to pay for the increased prices / cost
through high insurance premium
As opposed to this, a substantial
proportion of the population in India is market dependent and have to
meet all their expenses out of their own pocket on this account, making
price regulation of pharmaceutical products in the market unavoidable.
3.
In India, in view of a large segment of the population being poor,
the reach of the health coverage being inadequate, non-availability of
appropriate medical insurance coverage, price inelastic demand, market
imperfections and inadequate consumer awareness, the Committee
considers Jt necessary to continue formal regulation of the prices of
pharmaceutical products and medicines for some more time till public
expenditure on health care for those who cannot afford is increased and
an alternative system is developed for others. However, it is pertinent to
point out that the pharmaceutical industry is perhaps the only knowledge
based and highly technology oriented manufacturing industry in the
country which is under a formal price control regime. This is mainly
because the financial provisions in the budgets of Central and the State
Governments are too inadequate to cater to the needs of the ailing people.
The Committee expresses serious concern on this aspect and feels that
the budgetary provision should progressively be raised. Further, there is
an urgent neecf to expand public health care, supply of essential drugs
and the health insurance cover, both by the governmental and the non
governmental organisations, as prevailing in the developed countries.
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DEPARTMENT OF CHEMICALS & PETROCHEMICALS
Such an alternative arrangement should be made fully operative within a
period of next five years.
4.
The present system of product-based price control has been in
existence in this country since long with progressive decontrol in terms of
the number of drugs as well as their share in the total pharma market. For
the reasons staled above, the Committee is of the view that this system
should continue, for the lime being, bul with simplified methodologies and
procedures lo lake cognizance of the changed circumstances of
liberalisation ushered into the Indian economy.
For the purpose of
determining span of control and pricing of the drugs identified for price
control, the Committee recommends that:
(i)
The approach to price control based on selectivity be continued and
applied across-the-board to all the drugs used in the country irrespective
of their therapeutic use. The guiding factors to identify specific drugs
should be (i) mass consumption nature of the drug and (ii) absence of
adequate competitio'h in such drugs. This approach will also ensure that
the important drugs needed for National Health Programmes, where
adequate competition does not exist, are covered for the purposes of price
control.
(ii)
The Committee considered the suggestion that the low cost drugs
measured in terms of "cost per day per medicine" may be taken out of
price control. While the Committee feels that the above approach is
desirable, it calls for an objective and careful assessment for identifying
"low cost drugs", as the per day cost of a medicine varies depending on
dosage form, patients condition, variation in the prescribed dosage, price
difference in various brands, etc. The Committee is of the opinion that the
price of the largest selling pack of a brand be taken as the basis to
determind the low cost nature of a medicine for which, the cost of
maximum prescribed dose per day (irrespective of age and ailment) may
be considered and the cost per medicine per day so worked out should
not be more than Rs.2.00. This criteria is reasonable because for a short
duration treatment of 10 days, it amounts to only about 1.5 per cent of the
monthly per capita income and for long duration, it will be about 5 per~
cent. In common man’s perception, this expenditure is same as that for a
cup of tea. I lowever, the prices of such drugs would need to be monitored
so that these prices are not allowed to go up beyond acceptable limits.
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MINISTRY OF CHEMICALS & FERTILIZERS
DEPARTMENT OF CHEMICALS & PETROCHEMICALS
The committee noted that the criteria of mass consumption laid down in
the Drug Policy, 1994 had come under criticism on account of non
exclusion of "export vaiue” from the turnover of a bulk drug. The main
argument against the non-exclusion of the "export value" was that it does
not truly reflect the mass consumption nature of the dojo in the domestic
market and unduly inflates the turnover of a drug with high export share.
However, it was reported that the value of exports was not segregated for
the reasons of the fluctuating nature of export.
In this regard, the
Committee feels that if the criterion of "bulk drug turnover" is to be applied,
non-exclusion of the export turnover of a drug from the total turnover for
the purpose of assessing the mass consumption nature of a drug in a
more liberalised regime, is not a sound accounting method. Therefore,
identification of a drug for keeping it under price control may be decided
on the basis of its consumption in the domestic market which would
comprise domestic production and imports less exports.
The turnover level of Rs. 40 million stipulated in the Drug Policy as
modified in 1994 ma/'be updated on the basis of general rate of inflation
(WPI — All commodifies). With a view to undertaking such an exercise the
Committee collated the data available from the Annual Report of the
Department of Chemicals & Petrochemicals, the periodical returns/data
received from manufacturers by NPPA and observed that the data were
inadequate
Therefore, the Committee issued a public notice in the
national news papers (Hindi and English) requesting the manufacturers to
furnish the data for the year 1998-99 on production and exports (quantity
and value) of both the bulk drugs and formulations.
However, the
response was poor and the attempts to update the data did not succeed.
Therefore, the committee felt that the available data-were not complete to
work out the turnover, as defined above.
5.
In view of the above, the committee considered an alternative
method-based on the sales turnover of formulations (brand wise) in
various categories as given in the monthly retail store audit report on the
pharmaceutical market by a leading and reputed organisation, namely.
ORG-MARG. The ORG-MARG provides, on a monthly basis, the data on
moving-annual total (MAT) representing the sale value during a twelve
month period for each of the? formulation pack marketed by different
manufacturers. The formulations with their sale value are categorised as
per their clinical/therapeutic/chernical classification. For the purpose of
judging mass consumption nature of a bulk drug, any brand based on a
given drug having specified minimum value of MAT could be considered
as a mass consumption drug. Secondly, to judge the level of competition,
if the market share of a brand in a specific category is found to be higher
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DEPARTMENT OF CHEMICALS & PETROCHEMICALS
than the maximum stipulated share, such drug may be considered as
having inadequate’competition.
By adopting the above criteria, the
specific bulk drugs may be identified based on the composition of the
selected brands.
'
K
6.
The group constituted by the committee to consider an appropriate
methodology has made the following suggestions, with which the
committee agrees:(i)
The minimum MAT value of a brand for the purpose of determining the
mass consumption nature of the drug may be considered as Rs. 10 crores.
(•i)
Secondly, a brand with 10 per cent or more share in a given category may
be treated as having inadequate competition.
(iii)
Identify the brands having MAT value of Rs. 10 crores and above with a t
share of 10% or abovejn the group/category (there are approximately 180 H
categories in ORG). For this purpose, the March, 1999 issue of the ORG- v
MARG Report which provides firm data for the year, 1998-99 be used.
(iv)
Exclude all brands having Ayurvedic and other products which are not
covered under DPCO
(v)
Exclude the multi-ingredient based brand formulations.
(vi)
List out the bulk drugs contained in each of the brand products so selected
for the purpose of identifying the bulk drugs to be included under price
control.
(vii)
From the list of bulk drugs so worked out, the low cost drugs may be
eliminated on the basis of "per day cost of a medicine” worked out based
on thesmaximum retail price (MRP) of the top selling pack of the brand
from which the concerned bulk drug was identified. As stated earlier, the
per day cost of a medicine should not exceed Rs.2.00 for being
considered as ’’low cost medicine”. *
•
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7.
The committee recommends that the above methodology be
adopted for identification of specific bulk drugs to be put under price
control.
Accordingly, the Government would need to undertake an
exercise to arrivq^at a list.
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DEPARTMENT OF CHEMICALS & PETROCHEMICALS
8.
Methodology for fi/ation/determination of prices of bulk drugs
(0
For determining the price of a bulk drug, three alternatives were
considered viz. (i) The cost-curn-techno-oconomic study ^ii) Market price
a a an (hi) import price data. It was felt that the present methodology of
03 YT f.°r EriCe delermination through cost-cum-techno-economic
7,!edS. ° be rGviewed in (he context of the liberalised regime
erein the prices are likely to be determined by the market forces The
te(e als° l°ok note °f ‘he ‘act that the industry has been averse to
leehnn UdlGS
thG rGasons °f maintaining secrecy with regard to their
technology and process details. This would become a more legitimate
oncern particularly in the context of introduction of product patents
I herefore, the committee recommends that the market price data would
e a better method to determine realistic prices as compared to that based
on cost-cum-techno-economic studies.
(ii)
or the purpose of determining the price of a bulk drug, the committee
recognizes that a system of price related information would have to be
evolved since there is no single source of data which can be relied upon
rhe possible sources of information could be the chemical/drug industry
journals, purchase documents available from formulators import data as
available from DGHS. the Central Excise authont.es and Annual Cost
wo?k n
?e Governm,-nl 'W develop a suitable method to
Z
, representative price of a bulk drug based on an averaging
appropriate to the available data.
y y
(iii)
Such qrheSIS ,rom ,T° manu'ac,uror
’requonl revision in '(he prices
Such changes in the prices, if allowed, are bound to result in undue
dXlA nor?h?e marke'
WOUld neither bS in lha interesl of tha
based hn ? cona™ers- Therefore, after having determined the price
based on a weighted average market price, taking into account a
reasonable duration and source of data availability, revision in the bulk
drug prices' may be effected on an yearly basis and the prices so
base^onl. Te
nOtified/Or 1110 PurPose of P^ing of formulations
perXino io Z
firS'
°f June on the basis
data
^nno
lh
preced'ng financial year and statutory chances
announced m the budget for the current year. Provided however that
i .1 a view to keeping the prices within reasonable limits annual increase
may not be allowed beyond a lim.t which may be p^esedbed bv th!
lhS baSIS °f lhe ratQ of inflation during the preceding^ear
measured m terms of WPI of all commodities.
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In case the price to be notified on the basis of weighte
price of a drug as calculated under (iii) above is not accep
9
producer(s), at his request and on adequate information emg PJ^71
•
the government may require a cost cum techno-economi
y
undertaken as an exceptional measure. Further, ^^^^inos arl
undertaken only in situations where (i) Anti-dumping proceedings are
initiated and / or (ii) Public interest is involved. Where ever, suec scum-technical studies are to be undertaken, the present method may
adopted.
The two-third cut-off criteria in respect of the estimated
production of a drug to determine its price has generally been found to be
with, a sound economic rationale as the price so fixed covers bulk of t e
production i.e. more than 66 percent. This also encourage cost efficient
production while discouraging cost inefficient ones. Further capacity
utilisation may be taken at 80 per cent or actual whichever is higher so as
to be in- line with criteria adopted by the financial institutions for the
purpose of appraising proposals for granting financial assistance.
(iii)
Methodology for determining the prices of formulations.
9.
The Committee also deliberated on the suggestion that instead of
prices of bulk drugs, the prevailing market prices (MRP) of the
the
formulation packs containing any of the drugs identified for price control
may be taken as the bench-mark price and notified. Revision in the
notified prices'm future were suggested to be allowed within me limit of
rat° of inflation measured in terms of CPI for industrial workers/agricullural
labourers. It was also suggested that the price changes for the controlled
formulations may be reviewed by the Government every year for taking
(i)
necessary corrective measures.
The Committee considered the above suggestion and felt that the
following problems are likely to be encountered in this regard .
(a)
(b)
This method would provide automiilicily in the price fixation method for
formulations and provide incentive to the manufacturers to revise their
prices upwards. The concept of automaticity in pricing was considered in
the Drug Policy on an earlier occasion and was not found to be desirable.
Secondly, as the basis of price determination of controlled drugs (costplus) and'decontrolled drug formulations (market forces) differ, it would not
be appropriate to take the prevailing market prices as the bench mark. In
this regard, the suggestion of the industry for grant of one time increase
on the prices of controlled formulations, based on inflation factor, to bring
these at par with the decontrolled formulations (now to be brought under
price control) might unduly increase the prices.
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DEPARTMENT OF CHEMICALS & PETROCHEMICALS
(c)
Thirdly, (ho prices of new introductions with different pack sizes and
different slrenglh/compositions than those notified as bench mark
formulations would need to be fixed afresh renderirjcj the system more
complex and disputable.
v
In view of the above, the Committee felt that a cautious approach needs to
be adopted at this stage. However, based on a further review after about
three years i.e. before the TRIPS provisions come into existence, this
suggestion may be reexamined for its feasibility keeping in view the
observed changes in the availability, price situation and rationalisation of
phrama products.
(ii)
Therefore, the present method of determination of the- prices of
both imported and indigenous formulations on the basis of formula given
in para 7 of DPCO, 1995 may continue. However, for the indigenously
produced formulations the Committee has noted that the existing
methodology does^Yiot account for expenses on account of (a)
maintenance of quality by observing WHO certification etc. and (b)
improved packaging to check counterfeiting, maintenance of quality during
the shelf life, etc.
These elements involve capital investment and
recurring expenditure. Presently, a large number of manufacturers in the
country do not have WHO certification.
However, recovery of the
expenditure incurred on these elements through increased MAPE will not
be correct as per the established accounting principles since MAPE
covers only the post manufacturing expenses.
Nevertheless, the
Committee feels that due weighlage needs to be given to these elements
of cost while working out the prices of the formulations. With a view to
reducing the rigorous by moving from the micro analysis to the macro
assessment, the committee recommends that an additional eight per cent
cost be - allowed on the products manufactured under WHO-GMP
certification and additional upto two per cent for improved packaging, on
application by a manufacturer, to compensate for these costs over and
abov'e the ex-factory cost worked out based on the existing methodology
5s given in para 7 of the DPCO, 1995. Further, recognizing that there is a
need to improve the GMP standards to standards such as US-FDA/MCA
for encouraging exports, the Committee suggests that an appropriate
provision to meet higher expenses on this account may be allowed
through a further three per cent of the Ex-factory Cost, over and above
other provisions suggested above
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(iii)
As regards the question of providing incentive for R&D, the
Committee noted that the Pharmaceutical Research and Development
Committee (PRDC) is considering to lay down certain criteria for the
identification of Units/Industry engaged in R&D activities alongwith
required measures. Subject to the recommendations of that Committee, a
further additional cost of five per emit of ex-factory cost over and above
that recommended under para (ii) above, may be allowed to companies
which undertake basic research for new drug discovery, provided they
have actually spent a minimum percentage of their sales turnover, as may
be prescribed, for this purpose. Such an incentive may be provided based
on a certificate by a designated technical authority. The Committee
recognises that the proposed incentives to the manufacturers with USFDA/MCA certification and the R&D certified companies shall be availed
of by a small number of companies. These incentives, nevertheless, were
considered desirable to provide positive signals to the investors in such
activities. Further, the^Committee feels that any price rise on account of
these or W'HO-GMPJStandards is expected to be offset by the benefits to
consumers through improved quality and security from the spread of
spurious drugs in the market.
(iv)
With a view to introducing a simplified procedure, a suggestion was
made for appropriate neutralization, based on WPI/CPI of Conversion
Cost (CC). and Packing Charges (PC) and Packing Material (PM) Cost.
Based on the deliberations, the committee recommends that- the CC&PC
be neutralized on the basis of CPI for industrial workers. Further, the PM
Cost be neutralized on the basis of WPI for all commodities. For the
neutralization of these costs, the improvement in Process Loss (PL) needs
to be kept in view.
However the government needs to notify the norms every year as required
in the previous DPCOs .
(v) " During the deliberations, the Committee felt that the imported
finished formulations, patented or otherwise, be brought under price
control. However, this may not bo GATT/'A/TO compatible. Nevertheless,
the price of new introductions in the country would need to be watched
and monitored. The Committee, therefore, recommends that the prices of
patented drug formulations, including those granted with EMR. introduced
m the country shall be under price control and the marketing approval
under the Drugs & Cosmetics Act should be issued only after the applicant
has obtained price approval from the Government. When it is not feasible
to determine a reasonable price under the e,xisting methodology/formula,
an alternative methodology including reference pricing corrected for
relative per capita income level may be developed by the Government.
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10.
Monitoring & Enforcement
*
0)
The committee recognizes the objectives of the Drugs Price Control Order
in the given socio-economic conditions in the country and the need to
enforce and monitor the provisions to adequately protect the consumers’
interest, the Committee is of the view that effective monitoring systems
would have to be established to move away from the “controlled regime”
to the “monitoring regime" in a medium and long term perspective.
(ii)
The Committee noted with concern that the enforcement of various
provisions of Drugs and Cosmetics Act is still not uniform throughout the
country and spurious and substandard counterfeit drugs find their way into
the market. It was also reported that different yardsticks are adopted by
State Licensing Authorities for granting manufacturing approval of drug
formulations. This leads to proliferation of formulations and pack sizes.
The Committee feels that the systems and criteria adopted for granting
drug licences and JoTmulalion approvals need to be made uniform. The
Committee recommends that the Good Manufacturing Practices (GMPs)
requirements prescribed under the rules for manufacture of drugs be
upgraded to the levels prescribed for WHO-GMP Certification Scheme .
This needs to be achieved within a period of 2 years, say by December,
2001. after which no manufacturing license under the Drugs and
Cosmetics Act be renewed or granted to units not conforming to the
minimum prescribed WHO-GMP standards.
(iii)
Further, the committee is informed that under the provisions of "The Drugs
and Cosmetics Act" such activities constitute a cognizable offence with
appropriate penal provisions including imprisonment since it involves
human health and life. The committee feels that the relevant provisions
be enforced in their letter & spirit. The Committee also recommends that
WHO-GMP be made a basic criterion for granting a drug license to
martufacture a drug in the country.
(iv)
Further, for effective enforcement, the following steps are recommended :
(a)
Provide powers to the Drugs Control Authorities to dispose off small &
petty offences/contravention's by compounding provision for such
offences in the DPCO. This would obviate the necessity of launching
prosecutions in minor cases.
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(b)
The Government should develop an appropriate mechanism to study the
price movements of drugs marketed in the country in both
controlled/dccontrolled categories and develop a price index for pharma
products to. review the price situations on monthly/quagerly basis to take
corrective measures. In the case of imported bulk drugs and formulations,
the prices need to be monitored more closely in the light of the changes in
the international trade regime. This would help in determining the cases
of dumping and under/over invoicing to protect the interest of the industry
and consumers.
(c)
The Committee recognizes that in the liberalised regime, a reliable data
base would go a long way in evolving appropriate and timely policy
measures.
The Government should develop a data -bank on
pharmaceutical sector. A simplified format may be prescribed in the
DPCO to collect the required information.
(d)
The availability and*price situation l>e reviewed by holding periodical l(
meetings with the consumer interest groups, industry and trade.
'
(e)
Import of formulations falling under the price decontrolled category be
monitored effectively according to a format to be prescribed in DPCO.
This should indicate the quantity,'c i f. price, customs duty paid and the
MRP of iho piodiicl for each impoiled cons.ignmcnt
11.
Miscellaneous
(i)
Dispose off the review petitions filed by the manufacturers with in a given
time frame, say two months after receipt of complete information.
(ii)
The Committee has noted with concern that presently there is no system
of prescription audit, through which it could be ascertained whether the
hospitals/doctors prescribe more expensive and non-essential drugs
instead of low priced essential drugs.
However, the committee was
informed that there is a tendency to prescribe high cost medicines despite
the availability of cheaper and equally effective substitutes.
The
Committee feels that this tendency needs to be curbed through a
coordinated effort by the Department of Chemicals & Petrochemicals and
Ministry of I lealth by developing an appropriate prescription audit
mechanism with Relive support of Indian Medical Association.
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' V
(iii)
The Committee has noted that in addition to product-wise price control on
selected drugs, there are limits, slipulalod in the DPCO, 1995 on profits of
a pharmaceulical company as p(?rcenlage of its sales turnover. It was
also noted that this' provision of controlling overalr profitability of a
company was intended to check unreasonable increase in the prices of
pharmaceutical products not under price control. It was reported to the
committee that it has not been practicable for the government to
meaningfully monitor the profitability of each and every company. At the
same time, this provision has repoitcdly adversely affected the scope of
increased investment in R&D. As the thrust of the economic policy is
towards providing flexibility under the conditions of market economy, the
Committee is of the view that there is no need to have dual control’on
pharmaceutical companies. Therefore, the Committee recommends that
the provision limiting profitability of pharmaceutical companies be done
away with.
(iv)
As a medium and j&ng term strategy, adequate health insurance cover,
both by the public and private sector, needs to be provided so that the
dependence on price control measures could progressively be reduced.
(v).
To curb indiscriminate imports, there is need to strengthen procedures
and rules under Drugs & Cosmetics Act so as to provide for a registration
system for import of pharmaceutical products into the country.
(vi)
As per available reports, eight percent margin is provided to the
wholesalers and sixteen per cent to the retailers on the scheduled
formulations.
For non-scheduled formulations, the companies are at
liberty to decide the trade margin. It is reported that the prevailing normal
trade margin in respect of the decontrolled formulations is 20 per cent for
retailers
10 per cent for wholesalers. In view of this, the present
stipulation of 16 per cent margin on scheduled formulations to the retailers
needs to be retained.
(vii)
It has also been observed that some of the manufacturers tend to provide
unduly high trade margins, adversely affecting the consumer interest.
Therefore, the committee is of the view that to discourage unethical
practices by the players, the difference between the first sale price of a
formulation by the manufacturers and the retail price printed on the label
be limited to a maximum of 40 percent of the MRP in the case of
decontrolled formulations.
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DEPARTMENT OF CHEMICALS & PETROCHEMICALS
(viii)
As brought out earlier there is (a) absence of rational private health care
(b) inadequate public health care and (c) inadequate health insurance
cover in the country. Therefore, the committee recommends that there is
an urgent need to expand public health care by progressively raising the
budgetary provision, improve supply of essential drugs and accelerate the
process of providing health insurance cover, both by the governmental
and non-governmental organisations and that such an arrangement
should be made fully operative within a period of next five years..
(ix)
Further, the Committee has observed that several manufacturers are
providing bonus ofters/schemcs for promotion of their products. Such
schemes/offers lead to higher prices for the consumers apart from the
possibility of compromise on quality of the product, resulting in
proliferation of substandard products in the market.
Therefore, the
committee is of the view that such practices be discouraged through
effective monitoring for taking corrective measures.
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ANNEX-III
RATIONALE FOR THRESHOLD VALUES OF MAT
[Refer sub-para (vi) of para 1O.B.II(a) on p.6 of the Note]
Presently, there are 74 bulk drugs under price control and
the retail market coverage is estimated
be 38-40%
approzximately. These drugs were kept under control on the basis of
turnover criteria of Rs.400 lakhs or more, which was based on
1989-90 data. This, in terms of value of formulations, works out to
Rs. 1600 lakhs on the basis of “the ratio of value of consumption of
bulk drug for production of formulations to the value of formulations
produced as 1:4" adopted in Chapter V of the Report of the working
group on Drugs and Pharmaceuticals for the Ninth Five Year Plan
Period (1997-98 to 2001 -02).
Data used al the time of promulgation of DPCO 1995 was of
the year 1989-90. For this reason value of formulations arrived at
above would require correction for inflation since then. Further
correction woukTbe required there on account of the fact that now
we are considering only single ingredient formulations where as all
formulations comprise of single as well as multi-ingredient
formulations. On the basis of increase in the Wholesale Price
Index (WPI) for Drugs and Medicines from 140.4 points in 1989-90
to 320 9 points in 1998-99, Hie value of all the formulations i.e.
Rs. 1600 lakhs, calculated above, would come to Rs.3657 lakhs.
Further, the MAT-Value for all formulations as per ORG-MARG of
March, 1999 is Rs. 1190940 lakhs (Rs. 11909.46 crores), whereas
the MAT-Value of all the single ingredient formulations works out to
Rs.603283 lakhs. On this basis, the value of Rs.3657 lakhs of all,
formulations corresponds to Rs. 1852 lakhs in terms of the total
single ingredient formulations.
lienee, the threshold limit of
Rs.2000 lakhs appears reasonable for bringing drugs under price
control, wt'iich would mean that if, for any bulk drug, the MAT-Value
of all its single ingredient formulations is above Rs.2000 lakhs, then
it could be considered for price control.
Under the liberalised industrial, trade and economic policies,
the availability of bulk drugs is not as problematic as it was earlier
when import policy was quite restrictive. There are large number of
formulators for a bulk drug. However, an analysis of ORG-MARG
data indicates that in majority of cases, major share of the retail
market is with 3-5 formulators only. Rest of the formulators have
rather low shares. In view of these factors, it is not prudent to define
competition in terms of number of bulk drug manufacturers and
number of formulators in relation to a particular bulk drug.
secret
I
, D:\Anant\drug poHcy01.doc
Pharmaceutical Policy - 2001
Yes to Increased Profits, No to Health!
Anant Phadke
The draft Note for the cabinet committee on Economic Affairs, titled ‘Pharmaceutical Policy 2001’,
follows the old pattern of exclusively focussing on economic issues related to the drug industry. It primarily
deals with pricing of drugs, profitability.
This time, the additional concern is increased focus on making the India drug industry on par with the
international standards. Despite our repeated demand that the health ministry be actively involved in the
preparation of the pharmaceutical policy, this draft ‘Pharmaceutical Policy 2001’ has been prepared only by
the Ministry of Chemicals and Fertilizers, with total exclusion of issues of rationality of drug production.
Main Features of ‘Pharmaceutical Policy 2001’
Briefly speaking this ’Note’ has the following features -
1. Complete Surrender To The MNCs
It enumerates sanctifies the liberalization' steps taken since 1991- abolition of industrial licensing barring
a few exceptions; dereservation of the 5 drugs hitherto reserved for the public sector and opening of the public
sector to foreign competition; automatic approval of foreign investments even for 100% foreign collaboration;
automatic approval of foreign Technology Agreements.
Industrial licensing has been abolished except for three technologies - recombinant DNA technology, in
vivo nucleic acid use, specific cell/tissue targeted formulations.
2. Increased Incentives And Provisions For Research For Enhanced International
Com petitiveness
a) Permission to increase prices by five percent extra for drug companies which comply with suggested
’gold standards’ of • investing at least 5% of the turnover of the company in R and D, atieast 10 crores per annum
for innovative research,
•
employing at least 100 research scientists in India,
•
of having at least 10 patents for research done in India
b) Setting up of Pharmaceutical Research and Development Support Fund (PRDSF) with the Ministry of
Finance contributing Rs. 150 crores as Plan Fund’ for the creation of the ’R & D fund*
c) To enhance international competitiveness, certain measures will be taken, like mandatory WHO/Good
Manufacturing Practices Certification Scheme, attaining international standards for clinical testing.
For products manufactured under WHO-GMP certification, additional 8% cost be allowed in estimating
cost of production) and further upto 2% for improved packing.
(We have to see in detail, as to whether all the details of the WHO-GMP certification standards are
relevant to Indian conditions. There can not be any compromise on minimum standards. But beyond this, in
pursuit of promoting exports, if standards are set on par with developed countries, the drug prices would go
further out of the reach of the majority of people in India. Hence, we should question this move.)
3. Reduced Span Of Price-Controlled Drugs
Only about 37 bulk drugs accounting for about 20% of the maiket-sale, would be under price-control, as
compared with the 74 bulk drugs accounting for about 40% of the market being under price-control today and
343 drugs under price-control in 1985. Newer, liberal' criteria for selection of bulk drugs under price-control
have done this trick.
1
D:\Anant\drug pohcy01.doc
4. Increased Profitability
•
The Maximum Allowable Post-manufacturing Expense (MAPE) would be 100% for
indigenously manufactured drugs. Currently only class IV. Le. totally 'inessential ' drugs are allowed
100% MAPE.
For imported formulations, the selling price can be upto 150% of the landed costs.
•
The present provision as per the Third Schedule of the Drug Price Control order 1995, of
limiting the profitability of drug companies, would be done away with
•
There would be some exemptions ( see section B2.2 ) even for the limited number of 37 bulk
drugs to be under price control.
Thus overall, the drug companies have been given a free hand to jack up prices.
The above four are the main provisions in brief, of the ’Pharmaceutical Policy 2001.’ There are a few
other provisions, which are of not much significance.
What Should Be Our Critique?
Our response to this draft note should be two fold : raising issues on both the health and economic
aspects.
A. The Health Aspect of the Drug Policy
On the health aspect, we should strongly protest against the exclusion of the policy issues related to the
rationaHty/irrationality of various drug-formulations sold in India. Secondly we should once again bring forth
our following demands about the socio-medical rationality of drug production in India.
1. Eliminate all drugs and formulations not recommended by standard text-books and other
authorities
2. Eliminate al Fixed Dose Combinations not recommended, by standard text-books and other
authorities.
3. Priority and incentives to the production of Essential Drugs, especially to drugs for Primary
Health Care.
4. Abolish all brands names. Drugs to be sold only under generic name, with the company’s
name in the bracket.
5. Review of all the drugs every three years to eliminate obsolete drugs.
6. Strict ethical guidelines for drug-research.
7. Commercial production of any drug claimed to be Ayurvedic, should be allowed only after the
scrutiny of its rationality by the council for Indian System of Medicine.
8. Strict regulations for ethical promotion and marketing of pharma-products. We have formulated
details about this in our earlier deliberations and demands.
9. Proper system of post marketing surveillance for adverse drug reactions.
10. Proper system of Compulsory Continuing Medical Education (CMIE) for medical and
paramedical professionals in rational therapeutics.
The above is only a reiteration in brief, of our main demands as regards the medico-social rationality of
drug production in India.
We need to once again forcefully put forth these demands and point out that the ’Pharmaceutical Policy
2001’ does not even mention any of these crucial aspects of drug policy.
2
D:\Anant\dnig pohcy01.doc
B. Economic Aspects of Drug Policy
Bl.
Self reliance
Self-reliance, which was one of the principal concerns of the Hathi committee report and which was an
important element of the earlier drug-policy statements, does not even find a mention in this 'Note'! For the
current decision makers,a globalized economy means complete domination by the foreign multinationals. We
have to expose and oppose this spineless, shameless prostration before the imperialists. We should continue to
argue for restrictions on majority owned foreign companies in the production of those drugs for which know
how exists with the Indian companies. Foreign companies be allowed only if they are willing to provide
superior know how at reasonable cost, to the Indian companies.
In today's globalized economy, distinction between and the consequences of the role of Indian' and
'foreign' companies has been blurred to a certain extent. But there is no case for throwing over board, the
concept and strategy for self-reliance. Complete domination by foreign MNCs is nether inevitable nor of
course desirable.
B2 Price-Control
We have argued for price-control on drugs for two valid reasons 1. Drugs are part of essential commodities, are life-saving.
2. The consumer has no choice, but has to buy medicines once the doctor prescribes it. Hence consumer
resistance is very low in purchase of medicines.
No amount of so called liberalization would negate the above rationale. Hence the need for control of
drug prices continues. The drug price control is today too complicated because of the plethora of thousands of
irrational fixed dose combinations being marketed. If all these irrational fixed dose combinations are weeded
out, price-control win be far less complicated.
2.1 Criteria For Price-Controlled Drugs
Even within the existing drug production pattern, there is no case for further concessions to the drug
industry by reducing the number of drugs to be price controlled. We should oppose further decontrol of drug
prices by concretely exposing the irrational nature of the new measures of further price decontrol.
The new formula for deciding which bulk-drugs will be price-controlled, is as follows For bulk-drugs with a sale of Rs. 5 to 20 crores, the drug will be price-controlled if a formulator controls
more than 50% of the market.
For bulk-drugs with a sale of above 20 crores, the drug will be price controlled if a formulator controls
more than 90% of the market.
Even if price control is to be restricted to drugs which are produced or sold monopolistically, both these
figures of cut off sale value and of percent control by one formulator are arbitraiy. There should be no cut off
value for sales figures. Any drug be subject to price-control, whatever may be its sale, if it is produced or sold
monopolistically. Secondly, the cut off value to decide monopolistic control can not be set arbitrarily at 50%
or 90% control by one formulator. Internationally, it has been established that if more than half of the market
of a product is controlled by five or less number of companies, the product is deemed to be under monopolistic
control. This criterion be applied to the bulk drug market in India, if it is decided that price control is
restricted only to drugs which are monopolistically controlled.
The above formula is for bulk drugs, from which Ayurvedic drugs have been excluded. The method for
controlling prices of formulations would continue as before, as per the 1995 DPCO.
3
D:\Anant\drug poHcy01.doc
B 2.2
Liberal Exemptions
Certain drugs would be exempt from price-control. The criteria for exemption are liberal, at the cost of the
consumer. These criteria are
a. Fifteen year exemption for new drugs developed though indigenous R & D.
b. Exemption till expiry of the patent for
i) drugs whose process has been patented under the Indian Patent Act 1970.
ii) Formulations involving new drug delivery systems registered under IPA 1970.
As per the DPCO of 1979, some drugs were allowed only 40% mark up. Hence the drug companies were
clamouring for exemption of certain drugs from price control. But now, as per the new proposed policy, all
indigenously manufactured drugs would eryoy 100% MAPE. Secondly these will be monopoly due to the
patent coverage so that the prices will not be brought down by competition, below the levels decided by the
new limit of 100% MAPE. Hence, now there is no case for exemption from price-controls, if the MAPE is
raised to 100%.
c. ’Cost per day per medicine’ being less than Rs. 2/-.
This would mean commonly used essential drugs like aspirin, paracetamal, iron-folic acid, furazohdone,
B'comples, etc. will all go out of price-control! This exemption should also be stoutly opposed. The fact that
drug companies have been selling 75 mg. tablet of Aspirin at 75 paise per tablet, when the price should not be
more than 20 paise, per day, shows once again that they cheat, exploit consumers whenever there is a chance.
Removing price-control on those essential drugs whose per day cost is less Rs. 2/- is simply unacceptaHe.
B 3 Other Measures.
Other provisions as regards ceiling prices, fixing prices of Scheduled Bulk Drugs, drug price monitoring,
Drug Price Equalization Account (DPEA) do not require any fresh comments.
Thus overall, the new drug policy titled ‘Pharmaceutical Policy 200r is pro-industry, anti-people and
devoid of any medico-social rationality. We should oppose it in whatever way possible.
Pharmaceutical and Drugs Policy
There is need a pharmaceutical and rational drug policy, which would reflect our
concerns for the health of the people and the economy of the drug industry. Drugs are
? meant to^maintain and restore the health of the people. This primary concern should not
be lost
°f
any policy- At the same.it is necessary to ensure that the essential
, drugs are produced in sufficient quantities. The essential drugs must be available,
accessible and affordable. They must be utilised in a rational manner.
The National Policy must be^
jointly by the Ministry of Health and Family Welfare
and the Ministry of Chemicals and Fertilizers, to reflect the concerns for the health of the
people and the industry.
/W
A,
Situation:
Because of the GATT decisions and the formation of WTO, the Indian
Patent Act, 1970 i^ being amended to fall in line with the demands of the larger
multinational^procedures of drugs in the developed countries. This will adversely affect
the manufacturers in the country, who are able to produce drugs of reasonable quality at
much lower prices than the multinationals (eg. , the anti-retroviral drug packages in the
management of HIV infection and AIDS). There is need to ensure a certain amount of
self-reliance which would call for support for the local industry. The use of drugs in the
country is irrational. This starts with the manufacture and marketing of irrational drugs
and irrational combination of drugs.^s*^
There has been large scale reduction in the number of drugs under price control. This has
been followed by unwarranted increases in the price of the drugs ae£of price control.
A
Public Sector:
The public sector had been active in the production of essential drugs, including the
antibiotics. In recent times, they have fallen into disrepute because of mismanagement.
The remedy is not to dismantle them or to privatize them but to ensure better
management. The public sector needs to be strengthened as the sector responds to the
health needs of the people and not necessarily to profit making only. A vibrant public
sector would ensure that the country/state is noKvender the mercy of the private sector.
Private Sector: Indian economy has been a public - private mix. The private sector has
a role. It is competitive, though not so much in the health sector. Brand loyalty is
created; questionable promotion methods are used by which the prescriber (agent for the
user) prescribes only certain brands. It is necessary that the private sector is regulated
carefully: monitored and corrections applied without delay.
Span of Price Control With profit as the main guiding factor for the private sector,
there is always a tendency to increase the profits. While profitability is needed (otherwise
no industry will be interested in continuing the manufacture), it is necessary to’£** pro
and drive the drugs beyond the access of the majority of the people, especially the poor,
and the government.
All essential drugs should continue to under price control, ensuring availability and
affordability.
One way of reducing the price of drugs is to have them under generic name, instead of
the brand name.
The National Pharmaceuticals Pricing Authority must ensure early fixing of the prices* *
anT-...^Revisions may be made based on the consumer Price Infix / Wholesale Price
Index.
Import of drugs: Self - reliance is the key word to ensure availability and affordability.
But, with the new patent regime, many of the newer drugs will have to be imported. The
cost of the these imported drugs will be very high.
Care must be taken to ensure that only drugs which do not find-them counterparts locally^
manufactured are imported. These should not be merely ’me - too' drugs. They should
have specific indications, not met by drugs already available,^less adverse and side effects
and are cheaper.
Quality of drugs: We must be alert on the quality of drugs produced in the country or
imported from abroad. It is a good idea for the industry to join the WHO Good
Manufacturing Practice Scheme. This is not merely to boost export but to ensure that the
people receive good quality drugs.
Post marketing surveillance is essential to ensure that only quality drugs are in
circulation.
Rational Use of Drugs:
The Rational Use of Drugs has many facets. It starts with the manufacture of rational
drugs. Irrational drugs and irrational combinations of drugs should not be produced. The
relevant authorities must ensure that such drugs are not available in the market. No
banned drugs should be available. The legislation must ensure it; the law must be
implemented^yThe prescribes must be knowledgeable; hence, there is need for proper
education anocontinuing updating in the proper use of drugs.
The users also should become aware of the need for rational use of drugs. Addition of
new drugs or their formulation*' must be based on real need. At the same time, obsolete
drugs must bec&^nx
»
Research:
Research is necessary to bring out newer drugs needed for the health of the people. This
requires that increased incentives must be provided for investment in Research and
Development. The policy must serve this purpose. Research and Development should
A
form an integral part of the activities of the manufacturers, the larger ones independently
and the smaller ones conjointly. It is good to have the Pharmaceutical Research and
Development Support Fund. The industry must contribute to it. There is no reason why
Government should contribute Rs. 150/- crores towards such a fund. Government should
encourage in other ways, such as helping in the patenting of the new products and
Study on new drugs must follow all the ethical guidelines. The basic ethical principles
■£ <3^0^ are beneficence, non - male.... 2*ustice and antinomy and must be observed in all phrases
°f the eterical trials.
Promotion of drugs
The industry must follow the revised WHO ethical guidelines for promotion of drugs.
■ zx^i
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Pharmaceutical
Policy
2001
I
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z
o
Dr AnantPhadke
The Draft ‘Note’ submitted
before the Cabinet Committee
on Economic Affairs, titled
‘Pharmaceutical Policy2001
follows the old pattern of
exclusively focussing on
economic issues related to the1
drug industry'. It primarily
deals with pricing of drugs,
and profitability.
Complete Surrender To The MNCs
The ’Note' enumerates the sanctities of the ‘liberalization’
steps taken since 1991 — abolition of industrial licensing
bamng a few exceptions; dereservation of the 5 drugs hith
erto reserved for the public sector and opening-up of the
public sector to foreign competition; automatic approval of
foreign investments even for 100% foreign collaboration; and
automatic approval of Foreign Technology Agreements.
Industrial licensing has been abolished except for three
technologies — recombinant DNA technology, in vivo nucleic
acid use, specific cell/tifcsue-targeted formulations.
This time, the additional
concern is the increased focus
on making the Indian drug
industry on a par with the
international standards.
Despite our repeated demand
that the health ministry be
actively involved in the
preparation of the
pharmaceutical policy, the draft
has been prepared only by the
Ministry of Chemicals and
Fertilizers, with total exclusion
of issues of rationality of drug
production. The various groups
working in the Geld of health
as well as activists need to
register their opposition to the
draft policy in chorus so that
the policy gets rationalized.
Increased Incentives and Provisions for Research for
Enhanced International Competitiveness
a) Permission to increase prices by five percent extra for
drug companies which comply with suggested ‘gold stan
dards’ of
• investing at least 5% of the turnover of the company in
R and D, at least 10 crore per annum for innovative research,
• employing at least 100 research scientists in India,
• having at least 10 patents for research done in India
b) Setting up of Pharmaceutical Research and Develop
ment Support Fund (PRDSF) with the Ministry of Finance
contributing Rs. 150 crore as ‘Plan Fund’ for the creation of
the ‘R & D fund’
c) To enhance international competitiveness, certain mea
sures will be taken like mandatory WHO/Good Manufactur
ing Practices Certification Scheme, attaining international stan
dards for clinical testing and so on.
For products manufactured under WHO-GMP certifica
tion, additional 8% cost be allowed in estimating cost of pro
duction and further upto 2% for improved packing.
We have to see in detail whether all the details of the WHOGMP certification standards are relevant to Indian conditions.
There cannot be any compromise on minimum standards. But
beyond this, in pursuit of promoting exports, if standards are
set on a par with developed countries, the drug prices would
go further out of the reach of the majority of people in India.
Hence, we should question this move.
34
Briefly put, the ‘Note’ has the following features:
Health Action • December 2001
I
i
Reduced Span of Price-Controlled Drugs
Only about 37 bulk drugs, accounting for about 20% of
the market-sale, would be under price-control, as compared
with the 74 bulk drugs accounting for about 40% of the
market being under price-control today and 343 drugs under
price-control in 1985. Newer, ‘liberal’ criteria for selection of
bulk drugs under price-control have done this trick.
Ayurvedic should be allowed only after the scrutiny of its
rationality by the Council for Indian Systems of Medicine.
• Lay down strict regulations for ethical promotion and
marketing of pharma-products. We have formulated details
about this in our earlier deliberations and demands.
• Device a proper system of post-marketing surveillance
for adverse drug reactions.
• Evolving proper system of Compulsory Continuing
Medical Education (CMIE) for medical and paramedical pro
fessionals in rational therapeutics.
Increased Profitability
• The Maximum Allowable Post-manufacturing Expense
(MAPE) would be 100% for indigenously manufactured drugs.
Currently, only category II &III. drugs are allowed 100% ECONOMIC ASPECTS OF DRUG POUCY
Self-reliance
MAPE.
Self-reliance, which was one of the principal concerns of
• For imported formulations, the selling price can be upto
the
Hathi Committee Report and which was an important ele
150% of the landed costs.
ment
of the earlier drug-policy statements, does not even
• The present provision, as per the Third Schedule of the
find
a
mention in the ‘Note’! To the current decision-makers,
Drug Price Control Order 1995, of limiting the profitability of
a globalized economy means com
drug companies, would be done away
plete domination by the foreign mul
with.
Self-reliance,
which
was
tinationals. We have to expose as
• There would be some exemptions
well as oppose this spineless, shame
(see section B2.2) even for the limited
one of the principal
less prostration before the
number of 37 bulk drugs to be under
concerns of the Hathi
imperialists. We should continue to
price control. Thus, overall, the drug
Committee Report and
argue for restrictions on majoritycompanies have been given a free
which was an important
owned foreign companies in the pro
hand to jack up prices.
duction of those drugs for which
Besides the above main provisions
element of the earlier drug
know-how exists with the Indian com
there are a few other provisions,
policy statements, does not
panies. Foreign companies should be
which are not of much significance.
even find a mention in this
allowed only if they are willing to pro
vide superior know-how at reasonable
What Should be Our Response?
‘Note’! To the current
cost, to the Indian companies.
Our response to this draft note
decision-makers, a
Complete domination by foreign
should be twofold : raising issues on
globalized economy means
MNCs is nether inevitable nor desir
both the health and economic as
able.
complete domination by the
pects.
foreign multinationals.
HEALTH ASPECTS OF
THE DRUG POLICY
We should strongly protest
against the exclusion of the policy is
sues related to the rationality/irrationality of various drug
formulations sold in India. We should once again bring forth
the following demands about the socio-medical rationality of
drug production in India.
• Eliminate all drugs and formulations not recommended
by standard textbooks and other authorities
• Eliminate al Fixed Dose Combinations not recommended,
by standard textbooks and other authorities.
• Give priority and incentives to the production of Essen
tial Drugs, especially drugs for primary health care (PHC).
• Abolish all brand names. Drugs are to be sold only
under generic names, with the company’s name in the bracket
• Review of all the drugs every three years to eliminate
obsolete drugs.
• Strict ethical guidelines for drug-research.
• Commercial production of any drug claimed to be
Health Action • December 2001
Price-Control
We have argued for price-control
on drugs for two valid reasons.
• Drugs are part of essential com
modities, they are life-saving.
• The consumer has no choice, but has to buy medicines
once the doctor prescribes it. Hence consumer resistance is
very low in the purchase of medicines.
No amount of so-called liberalization would negate the
above rationale. Hence the need for control of drug prices
continues. The drug price control is today too complicated
because of the thousands of irrational fixed-dose-combina
tions being marketed. If all these irrational fixed-dose-combinations are weeded out, price-control will be far less compli
cated.
Criteria for Price-Controlled Drugs
Even within the existing drug production pattern, there is
no case for further concessions to the drug industry by re
ducing the number of drugs to be price-controlled. We should
35
|
fS
■
oppose further decontrol of drug prices by concretely ex
posing the irrational nature of the new measures of further
price decontrol.
The new formula for deciding which bulk-drugs will be
price-controlled is as follows
• For bulk-drugs with a sale of Rs. 5 to 20 crore, the drug
will be price-controlled, if a formulator controls more than
50% of the market.
• For bulk-drugs with a sale of above 20 crore, the drug
will be price controlled if a formulator controls more than 90%
of the market.
Even if price-control is to be restricted to drugs which are
produced or sold monopolistically, both these figures of cut
off sale value and of percent control by one formulator are
arbitrary. There should be no cut-off value for sales figures
Any drug be subject to price-control, whatever may be its
sale, if it is produced or sold monopolistically. Secondly, the
cut-off value to decide monopolistic control cannot be set
arbitrarily at 50% or 90% control by one formulator. Interna
tionally. it has been established that if more than half of the
market of a product is controlled by five or less number of
companies, the product is deemed to be under monopolistic
control. This criterion should be applied to the bulk drug
market in India, if it is decided that price control is restricted
only to drugs which are monopolistically-controlled.
The above formula is for bulk drugs from which Ayurvedic
drugs have been excluded The method for controlling prices
of formulations would continue as before, as per the 1995
DPCO.
Liberal Exemptions
Certain drugs would be exempt from price-control. The
criteria for exemption are liberal, at the cost of the consumer.
These criteria are
a. A fifteen-year-exemption for new drugs developed
though indigenous R & D.
b. Exemption till expiry of the patent for
i) drugs whose process has been patented under the In
dian Patents Act (IPA) 1970.
ii) formulations involving new drug delivery systems registered under IPA 1970.
As per the DPCO of 1979, some drugs were allowed only
40% mark-up. Hence the drug companies were clamouring for
exemption of certain drugs from price control. But now, as
per the proposed policy, all indigenously manufactured drugs
would enjoy 100% MAPE. Secondly, there will be monopoly
due to the patent coverage so that the prices will not be
brought down by competition, below the levels decided by
the new limit of 100% MAPE. Now there is no case for exemp
tion from price-controls, if the MAPE is raised to 100%.
c. ‘Cost per day per medicine’ being less than Rs. 2/-.
This would mean commonly used essential drugs like as
pirin. paracetamol, iron-folic acid, furazolidone, B'complex,
etc. will all go out of price-control! This exemption should
also be stoutly opposed. The fact that drug companies have
been selling 75 mg. tablet of aspirin at 75 paise per tablet,
when the price should not be more than 20 paise, per day,
shows once again that they cheat, exploit consumers when
ever there is a chance. Removing price-control on those es
sential drugs whose per day cost is less Rs. 2/- is simply
unacceptable.
Other Measures
Other provisions as regards ceiling prices, fixing prices of
Scheduled Bulk Drugs, Drug Price Monitoring. Drug Price
Equalization Account (DPEA) do not require any fresh com
ments.
Thus overall, the new drug policy titled ‘Pharmaceutical
Policy 2001 is pro-industry, anti-people and devoid of any
medico-social rationality. We should oppose it in whatever
way possible. ■
(Fhe author is with CEHAT, Pune 411 009)
Z
~
‘‘x-"s<'
81
.
HONOURED
The World Health Organization, Geneva, has
appointed Dr Abhay Bang on the Global
Steering Committee for the Research on
!Tropical Diseases?' Dr Abhay''Bang'is’ the'*’
director of a voluntary organization. SEARCH
which has been working for the last 15 years
in the Gadchiroli District
in >Maharashtra
on
.
• ,. ....
the health problems of one lakh rural and
tribal population.
AWARDED
in > -
■
-
.
.
.
.
.
.
.
. ............ ''
The Karnataka Government has conferred
................................................................................................................................................... :
.
■■
•.
Pathanjala Swarna Padaka Award to Dr B N
Brahmacharya for the year 2000.
■
He has
■
rendered yeoman service in the field of Nature
- -
Cure and Yoga over 30 years. He is the Hon.
Consultant at Prakruthi Jeevana Kendra, a
charitable trust at Malleswaram, Bangalore.
36
Health Action • December 2001
D:\Anant\drug policy01.doc
Pharmaceutical Policy - 2001
Yes to Increased Profits, No to Health!
Anant Phadke
The draft Note for the cabinet committee on Economic Affairs, titled ‘Pharmaceutical Policy 2001’,
follows the old pattern of exclusively focussing on economic issues related to the drug industry. It primarily
deals with pricing of drugs, profitability.
This time, the additional concern is increased focus on making the India drug industry on par with the
international standards. Despite our repeated demand that the health ministry be actively involved in the
preparation of the pharmaceutical policy, this draft ‘Pharmaceutical Policy 2001’ has been prepared only by
the Ministry of Chemicals and Fertilizers, with total exclusion of issues of rationality of drug production.
Main Features of ‘Pharmaceutical Policy 2001’
?
Briefly speaking this ’Note’ has the following features 1. Complete Surrender To The MNCs
It enumerates sanctifies the liberalization’ steps taken since 1991- abolition of industrial licensing barring
a few exceptions; dereservation of the 5 drugs hitherto reserved for the public sector and opening of the public
sector to foreign competition; automatic approval of foreign investments even for 100% foreign collaboration;
automatic approval of foreign Technology Agreements.
Industrial licensing has been abolished except for three technologies - recombinant DNA technology, in
vivo nucleic acid use, specific cell/tissue taigeted formulations.
2. Increased Incentives And Provisions For Research For Enhanced International
Com petitiveness
a) Permission to increase prices by five percent extra for drug companies which comply with suggested
’gold standards’ of • investing at least 5% of the turnover of the company in R and D, atleast 10 crores per annum
for innovative research,
•
employing at least 100 research scientists in India,
•
of having at least 10 patents for research done in India
b) Setting up of Pharmaceutical Research and Development Support Fund (PRDSF) with the Ministry of
Finance contributing Rs. 150 crores as Plan Fund’ for the creation of the R & D fund’
c) To enhance international competitiveness, certain measures will be taken, like mandatory WHO/Good
Manufacturing Practices Certification Scheme, attaining international standards for clinical testing.
For products manufactured under WHO-GMP certification, additional 8% cost be allowed in estimating
cost of production) and further upto 2% for improved packing.
(We have to see in detail, as to whether all the details of the WHO-GMP certification standards are
relevant to Indian conditions. There can not be any compromise on minimum standards. But beyond this, in
pursuit of promoting exports, if standards are set on par with developed countries, the drug prices would go
further out of the reach of the majority of people in India. Hence, we should question this move.)
3. Reduced Span Of Price-Controlled Drugs
Only about 37 bulk drugs accounting for about 20% of the market-sale, would be under price-control, as
compared with the 74 bulk drugs accounting for about 40% of the market being under price-control today and
343 drugs under price-control in 1985. Newer, liberal' criteria for selection of bulk drugs under price-control
have done this trick.
D:\Anant\drug policy01.doc
4. Increased Profitability
•
The Maximum Allowable Post-manufacturing Expense (MAPE) would be 100% for
indigenously manufactured drugs. Currently only class IV. i.e. totally 'inessential ’ drugs are allowed
100% MAPE.
For imported formulations, the selling price can be upto 150% of the landed costs.
•
The present provision as per the Third Schedule of the Drug Price Control order 1995, of
limiting the profitability of drug companies, would be done away with.
•
There would be some exemptions ( see section B2.2 ) even for the limited number of 37 bulk
drugs to be under price control.
Thus overall, the drug companies have been given a free hand to jack up prices.
The above four are the main provisions in brief, of the 'Pharmaceutical Policy 2001.' There are a few
other provisions, which are of not much significance.
What Should Be Our Critique?
Our response to this draft note should be two fold : raising issues on both the health and economic
aspects.
A. The Health Aspect of the Drug Policy
On the health aspect, we should strongly protest against the exclusion of the policy issues related to the
rationahty/irrationality of various drug-formulations sold in India. Secondly we should once again bring forth
our following demands about the socio-medical rationality of drug production in India.
1. Eliminate all drugs and formulations not recommended by standard text-books and other
authorities
2. Eliminate al Fixed Dose Combinations not recommended, by standard text-books and other
authorities.
3. Priority and incentives to the production of Essential Drugs, especially to drugs for Primary
Health Care.
4. Abolish all brands names. Drugs to be sold only under generic name, with the company’s
name in the bracket.
5. Review of all the drugs every three years to eliminate obsolete drugs.
6. Strict ethical guidelines for drug-research.
7. Commercial production of any drug claimed to be Ayurvedic, should be allowed only after the
scrutiny of its rationality by the council for Indian System of Medicine.
8. Strict regulations for ethical promotion and marketing of pharma-products. We have formulated
details about this in our eartier deliberations and demands.
9. Proper system of post marketing surveillance for adverse drug reactions.
10. Proper system of Compulsory Continuing Medical Education (CMIE) for medical and
paramedical professionals in rational therapeutics.
The above is only a reiteration in brief, of our main demands as regards the medico-social rationality of
drug production in India.
We need to once again forcefully put forth these demands and point out that the 'Pharmaceutical Policy
2001’ does not even mention any of these crucial aspects of drug policy.
2
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B. Economic Aspects of Drug Policy
Bl.
Self reliance
Self-reliance, which was one of the principal concerns of the Hathi committee report and which was an
important element of the earlier drug-policy statements, does not even find a mention in this ’Note’! For the
current decision makers, a globalized economy means complete domination by the foreign multinationals. We
have to expose and oppose this spineless, shameless prostration before the imperialists. We should continue to
argue for restrictions on majority owned foreign companies in the production of those drugs for which know
how exists with the Indian companies. Foreign companies be allowed only if they are willing to provide
superior know how at reasonable cost, to the Indian companies.
In today's globalized economy, distinction between and the consequences of the role of Indian’ and
’foreign’ companies has been blurred to a certain extent. But there is no case for throwing over board, the
concept and strategy for self-reliance. Complete domination by foreign MNCs is nether inevitable nor of
course desirable.
B2 Price-Control
We have argued for price-control on drugs for two valid reasons 1. Drugs are part of essential commodities, are life-saving.
2. The consumer has no choice, but has to buy medicines once the doctor prescribes it. Hence consumer
resistance is very low in purchase of medicines.
No amount of so called liberalization would negate the above rationale. Hence the need for control of
drug prices continues. The drug price control is today too complicated because of the plethora of thousands of
irrational fixed dose combinations being marketed. If all these irrational fixed dose combinations are weeded
out, price-control win be far less complicated.
2.1 Criteria For Price-Controlled Drugs
Even within the existing drug production pattern, there is no case for further concessions to the drug
industry by reducing the number of drugs to be price controlled. We should oppose further decontrol of drug
prices by concretely exposing the irrational nature of the new measures of further price decontrol.
The new formula for deciding which bulk-drugs will be price-controlled, is as follows For bulk-drugs with a sale of Rs. 5 to 20 crores, the drug wfll be price-cxMitroUed if a formulator controls
more than 50% of the market.
For bulk-drugs with a sale of above 20 crores, the drug wfll be price controlled if a formulator controls
more than 90% of the market.
Even if price control is to be restricted to drugs which are produced or sold monopolistically, both these
figures of cut off sale value and of percent control by one formulator are arbitrary. There should be no cut off
value for sales figures. Any drug be subject to price-control, whatever may be its sale, if it is produced or sold
monopolistically. Secondly, the cut off value to decide monopolistic control can not be set arbitrarily at 50%
or 90% control by one formulator. Internationally, it has been established that if more than half of the market
of a product is controlled by five or less number of companies, the product is deemed to be under monopolistic
control. This criterion be applied to the bulk drug market in India, if it is decided that price control is
restricted only to drugs which are monopolistically controlled.
The above formula is for bulk drugs, from which Ayurvedic drugs have been excluded. The method for
controlling prices of formulations would continue as before, as per the 1995 DPCO.
D:\Anant\drug policy01.doc
B 2.2
I
Liberal Exemptions
Certain drugs would be exempt from price-control. The criteria for exemption are liberal, at the cost of the
consumer. These criteria are
a. Fifteen year exemption for new drugs developed though indigenous R & D.
b. Exemption till expiry of the patent for
i) drugs whose process has been patented under the Indian Patent Act 1970.
ii) Formulations involving new drug delivery systems registered under IPA 1970.
As per the DPCO of 1979, some drugs were allowed only 40% mark up. Hence the drug companies were
clamouring for exemption of certain drugs from price control. But now, as per the new proposed policy, all
indigenously manufactured drugs would enjoy 100% MAPE. Secondly these will be monopoly due to the
patent coverage so that the prices will not be brought down by competition, below die levels decided by the
new limit of 100% MAPE. Hence, now there is no case for exemption from price-controls, if the MAPE is
raised to 100%.
c. ’Cost per day per medicine4 being less than Rs. 2/-.
This would mean commonly used essential drugs like aspirin, paracetamal, iron-folic acid, furazolidone,
B'comples, etc. will all go out of price-control! This exemption should also be stoutly opposed. The fact that
drug companies have been selling 75 mg. tablet of Aspirin at 75 paise per tablet, when the price should not be
more than 20 paise, per day, shows once again that they cheat, exploit consumers whenever there is a chance.
Removing price-control on those essential drugs whose per day cost is less Rs. 2/- is simply unacceptable.
B 3 Other Measures.
Other provisions as regards ceiling prices, fixing prices of Scheduled Bulk Drugs, drug price monitoring,
Drug Price Equalization Account (DPEA) do not require any fresh comments.
Thus overall, the new drug policy titled ‘Pharmaceutical Policy 2001’ is pro-industry, anti-people and
devoid of any medico-social rationality. We should oppose it in whatever way possible.
ift**^*^******
4
|’ </I X.
I
SUBJECT:
1 NOlT (OU I III - CAlHNI-r COLIMII TilON rCON< >M1C Al I'AIRS
Pharmaceutical Policy - 2001
INTRODUCTION
The basic objectives of Government’s Policy relating to the
drugs and pharmaceutical sector were enumerated in the Drug
Policyjof 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 mere towards ^promoting accelerated
cmvZh of tl^e pharmaceu^icr’l ie.dustr>' and towards making it more
inreir.mion^
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. -
o
o
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.
Reservation of 5 drugs for manufacture by the public sector only
was abolished in Feb.1999, thus opening them up for
manufacture by the private sector also.
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o
o
o
E°reign investmenLthrough automatic route was raised from
51% to 74% in. March, 2000 and the same has been raised to
100%.
s
AjJton^tic approval for Foreign Technology Agreements
is is being
given in the case of all bulk drugs, tflbir intermediates
intermeciiates and
and
formulations except those produced by the use of recombinant
DNA technology, for which the procedure prescribed by the
Government would be followed.
Drugs and pharmaceuticals manufacturing units in the public
sector are being allowed tp_ face competition including
competition from imports. Wherever possible, these units are
being privatized.
APPROACH ADOPTED IN THE REVIEW
3.
Two major issues have surfaced on account of globalization
and implementation of our obligations under TRIPs which impact on
long-term competitiveness cf Indian industry. These have been
addressed jn'the Pharmaceutical Policy - 2001. A reorientation of
uie
of the current policy has also become necessary on
account of these issues (2)
(b)
Tne essentiality of improving incentives for research __and
development in the Indian pharmaceutical industry, to enable
tne industry to achieve sustainable growth particularly in view
o. anticipated changes in the Patent Law; and
i he need for reducing^ further the rigours of price control
particularly m view of the ongoing process of liberalization.
In order to strengthen the pharmaceutical industry's research
Committee was set up inJ999 by this Department by the name of
rab • Rese7ch and Development Committee (PRDC)
nd.r the Chairmanship of Director General of CSIR The
Commiuee has given its report and its recommendations are
summarized in Annex. I.
'he
PRDC
haS
Invest at least .5% of its turnover per annum in R&D
inchdinn
C'?re Per annum in innova^e research
^ludmg new drug development, new delivery systems etc. in
II IUI cl,
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o
o
G.
Employ at least 100 research scientists in R&D in India,
Has,been granted at least 10 patents for research done in India,
Own and operate manufacturing facilities in India.
The recommendations of the PRDC in sc^far as they relate to
the Drug Policy have been taken into account while formulating the
proposals on pricing aspects.
7.
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). This Committee recommended that the fund would be
created by collecting a surcharge of 1% of the maximum-retail price
sold willnn the.country dncTcouId'be^experteTl—
to generate around Rs. 100 crore annually. However, the Ministry of
Finance has, ic\ lieu of the surcharge, agreed to allocate Rs. 150
cro, es as Plarl Fund for creation of the R&D fund. This proposal is
being pursued through Expenditure Finance Committee separately.
8.
As far as the question of price control is concerned, the span
of-Control has been gradually reduced since 1979. Presently, under
QF\P,. 19S5_there are F4 bulk drugs and their formulations under
price control covering approxiindtely 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. Ip 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
coLinler-productivo, a committee, called the Drugs Price Control
Rovrew Committee (DPCItC), under the Chairmanship of Secretary.
Department of Chemicals & Petrochemicals was set up in 1999
which has given its report. The summary of these recommendations
' is at Annex.ll. These recommendations have been examined in
this Department.
The domestic drugs and pharmaceutical industry needs
reorientation in order to meet the challenges and canvass
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
W'" retain 11,0 P°Wer tO interver|e comprehensively in
leases where prices behave abnormally. The Statement
on
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DEPARTMENT OF CHEMICALS & PETROCHEMICALS
Pharmaceutical Policy - 2001
objectives and measures.
(Annex. V) incorporates these
10.
In view of the steps already taken, as enumerated in
paragraph 2 above and in the light of the approach indicated in the
foregoing paragraphs, the proposals for inclusion in the Statement of
Pharmaceutical Policy - 2001 are detailed below
A.
PROPOSALS ALREADY APPROVED
I.
Industrial Licensing
Industrial licensing for all bulk drugs cleared by Drug Controller
General (India), all their intermediates and formulations will- be
abolished, subject to stipulations laid down from time to time in the
Industrial Policy, except in the cases of
bulk drugs produced by the use of recombinant DNA
(i)
technology,
bulk drugsVequiring in-vivo use of nucleic acids as the active
(")
principles, and
specific cell/tissue targotted formulations.
(iii)
Foreign Investment
II.
Foreign investment upto 100% will be permitted, subject to
stipulations laid down from time to time in the Industrial Policy,
through the automatic route in the case of all bulk drugs cleared by
Drug Controller General (India), all their intermediates and
formulations, except those, referred to in para 10.A.I above, kept
under industrial licensing.
III.
Foreign Technology Agreements
Automatic approval for Foreign Technology Agreements will be
available in the case of all bulk drugs cleared by Drug Controller
v General (India), all their intermediates and formulations, except
dhose, referred to in para 10.A.I above, kept under industrial
licensing for which a special procedure prescribed by the
Government would be followed.
IV.
Imports
Imports of drugs and pharmaceuticals will be as per EXIM policy in
. force. A centralized system of registration will be introduced under
the Drugs^and Cosmetics Act and Rules made thereunder. Ministry
Of Health and Family Welfare will enforce strict regulatory
processes for import of bulk drugs and formulations.
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DEPARTMENT OF CHEMICALS & PETROCHEMICALS
<
B.
PROPOSALS SUBMITTED FOR CONSIDERATION
I.
RESEARCH
TO
AND
ENCOURAGEMENT
DEVELOPMENT(R&D)
the establ^hment of
(a)
In principle approval to the establishment of the
Pharmaceutical Research and Development Support Fund
(PRDSF) under the administrative control of the Department of
Science and Technology, which will also constitute a Drug
Development Promotion Board on the lines of the Technology
Development Board to administer the utilization of the PRDSF.
(b)
Royalty receipts obtained on sales or assignment of Indian
intellectual property, including a patent held by a research-intensive
company, meeting gold standards, would be fully exempt from
income tax.
(c)
Expenditure on consumables as well as on equipment
directly used in R&D by a research-intensive company, meeting
gold standards^would be allowed to be written off for purposes of
Income Tax within a period of one year.
(d)
Exemption to a research-intensive company, meeting gold
standards, from payment of import duties on chemicals, biochemicals. special consumables, equipment and spares, as
specified by the Government from lime to time, required by it for
R&D. in its own facility.
IL
PRICING ASPECTS
Span of Price Control
The guiding principle for identification of specific bulk drugs
for
price regulation
should
continue, ' as per
DPCRC’s
recommendation, to be: (a) mass consumption nature of the drug
and (b) absence of sufficient competition in such drugs. These
principles would be applied foi developing the criteria for selection of
s bulk drugs for price regulation under the Pharmaceutical Policy ;2001. However, the DPCRC’s recommendation regarding the new
criteria for ascertaining the mass consumption nature of a bulk drug
on the basis of the top selling brand is not acceptable as it gives rise
to anomalies. After due consideration of various options in this
regard, the Department proposes that the identification of bulk drugs
for price regulation should be based on the following methodology
(a)
.
(i)
The 279 items appearing in the alphabetical list of Essential
Dhjgs 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,
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be eligible for exemption from price control in respect of that drug
for a period of 15 years from the date of the commencement of its
commercial production in the country.
(ii)
A manufacturer producing a drug in the CQuntry by a process
developed through indigenous R&D and patentea 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.
(TiT)
A formulation involving a new delivery system patented •
under the Indian Patent Act, 1970, 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 j
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 controj. 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. .
Pricing of Scheduled Bulk Drugs
(f)
For a Scheduled bulk drug, there shall be a price notified as
(i)
the ‘'maximum allowable price” for being adopted while fixing the
prices of formulations containing that bulk drug.
(Some of the models (of working out the 'maximum allowable price" are detailed in Annex. IV.)
(ii)
The Government shall, however, retain the overriding power
of fixing the maximum sale price of any bulk drug, in public interest,
and also to conduct cost cum techno-economic study, if it considers
it necessary to do so, as per present practice.
(9)
Monitoring
(i)
"ihe DPCRC’s recommendations Io 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
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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 qf,[nedicines 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.
.Ol)
Drug Price Equalization Account (DPEA)
v Provision would be made in the new Drugs (Prices Control) Order
•4DPCO) to ensure that amounts which have already accrued to the
DPEA and those which arc likely to accrue as a result of action in
the past, are protected and used for the purpose stipulated in the
existing DPCO.
HI.
QUALITY ASPECTS
. (a)
The DPCRC s iecommendation that the requirements of
"Good Manufacturing Practices" prescribed under the Drugs &
Cosmetics Act and Rules made thereunder be upgraded to the
levels prescribed for WHO/GMP certification is acceptable. The
■ Ministry of Health & Family Welfare will be advised
(i)
to progressively benchmark the regulatory standards against
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r
those adopted in developed countries, for manufacturing.
(ii)
to progressively harmonize standards for clinical testing with
international practices.
(iii)
to streamline the procedures and steps for quick evaluation
and clearance of new drug applications, developed in India through
indigenous R&D.
(b)
to ensure high standards of quality, safety and efficacy of
drugs and pharmaceuticals,. Ministry of Health and Family Welfare
would (a) set up a world class Central Drug Standard Control
Organisation (CDSCO) by modernizing, restructuring and reforming
the existing system and (b) establish an effective net work of drugs
standards enforcement administrations in the States with the
CDSCO as a nodal center.
11.
On the assumption that the proposals indicated above will be
approved, a Draft Statement entitled "Pharmaceutical Policy -2001"
has been prepared (Annex.V ) for the public announcement.
12.
Comments of the Departments of Industrial Policy &
Promotion, Biotechnology, Health, Indian Systems of Medicines
and Homeopathy, Scientific & Industrial Research, Science &
Technology, Revenue, Eiconomic Affairs, Expenditure and the
Planning Commission were called for and their views alongwith the
comments of this Department thereon are at Annex. VI.
13.
The approval of the Cabinet Committee on Economic Affairs
is requested to the following :
(•)
.
T(ii)
14.
Proposals contained in para 10 B above relating to
Encouragement to Research and Development (R&D),
Pricing and Quality of Drugs and Pharmaceuticals.
Draft Statement titled “Pharmaceutical Policy - 2001” (at
Annex.V) for public announcement.
A Statement on
Appendix -I.
15.
Implementation Schedule is given
at ‘
This note has been seen and approved by the Minister (C&F).
( Sharad Gupta )
Joint Secretary to the Government of India
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ANNEX. I.
RECOMMENDATIONS OF PRDC
[Refer para 4 on p.2 of the Note]
S.N.
Action Point
1.
Establishment of a Drug Development
Promotion Foundation_________
Revamping
and
modernization
of
CDSCO________________________
Establishment of the Pharmaceutical
R&D Fund.__________________________
Establishment and operationalisation of
GMP/GLP/GCP Monitoring Authority
2.
3.
4.
Responsibility for
action____________
Dept, of C&PC
Min. of Health and
Dept, of C&PC_____
Min. of Finance and
Dept, of C&PC.
Dept, of Science
and
Technology,
ICMR, DCG (I)
Min. of Industry and
Dept, of C&PC.
Min. of Finance &
Dept, of C&PC.
5.
Amendments to the Indian Patent Act.
6.
Establishment to the Income Tax Act for
tax exemptions on royalty and licensing
from abroad and export of pharma R&D
| Amendments to the custom duty Mm. of Finance &
| structure to exempt imports for pharma Dept, of C&PC.
'■ R&D from custom_duty______________
I Amendments to legislation etc. for Mm. of Welfare &
contract research use and import of Dept, of C&PC.
animals for pharma R&D.__________
Establishment of a tenable system of Dept, of ISM
quality assurance for indigenous system
of medicines.____________ ____________
Establishment of a new drug discovery Dept,
of
C&PC,
infrastructure
CSIR, ICMR, DST,
DBT, & Dept., of
ISM,______________
Documentation
and
digitization
of CSIR, ISM, ICMR
indigenous knowledge systems________
and Dept, of C&PC
Human Resource Development for New CSIR, ICMR, Dept,
Drug Discovery and ISM.
of ISM, DBT, DST,
Universities & Dept,
of C&PC.
7.
I 8.
9.
10.
11.
12.
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GOVERNMENT OF INDIA
MINISTRY OF CHEMICALS & FERTILIZERS
DEPARTMENT OF CHEMICALS & PETROCHEMICALS
ANNEX.II
DRUG PRICE CONTROL REVIEW COMIVH^TEE
SUMMARY AND RECOMMENDATIONS
[Refer para 8 on p. 3 of Note]
The Commillee held detailed deliberations to review the existing
drug price control mechanism in the country keeping in view the terms of
reference assigned to it by the Government. Apart from studying details in
regard to pricing systems prevalent in various countries, two separate
teams visited (a) Canada, France and Egypt and (b) U.S.A, and Mexico to
have first hand information on the price regulatory systems operating in
these countries. Bothjhe teams had extensive discussions with various
interest groups namely manufacturers, trade, pharmacists and
Government officials' of these countries. Also, the Committee constituted
a group consisting of Dr. Rakesh Mohan, Dr. Amit Mitra, Dr. S. M.
Jharwal, Shri Sharad Gupta, Shri K. M. Kaul and Dr. P. V. Appaji to look
into the present criteria of selection of drugs for price control and the
current
price
determination
mechanism
and
to
suggest
modbications/alternatives to make the system of price control simpler and
more transparent.
Based on the suggestions received from industry
associations, consumer interest groups, voluntary health organisations,
trade, Stale Governments and some experts, and .inputs received from
teams and the group mentioned above, the Committee makes the
following recommendations alongwilh relevant observations :'
1.
The- committee noted that the Indian Pharma Industry has
registered an impressive growth over the years and has been expanding
its market beyond the national frontiers. But in the changing trade and
regulatory scenario at the international level rough more needs to be done
to make available the required medicines in abundance to the masses. Of
laTe, increasing incidence has been observed of the diseases such as
malaria, Diarrhoea, T. B., Sexually Transmitted Diseases (STDs),
Hepatitis-B, Whooping cough (pertussis), measles, amoebiasis, diabetes
mellitus and mood disorders. To deal with the various diseases, the public
funding available in India for healthcare facilities and products is
abysmally inadequate. Currently only about 3.5% of the total outlay of the
slates is spent on health needs. The available data reveal that the
per capita expenditure on medicines is less than Rs.5.00 in many states.
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DEPARTMENT OF CHEMICALS & PETROCHEMICALS
The role of the state assumes special significance since the proportion of
the people below poverty line is more than one third of the total
population. The fact that these people do not have the means to meet the
expenditure even on-minimum calorie level require# implies that the
expenditure on medicines which is of emergent nature is much beyond
their capacity. Further, for the large segment of the population above
poverty line, the problem is compounded in the absence of rational private
health care, adequate and affordable public health care and health
insurance cover because they are not able to meet the entire expense out
of their pocket.
2.
The Committee noted that in most other countries, the regulation of
the drug prices is considered necessary to contain public expenditure due
to government’s role in funding social health and insurance schemes that
cover hospital and out-patient drugs. The price regulations are used as an
instrument to keep their health budgets within reasonable limits. In these
countries, a substantial proportion of the population is covered through
health insurance and public health schemes. As a result, the consumers
are not affected directly by the high prices of drugs or high costs of
medical services, but are made to pay for the increased prices / cost
through high insurance premium
As opposed to this, a substantial
proportion of the population in India is market dependent and have to
meet all their expenses out of their ov^n pocket on this account, making
price regulation of pharmaceutical products in the market unavoidable.
3.
In India, in view of a large segment of the population being poor,
the reach of the health coverage being inadequate, non-availability of
appropriate medical insurance coverage, price inelastic demand, market
imperfections and inadequate consumer awareness, the Committee
considers Jt necessary to continue formal regulation of the prices of
pharmaceutical products and medicines for some more time till public
expenditure on health care for those who cannot afford is increased and
an alternative system is developed for others. However, it is pertinent to
point out that the pharmaceutical industry is perhaps the only knowledge
based and highly technology oriented manufacturing industry in the
country which is under a formal price control regime. This is mainly
because the financial provisions in the budgets of Central and the State
Governments are too inadequate to cater to the needs of the ailing people.
The Committee expresses serious concern on this aspect and feels that
the budgetary provision should progressively be raised. Further, there is
an urgent need1 to expand public health care, supply of essential drugs
and the health insurance cover, both by the governmental and the non
governmental organisations, as prevailing in the developed countries.
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DEPARTMENT OF CHEMICALS & PETROCHEMICALS
Such an allerhalive arrangement should be made fully operative within a
period of ne,xt five years.
The present system of product-based price control has been in
4.
existence in this country since long with progressive decontrol in terms of
the number of drugs as well as their share in the total pharma market. For
the reasons stated above, the Committee is of the view that this system
should continue, for the time being, but with simplified methodologies and
procedures to take cognizance of the changed circumstances of
liberalisation ushered into the Indian economy.
For the purpose of
determining span of control and pricing of the drugs identified for price
control, the Committee recommends that:
(i)
The approach to price control based on selectivity be continued and
applied across-the-board to all the drugs used in the country irrespective
of their therapeutic use. The guiding factors to identify specific drugs
should be (i) mass consumption nature of the drug and (ii) absence of
adequate competition in such drugs. This approach will also ensure that
the important drugs needed for National Health Programmes, where
adequate competition does not exist, are covered for the purposes of price
control.
(n)
The Committee considered the suggestion that the low cost drugs
measured in terms of "cost per day per medicine” may be taken out of
price control. While the Committee feels that the above approach is
desirable, it calls for an objective and careful assessment for identifying
“low cost drugs”, as the per day cost of a medicine varies depending on
dosage form, patients condition, variation in the prescribed dosage, price
difference in various brands, etc. The Committee is of the opinion that the
price of the largest selling pack of a brand be taken as the basis to
determind the low cost nature of a medicine for which, the cost of
maximum prescribed dose per day (irrespective of age and ailment) may
be considered and the cost per medicine per day so worked out should
not be more than Rs.2.00. This criteria is reasonable because for a short
duration treatment of 10 days, it amounts to only about 1.5 per cent of the
monthly per capita income and for long duration, it will be about 5 per^
cent. In common man's perception, this expenditure is same as that for a
cup of tea. However, the prices of such drugs would need to be monitored
so that these prices are not allowed to go up beyond acceptable limits.
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GOVERNMENT OF INDIA
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DEPARTMENT OF CHEMICALS & PETROCHEMICALS
The committee noted that the criteria of mass consumption laid down in
the Drug Policy, 1994 had come under criticism on account of non
exclusion of "export value" from the turnover of a bulk drug. The main
argument against the non-exclusion of the "export value" was that it does
not truly reflect the mass consumption nature of the dwjo in the domestic
market and unduly inflates the turnover of a drug with high export share.
However, it was reported that the value of exports was not segregated for
the reasons of the fluctuating nature of export.
In this regard, the
Committee feels that if the criterion of "bulk drug turnover" is to be applied,
non-exclusion of the export turnover of a drug from the total turnover for
the purpose of assessing the mass consumption nature of a drug in a
more liberalised regime, is not a sound accounting method. Therefore,
identification of a drug for keeping it under price control may be decided
on the basis of its consumption in the domestic market which would
comprise domestic production and imports less exports.
The turnover level of Rs. 40 million stipulated in the Drug Policy as
modified in 1994 may^be updated on the basis of general rate of inflation
(WPI — All commodities). With a view to undertaking such an exercise the
Committee collated the data available from the Annual Report of the
Department of Chemicals & Petrochemicals, the periodical returns/data
received from manufacturers by Nl’PA and observed that the data were
inadequate
Therefore, the Committee issued a public notice in the
national news papers (Hindi and English) requesting the manufacturers to
furnish the data for the year 1998-99 on production and exports (quantity
and value) of both the bulk drugs and formulations.
However, the
response was poor and the attempts to update the data did not succeed.
Therefore, the committee felt that the available data-were not complete to
work out the turnover, as defined above.
5.
In view of the above, the committee considered an alternative
method-based on the sales turnover of formulations (brand wise) in
various categories as given in the monthly retail store audit report on the
pharmaceutical market by a leading and reputed organisation, namely.
ORG-MARG. The ORG-MARG provides, on a monthly basis, the data on
moving-annual total (MAT) representing the sale value during a twelve
month period for each of the formulation pack marketed by different
manufacturers. The formulations with their sale value are categorised as
per their clinical/therapeutic/chernical classification. For the purpose of
judging mass consumption nature of a bulk drug, any brand based on a
given drug having specified minimum value of MAT could be considered
as a mass consumption drug. Secondly, to judge the level of competition,
if the market share of a brand in a specific category is found to be higher
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MINISTRY OF CHEMICALS & FERTILIZERS
DEPARTMENT OF CHEMICALS & PETROCHEMICALS
than the maximum stipulated share, such drug may be considered as
having inadequate’ competition.
By adopting the above criteria, the
specific bulk drugs may be identified based on the composition of the
selected brands.
'
x
6.
The group constituted by the committee to consider an appropriate
methodology has made the following suggestions, with which the
committee agrees:-
(i)
The minimum MAT value of a brand for the purpose of determining the
mass consumption nature of the drug may be considered as Rs.10 crores.
(ii)
Secondly, a brand with 10 per cent or more share in a given category may
be treated as having inadequate competition.
(iii)
Identify the brands having MAT value of Rs. 10 crores and above with a ;
share of 10% or abovejn the group/category (there are approximately 180 j
categories in ORG). For this purpose, the March. 1999 issue of the ORG- '
MARG Report which provides firm data for the year, 1998-99 be used.
(iv)
Exclude all brands having Ayurvedic and other products which are not
covered under DPCO.
(v)
Exclude the multi-ingredient based brand formulations.
(vi)
List out the bulk drugs contained in each of the brand products so selected ’
for the purpose of identifying the bulk drugs to be included under price
control.
(vii)
From the list of bulk drugs so worked out, the low cost drugs may be
eliminated on the basis of "per day cost of a medicine" worked out based
on thesmaximum retail price (MRP) of the top selling pack of the brand
from which the concerned bulk drug was identified. As stated earlier, the
per day cost of a medicine should not exceed Rs.2.00 for being
considered as "low cost medicine". "
I
i
7.
The committee recommends that the above methodology be
adopted for identification of specific bulk drugs to be put under price
control.
Accordingly, the Government would need to undertake an
exercise to arrivq^at a list.
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GOVERNMENT OF INDIA
MINISTRY OF CHEMICALS & FERTILIZERS
DEPARTMENT OF CHEMICALS & PETROCHEMICALS
8.
Methodology for fi^ation/determination of prices of bulk drugs
(i)
For determining the price of a bulk drug, three alternatives were
considered viz. (i) The cost-curn-lechno-cconomic study ^ii) Market price
data and (iii) Import price data. It was loll that the present methodology of
micro analysis for price determination through cost-cum-techno-economic
studies needs to be reviewed in (he context of the liberalised regime
wherein the prices are likely to be determined by the market forces. The
ommittee also took note of the fact that the industry has been averse to
such studies for (he reasons of maintaining secrecy with regard to their
ec nology and process details. This would become a more legitimate
concern particularly in the context of introduction of product patents
I herefore, the committee recommends that the market price data would
be a better method to determine realistic prices as compared to that based
on cost-cum-techno-economic studies.
(ii)
For the purpose of determining the price of a bulk drug, the committee
recognizes that a system of price related information would have to be
evolved since there is no single source of data which can be relied upon.
e possible sources of information could be the chemical/drug industry
journals, purchase documents available from formulators, import data as
ar able from DGHS. the Central Excise authorities and Annual Cost
, °rt etC ThG Governm,-n( may develop a suitable method to
work out a representative price of a bulk drug based on an averaging
appropriate to the available data.
y y
(iii)
The committee also recognizes that in the
t
libcralised’regime, the prices of
bulk drugs would be more prone to fluctuations and, therefore there may
be.
requests
Ru/b
9 k65'5 from the
,hC manufacturer
manufact“rcr for frequent revision in the prices
buch changes in the prices, if allowed, are bound to result in undue
uncertainty m the market which would neither be in the interest of the
industry nor the consumers. Therefore, after having determined the price
reasonX d ^.,9hted/verage ™rket price, taking into account a
dmn nr
2
source °f data availab'lity. revision in the bulk
drug puces' may be effected on an yearly basis and the orices so
be n°“'iedh!Or "10 purpose °f P-ingoXmuSon:
based on i, every year in the first week of June on the basis of data
Por'a.mng to the preceding financial year and statutory changel
2h nX I1"/
bU(J9Ct f°r lh° CU,Tenl year' Provided. however thft
to a vi w to keeping the prices within reasonable limits, annual increase
may not be allowed beyond a limit which may be prescribed ly lhl
Government on the basis of the rate of inflation during the preceding^ear
measured in terms of WPI of all commodities.
P-eceoing year
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DEPARTMENT OF CHEMICALS & PETROCHEMICALS
In case the price to be notified on the basis of weighte
®
price of a drug as calculated under (iii) above is not accep
9
producer(s), al his request and on adequate information eing provi e
the government may require a cost cum techno-economic s u y
undertaken as an exceptional measure. Further, such a study s a
undertaken only in situations where (i) Anti-dumping proceedings are
initialed and / or (ii) Public interest is involved. Where ever. such cos cum-technical studies are to be undertaken, the present method may
adopted.
The two-third cut-off criteria in respect of the est'n]ala^
production of a drug to determine its price has generally been found to b
with, a sound economic rationale as the price so fixed covers bulk of I e
production i.e. more than 66 percent. This also encourage cost efficient
production while discouraging cost inefficient ones. Further capacity
utilisation may be taken at 80 per cent or actual whichever is higher, so as
to be in- line with criteria adopted by the financial institutions for the
purpose of appraising proposals for granting financial assistance.
(iii)
9.
Methodology for determining the prices of formulations.
(i)
The Committee also deliberated on the suggestion that instead of
the prices of bulk drugs, the prevailing market prices (MRP) of the
formulation packs containing any of the drugs identified for price control
may be taken as the bench-mark price and notified. Revision in the
nolifiea prices m future v/ere suggested to be allowed within tne limit of
rale of inflation measured in terms of CPI for industrial workers/agncullural
labourers It was also suggested that the price changes for the controlled
formulations may be reviewed by the Government every year for taking
necessary corrective measures.
The Committee considered the above suggestion and felt that the
following problems are likely to be encountered in this regard .
(a)
(b)
This method would provide aulonuilicity in the price fixation method for
formulations and provide incentive to the manufacturers to revise their
prices upwards. The concept of automalicity in pricing was considered in
the Drug Policy on an earlier occasion and was not found to be desirable.
Secondly, as the basis of price determination of controlled drugs (costplus) and'deconlrolled drug formulations (market forces) differ, it would not
be appropriate to lake the prevailing market prices as the bench mark. In
this regard, the suggestion of the industry for grant of one time increase
on the prices of controlled formulations, based on inflation factor, to bring
these at par with the decontrolled formulations (now to be brought under
price control) might unduly increase the prices.
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DEPARTMENT OF CHEMICALS & PETROCHEMICALS
(C)
Thirdly, the prices of new introductions with different pack sizes and
different slrenglh/compositions than those notified as bench mark
formulations would need to be fixed afresh renderir^p the system more
complex and disputable.
In view of the above, the Committee felt that a cautious approach needs to
be adopted at this stage. However, based on a further review after about
three years i.e. before the TRIPS provisions come into existence, this
suggestion may be reexamined for its feasibility keeping in view the
observed changes in the availability, price situation and rationalisation of
phrama products.
(ii)
Therefore, the present method of determination of the- prices of
both imported and indigenous formulations on the basis of formula given
in para 7 of DPCO, 1995 may continue. However, for the indigenously
produced formulations the Committee has noted that the existing
methodology does^ot account for expenses on account of (a)
maintenance of quality by observing WHO certification etc. and (b)
improved packaging to check counterfeiting, maintenance of quality during
the shelf life, etc.
These elements involve capital investment and
recurring expenditure. Presently, a large number of manufacturers in the
country do not have WHO certification.
However, recovery of the
expenditure incurred on these elements through increased MAPE will not
be correct as per the established accounting principles since MAPE
covers only the post manufacturing expenses.
Nevertheless, the
Committee feels that due weightage needs to be given to these elements
of cost while v/orking out the prices of the formulations. With a view to
reducing the rigorous by moving from the micro analysis to the macro
assessment, the committee recommends that an additional eight per cent
cost be - allowed on the products manufactured under WHO-GMP
certification and additional upto two per cent for improved packaging, on
application by a manufacturer, to compensate for these costs over and
abov'e the ex-factory cost worked out based on the existing methodology
&s given in para 7 of the DPCO, 1995. Further, recognizing that there is a
need to improve the GMP standards to standards such as US-FDA/MCA
for encouraging exports, the Committee suggests that an appropriate
provision to meet higher expenses on this account may be allowed
through a further three per cent of the Ex-factory Cost, over and above
other provisions suggested above
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(iii)
As regards the question of providing incentive for R&D, the
Committee noted that the Pharmaceutical Research and Development
Committee (PRDC) is considering to lay down certain criteria for the
identification of Unils/lndustry engaged in R&D activities alongwith
required measures. Subject to the recommendations of that Committee, a
further additional cost of five per cent of ex-factory cost over and above
that recommended under para (ii) above, may be allowed to companies
which undertake basic research for new drug discovery, provided they
have actually spent a minimum percentage of their sales turnover, as may
be prescribed, for this purpose. Such an incentive may be provided based
on a certificate by a designated technical authority. The Committee
recognises that the proposed incentives to the manufacturers with USFDA/MCA certification and the R&D certified companies shall be availed
of by a small number of companies. These incentives, nevertheless, were
considered desirable to provide positive signals to the investors in such
activities. Further, the^Committee feels that any price rise on account of
these or WHO-GMP^tandards is expected to be offset by the benefits to
consumers through improved quality and security from the spread of
spurious drugs in the market.
(iv)
With a view to introducing a simplified procedure, a suggestion was
made for appropriate neutralization, based on WPI/CPI of Conversion
Cost (CC). and Packing Charges (PC) and Packing Material (PM) Cost.
Based on the deliberations, the committee recommends that the CC&PC
be neutralized on the basis of CPI for industrial workers. Further, the PM
Cost be neutralized on the basis of WPI for all commodities. For the
neutralization of these costs, the improvement in Process Loss (PL) needs
to be kept in view.
However the government needs to notify the norms every year as required
in the previous DPCOs .
(v)
During the deliberations, the Committee felt that the imported
finished formulations, patented or otherwise, be brought under price
control. However, this may not bo GATF/WTO compatible. Nevertheless,
the price of new introductions in the* country would need to be watched
and monitored. The Committee, therefore, recommends that the prices of
patented drug formulations, including those granted with EMR. introduced
in the country shall be under price control and the marketing approval
under the Drugs & Cosmetics Act should be issued only after the applicant
has obtained price approval from the Government. When it is not feasible
to determine a reasonable price under the existing methodology/formula,
an alternative methodology including reference pricing corrected for
relative per capita income level may be developed by the Government.
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DEPARTMENT OF CHEMICALS & PETROCHEMICALS
(■
10.
Monitoring & Enforcement
(i)
The committee recognizes the objectives of the Drugs Price Control Order
in the given socio-economic conditions in the counfry and the need to
enforce and monitor the provisions to adequately protect the consumers’
interest. Ihe Committee is of the view that effective monitoring systems
would have to be established to move away from the "controlled regime”
to the "monitoring regime” in a medium and long term perspective.
(n)
The Committee noted with concern that the enforcement of various
provisions of Drugs and Cosmetics Act is still not uniform throughout the
country and spurious and substandard counterfeit drugs find their way into
the market. It was also reported that different yardsticks are adopted by
State Licensing Authorities for granting manufacturing approval of drug
formulations. This leads to proliferation of formulations and pack sizes.
The Committee feels^that the . systems and criteria adopted for granting
drug licences and formulation approvals need to be made uniform. The
Committee recommends that the Good Manufacturing Practices (GMPs)
requirements prescribed under the rules for manufacture of drugs be
upgraded to the levels prescribed for WHO-GMP Certification Scheme
This needs to be achieved within a period of 2 years, say by December,
2001. after which no manufacturing license under the Drugs and
Cosmetics Act be renewed or granted to units not conforming to the
minimum prescribed WHO-GMP standards.
(iii)
Further, the committee is informed that under the provisions of ’The Drugs
and Cosmetics Act" such activities constitute a cognizable offence with
appropriate penal provisions including imprisonment since it involves
human health and life. The committee feels that the relevant provisions
be enforced in their letter & spirit. The Committee also recommends that
WHO-GMP be made a basic criterion for granting a drug license to
manufacture a drug in the country.
(iv)
Further, for effective enforcement, the following steps are recommended :
(a)
Provide powers to the Drugs Control Authorities to dispose off small &
petty offences/contravention ’s by compounding provision for such
offences in the DPCO. This would obviate the necessity of launching
prosecutions in minor cases.
5
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(b)
The Government should develop an appropriate mechanism to study the
price movements of drugs marketed in the country in both
controlled/dccontrolled categories and develop a price index for pharma
products to.review the price situations on monthly/qua^erly basis to take
corrective measures. In the case of imported bulk drugs and formulations,
the prices need to be monitored more closely in the light of the changes in
the international trade regime. This would help in determining the cases
of dumping and under/over invoicing to protect the interest of the industry
and consumers.
(c)
The Committee recognizes that in the liberalised regime, a reliable data
base would go a long way in evolving appropriate and timely policy
measures.
The Government should develop a data -bank on
pharmaceutical sector. A simplified format may be prescribed in the
DPCO to collect the required information.
(d)
The availability and*price situation I >e reviewed by holding periodical l(
meetings with the consumer interest groups, industry and trade.
'
(e)
Import of formulations falling under the price decontrolled category be
monitored effectively according to a format to be prescribed in DPCO.
This should indicate the quantity,'c.i f. price, customs duty paid and the
MRP of Um pioduci for each impelled consignment
11.
Miscellaneous
(i)
Dispose off the review petitions filed by the manufacturers with in a given
time frame, say two months after receipt of complete information.
(ii)
The Committee has noted with concern that presently there is no system
of prescription audit, through which it could be ascertained whether the
hospitgls/doctors prescribe more expensive and non-essential drugs
instead of low priced essential drugs.
However, the committee was
informed that there is a tendency to prescribe high cost medicines despite
the availability of cheaper and equally effective substitutes.
The
Committee feels that this tendency needs to be curbed through a
coordinated effort by the Department of Chemicals & Petrochemicals and
mistry of Health by developing an appropriate prescription audit
mechanism with Relive support of Indian Medical Association.
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DEPARTMENT OF CHEMICALS & PETROCHEMICALS
('
(iii)
The Committee has noted that in addition to product-wise price control on
selected drugs, there are limits, stipulated in the DPCO, 1995 on profits of
a pharmaceutical company as percentage of its sales turnover. It was
also noted that this' provision of controlling overalr profitability of a
company was intended to check unreasonable increase in the prices of
pharmaceutical products not under price control. It was reported to the
committee that it has not been practicable for the government to
meaningfully monitor the profitability of each and every company. At the
same time, this provision has reportedly adversely affected the scope of
increased investment in R&D. As the thrust of the economic policy is
towards providing flexibility under the conditions of market economy, the
Committee is of the view that there is no need to have dual control’on
pharmaceutical companies. Therefore*, the Committee recommends that
the provision limiting profitability of pharmaceutical companies be done
away with.
(iv)
As a medium and ]&ng term strategy, adequate health insurance cover,
both by the public and private sector, needs to be provided so that the
dependence on price control measures could progressively be reduced.
(v).
To curb indiscriminate imports, there is need to strengthen procedures
and rules under Drugs & Cosmetics Act so as to provide for a registration
system for import of pharmaceutical products into the country.
(vi)
As per available reports, eight percent margin is provided to the
wholesalers and sixteen per cent to the retailers on the scheduled
formulations.
For non-scheduled formulations, the companies are at
liberty to decide the trade margin. It is reported that the prevailing normal
trade margin in respect of the decontrolled formulations is 20 per cent for
retailers .and 10 per cent for wholesalers. In view of this, the present
stipulation of 16 per cent margin on scheduled formulations to the retailers
needs to be retained.
(vii)
Il has also been observed that some of the manufacturers tend to provide
unduly high trade margins, adversely affecting the consumer interest.
Therefore, the committee is of the view that to discourage unethical
practices by the players, the difference between the first sale price of a
formulation by the manufacturers and the retail price printed on the label
be limited to a maximum of 40 percent of the MRP in the case of
decontrolled formulations.
.
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(viii)
As brought out earlier there is (a) absence of rational private health care
(b) inadequate public health care and (c) inadequate health insurance
cover in the country. Therefore, the committee recommends that there is
an urgent need to expand public health care by progressively raising the
budgetary provision, improve supply of essential drugs and accelerate the
process of providing health insurance cover, both by the governmental
and non-governmental organisations and that such an arrangement
should be made fully operative within a period of next five years..
(ix)
Further, the Committee has observed that several manufacturers are
providing bonus offers/schemes for promotion of their products. Such
schemes/offers lead to higher prices for the consumers apart from the
possibility of compromise on quality of the product, resulting in
proliferation of substandard products in the market.
Therefore, the
committee is of the view that such practices be discouraged through
effective monitoring for taking corrective measures.
SECRET
bLCHCI
r
I ,N<> n/z/nHKi iM.i
GOVLHNMI Nl <>l INDIA
MINItHRY Of CHEMICALS & FtRFILIZtRS
DEPARTMENT OF CHEMICALS & PETROCHEMICALS
ANNEX-111
RATIONALE FOR THRESHOLD VALUES OF MAT
[Refer sub-para (vi) of para 10.B.Il(a) on p.6 of the Note]
Presently, there are 74 bulk drugs under price control and
the retail market coverage is estimated X° be 38-40%
approximately. These drugs were kept under control on the basis of
turnover criteria of Rs.400 lakhs or more, which was based on
1989-90 data. This, in terms of value of formulations, works out to
Rs. 1600 lakhs on the basis of "the ratio of value of consumption of
bulk drug for production of formulations to the value of formulations
produced as 1:4" adopted in Chapter V of the Report of the working
group on Drugs and Pharmaceuticals for the Ninth Five Year Plan
Period (1997-98 to 2001-02).
Data used at the time of promulgation of DPCO 1995 was of
the year 1989-90. For this reason value of formulations arrived al
above would require correction for inflation since then. Further
correction woukTbe required there on account of the fact that now
we are considering only single ingredient formulations where as all
formulations comprise of single as well as multi-ingredient
formulations. On the basis of increase in the Wholesale Price
Index (WPI) for Drugs and Medicines from 140.4 points in 1989-90
to 320 9 points in 1998-99, the value of all the formulations i.e.
Rs. 1600 lakhs, calculated above, would come to Rs.3657 lakhs.
Further, the MAT-Value for all formulations as per ORG-MARG of
March, 1999 is Rs. 1190946 lakhs (Rs. 11909.46 crores), whereas
the MAT-Value of all the single ingredient formulations works out to
Rs.603283 lakhs. On this basis, the value of Rs.3657 lakhs of all,
formulations corresponds to Rs. 1852 lakhs in terms of the total
single ingredient formulations.
Hence, the threshold limit of
Rs.2000 lakhs appears reasonable for bringing drugs under price
control, which would mean that if, for any bulk drug, the MAT-Value
of all its single ingredient formulations is above Rs.2000 lakhs, then
it could be considered for price control.
Under the liberalised industrial, trade and economic policies,
the availability of bulk drugs is not as problematic as it was earlier
when import policy was quite restrictive. There are large number of
formulators for a bulk drug. However, an analysis of ORG-MARG
data indicates that in majority of cases, major share of the retail
market is with 3-5 formulators only. Rest of the formulators have
rather low shares. In view of these factors, it is not prudent to define
competition in terms of number of bulk drug manufacturers and
number of formutators in relation to a particular bulk drug.
SECRET
PCGHCI
i No m/udoo i'l l
('.ovntNMhNi or india
MINT*’, f i(y <>| CIII MlCAI-fl A 11
departmenr or chemicals & petrochemicals
Cr.ii-.idciing .ill ||k?;.o ar.pccln, bulk (lings will bo kc'pl undoi
price regulation in accordance with the following critera:(i) ’
The total MAT value of any particular bulk drug is
more than Rs.2000 lakhs (Rs. 20 Crores) and the
percentage share of any of the fonXjIators is 50% or
more.
(ii)
The tola! MAT value of any particular bulk drug is less
than Rs.2000 lakhs (Rs. 20 Crores) but more than
Rs.500 lakhs (Rs. 5 Crores) and the percentage
share of any of the formulators is 90% or more.
The above mentioned modified methodology and criteria are
the best available, keeping in view the inherent constraints with
respect to access to and availability of turnover data of large variety
and range of bulk drugs. This modified methodology meets the
requirement
that the bulk drugs for price control should be
identified on^tRe basis of extent of usage and the absence of
sufficient competition in both high selling and low selling
formulations On this basis, criteria have been enunciated in sub
para (vi) of para 10.D ll(a) the Note.
On the basis of the data worked out from the ORG-MARG of
March, 1999 for the application of the above mentioned
methodology and on the basis of the application of criteria stated in
sub-para (f) above, there would be about 37 bulk drugs under price
control and the retail market coverage on account of formulations of
these drugs is estimated to be around 25% of the total retail trade
reported in ORG-MARG of March 1999. This span of control is
consjdered reasonable keeping in view the overall objective of the
Pharmaceutical Policy — 2001” aiming at ensuring adequate
availability at reasonable prices and also creating an environment
conducive to channelising now investments into pharmaceutical
R&D and industry.
SECRET
r.liCKET
I .No.n/7/2000 1*1.1
GOVERNMENI OF INDIA
MINISTRY OF CHEMICALS & FERTILIZERS
DEPARTMENT OF CHEMICALS & PETROCHEMICALS
ANNEX. IV
SOME OF THE MODELS FOR WORKING OUT THE
MAXIMUM ALLOWABLE PRICE
[Refer sub-para (f) of para 10.B.II on p. 8 of the NoteJ
The DPCRC's observation that the present methodology of
microanalysis for price determination of bulk drugs through costcum-tcchno-economic study needs to be reviewed in.the context of
the liberalized economic regime, is a profound observation. The
pharmaceutical industry has been averse to such studies for the
reasons of maintaining secrecy with regard to their technology and
process details. Moreover, as the price fixed on the basis of such a
study is a normative price and not the actual price, it creates
problems for some producers of so called "quality drugs. The
industry has been consistently representing against the present
system. Hence, for calculating the “maximum allowable price" of
bulk drugs, it is proposed to allow the working out of the prices of
major manufacturers of a bulk drug, which is under price control, in
a given periqd of time on the basis of invoices submitted to the
Central Excise Authorities on which the Central Excise Duty is paid.
The data could also be collected from the top 4 or 5 formulators (as
pei ORG) < »l lh<' cm ii i 'i i u'd bi ilk di ug 1 ho avci ago pi n < I inso pi it o
for the concerned bulk drug could be determined for price
regulation on this basis also. Similarly, for bulk drugs, which are
imported, the average of the landed cost in a given period of time
shall be considered. The National Pharmaceutical Pricing Authority
(NPPA) under the Department of Chemicals and Petrochemicals
can take into account market based data and arrive at an average
"maximum allowable price’’ for the bulk drug on the basis of this
data.
If this is not possible the NPPA can devise its own
methodology. Once the average price is determined for a bulk drug,
it would be notified and shall be considered for revision from time to
Cime. Under the Pharmaceutical Policy-2001, the flexibility to use
'market based data would be available to determine the “maximium
allowable price" of bulk drugs. TheDepartment of Revenue and the
' Customs and Central Excise formations all over the country shall
assist the Department of Chemicals & Petrochemicals and its
attached office, the National Pharmaceutical Pricing Authority, to
get the data/invoices/information as deemed necessary for
conducting the above study from time to time. The Department of
Revenue be advised to take necessary steps in facilitating this
procedure.
x
SECRET
nC9WT
I .No.B/7/2000-PI.I
*
GOVERNMENT OF INDIA
MINISTRY OF CHEMICALS & FERTILIZERS
DEPARTMENT OF CHEMICALS & PETROCHEMICALS
F'
(ii)
Ar. R&D intensive company achieving “the gold standards
would qualify for an additional cost of 5% of ex-factory cost in
determination of the prices of Scheduled formulations manufactured
by it.
%
(d)
Ceiling prices
Ceiling prices may be fixed for any formulation, from time to time,
and it would be obligatory for all importers/formulators, including
those in small scale sector or marketing under generic name, to
follow the price so fixed.
(e)
Exemptions
7)
A manufacturer producing a new drug in the country, not
(i)
produced elsewhere, if developed through indigenous R&D, would
be eligible for exemption from price control in respect of that drug
for a period oMS years from the date of the commencement of its
commercial production in the country.
7‘)
A manufacturer producing a drug in the country by a process
(■i)
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 patented
under the Indian Patent Act, 1970, 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)
Any formulator may 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. 21- 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^atient , on the basis of the proposed revised price,
exceeds beyond the limit of Rs. 2/- per day, obtain the necessary
price approval.
SECRET
SECRET
F.NO.5/7/2000-PI.I
GOVERNMENT OF INDIA
MINISTRY OF CHEMICALS & FERTILIZERS
DEPARTMENT OF CHEMICALS & PETROCHEMICALS
(f)
Pricing of Scheduled Bulk Drugs
.
(i)
For a Scheduled bulk drug, there shall be a price notified as
the “maximum allowable price" for being adopted while fixing
e
ST5 SSZ - "
overriding power
of fixing the maximum sale price of any bulk drug, in public interest,
and also to conduct cost cum techno-economic study, if it considers
it necessary to do so. as per present practice.
(g)
Monitoring
(i)
To have effective monitoiing and enforcement system and to
move away from the “controlled regime” to a “monitoring regime is,
in the present context, extremely important 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 rational Pharmaceutical Pricing Authority, set up in
August, 1997r'would need to be revamped and reoriented for this
purpose It will continue to be entrusted with the task of price
fixation / piice icvision 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, decided to strengthen the National Pharmaceutical
s Pricing Authority by providing appropriate powers under the DPCO
which would make it mandatory for the manufacturer to furnish all
infoimalion as called for by NPPA and also to regulate such prices,
wherever, required.
(1>)
Drug Price Equalization Account (DPEA)
Provision would be made in the new Drugs (Prices Control)
Order (DPCO) to ensure that amounts which have already accrued
to the DPEA and those which are likely to accrue as a result of
action in the past, are protected and used for the purpose stipulated
in the existing DPCO.
SECRET
H)
•
•
(
.
SECRET
F.No.5^2006-PI.I
GOVERNMENT OF INDIA
MINISTRY OF CHEMICALS & FERTILIZERS
DEPARTMENT OF CHEMICALS & PETROCHEMICALS
VII.
QUALITY ASPECTS
The Ministry of Health & Family Welfare would
%
(i)
Iprogressively
„
. benchmark the regulatory. standards against
those adopted in developed countries, for manufacturing.
(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 qpforcement 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
The National Institute of Pharmaceutical Education and
Research (NIPER) has been set up by the Government of India as
an institute of "national importance" to achieve excellence in
pharmaceutical sciences and technologies, education and training.
Through this institute, Government’s endeavor will be to upgrade the
standards of pharmacy education and R&D. Besides tackling
problems of human resources development for academia and the
indig'enous pharmaceutical industry, the institute will make efforts to
maximize collaborative research yvith the industry and other
' technical institutes in the area of drug discovery and pharma
technology development.
SFCnF.I
■' i
M ■■ ““ ii
,
GLOBALISATION AND ITS IMPACT
ON THE
INDIAN PHARMACEUTICAL INDUSTRY
D. P. DUBEY
J
Published by: D. P. Dubey General Secretary of FMRAI
Printed byRam Printing Press 2727/7, Chuna Mandi, Pahar Ganj
New Delhi-110055 Phone : 7774339 Fax: 7517704
Price Rs. 3/- >017
Published by
Federation of Medical & Sales
Representatives' Associations of India
372/21-Russa Road (E) Tollyganj
Calcutta-700033
9
products
Syntex Lab.
1994
$ 5.3 bn.
Hoffman La Roche
Eli Lyly
PCS Health System 1994
$ 4 bn.
1994
Sandoz
Gerber
$ 3.7 bn.
Sterling
1994
$2.9 bn.
8. Smith Kline
Beecham
$ 14.2 bn.
9. Glaxo
Burroughs Wellcome 1995
$ 7.2 bn.
10. Hoechst
MMD Roussel
1995
$7 bn.
1995
Upjohn
11. Pharmacia
$2.7 bn.
1995
Fison
12. Rhone-Poulenc
Rorers
0. BASF
Boots
1S95
$ 1.3 bn.
Sandoz
1996
$30.1 bn.
14. Ciba Geigy
$11 bn.
1997
15. Hoffman la Roche
Comage Ltd.
1998
16. Hoechst A.G.
Rhone Poulenc
$67 bn.
1998
Zeneca
17. Astra
(Source Compilation from reports published in various news
papers at different times)
5.
6.
k
TABLE-V
Percentage of drug production and world population in some
countries
Country
% of world Drug production.
%world population
28.2 %
4.7 %
USA
7.7%
1.5%
Germany
7.1%
1.1%
France
3.4%
1.1%
U. K.
1.7%
2.8%
Brazil
1.2%
16.1%
India
(SourceBusiness Standard February 19,1997)
€
8
1
Conclusion:
GLOBALISATION AND ITS IMPACT ONTHE
The present Govt, at centre is bringing a bill in the winter session of
the Parliament to change Indian Patent Act 1970. The change in the Act is
not in the interest of the people of the country. Now the patent has become
an object of business instead of development. Considering the wide gap of
industrial and technological development between developed and developing
countries monopoly rights through patent system should not be allowed to
the rich nations. Today 85% of the patents are being controlled by TNCs of
’ rich nations. "Globalisation is hurting poor people, hot just the poor countries.
In this process poor country and poor people will become increasingly
marginalised," says the 1997 world development report of UNDP.
The question is why this pressure and hurry ? The main aim to impc^b
the conditionalities of WTO and the attempt to change Indian Patent Acus
• that MNCs need more markets and are eyeing Asia the largest continent of
the world where 60% of the world population lives but contributes only 20%
of the world pharma business. With high rate of population growth it is
expected that the need of the drugs will tremendously increase in the third
world countries including India in the next millennium. India contributes 16.1 %
of world population, but produces only 1.2% of world drug production (See
table-V). Hence the MNCs are trying to have more control on the
pharmaceutical markets of the developing nation.
Developed countries are always backing their own big companies to
capture markets in other countries even at the cost of the interest of the
people there. The United States has successfully battled for the inclusion of
strict intellectual property rules in international trade agreements such as
NAFTA and GATT. Often the U.S. position has literally been drafted by PhRMA.
These trade agreements disregard public health consideration and have
forced dramatic change in the intellectual property rules world over. Still
PhRMA is not satisfied. And when PhRMA is not happy the office of U.S.
Trade Representative (USTR) is not happy," says the editorial comment of
Multinational Monitor.
The above comments clearly indicate intention of the USA and other rW
INDIAN PHARMACEUTICAL INDUSTRY
*
nations. Unfortunately, the Govt, of India is dancing to their tune. Against
this, it is necessary to develop and launch broad based movement every
where with the active support of people hailing from all walks of life forcing
the government to change their stand.
TABLE IV
Some TOP Pharma Company mergers in the world
Name of Company
Name of Company
Year of
Value of
merger transaction
1. Dow Chemials
Marion Labs
1986
$6.21 bn.
2. Bristol Myers
Squibb Corp
1989
$12.09 bn.
3. Beecham group of
Smith, Kline &
1989
$7.9 bn.
Company
French
4. American Home
American Cynamide 1994
$9.7 bn.
J
Globalisation is a process which involves economic inter-dependence
of countries world wide removing all barriers for economic integration as if
the whole world is a single village. Obviously, in this process the rich nations
with their superior financial power, control the scenario and on the other
hand the poor and the developing nations are forced to integrate surrendering
their economic independence knowing fully well, what they are forced to
accept is really prejudicial to their own interest. In this process, the world
financial institutions like world Bank, IMF and now the WTO advance the
b^erest of the rich countries only. The draconian policies of World Bank and
under structural adjustment programme resulted in the net transfer of
$178 billion between 1984 and 1990 from poor countries to the commercial
banks of rich nations. (Source: UNDP Human Development Report 1994).
William Shakespeare introduced us to Shylock, the one man bank and his
method of debt extraction. The process of IMF, World Bank is more organised,
ruthless and heinous today than Shylock's. The Transnational Corporations
(TNC) of rich nations are practically controlling the world finances. Today,
the whole world is colonised by Global finance and the TNCs supported by
the neo-colonial structure including World Bank, IMF and WTO are controlling
the financial situation world-wide. Government of third world countries are
powerless against global finance arid are unable to control its movement
within their own national boundaries.
The situation of the world drug industry is no different. "Operating at
the behest of the Pharmaceutical Research and Manufacturers Association
(PhRMA) for a decade and a half, U.S. Government has waged a ruthless
crusade to force third world countries to adopt straight jacketting intellectual
property rules at the expense of protecting public health", says the editorial
comment in the June '98 issue of Multinational Monitor, a journal published
ten Washington.
~ The structural adjustment programme introduced by Government of
India at the behest of IMF, World Bank and WTO created serious impact on
India's drug industry, health care system, on the workers engaged in the
industry and ultimately on the people of the country. These reform policies
are mainly the reduced role of the Government, cut in subsidy in social
sector, increase in administered prices, liberalisation of trade by increasing
tariff rate providing incentive for foreign investment, privatisation of public
sector, equating foreign companies with Indian companies de-regulating
the labour market etc. This is aimed at withdrawal of the state initiative
from social and welfare sector like health, education, public distribution etc.
In the following paras I shall deal on how the workers of the drug industry
and the people of our country are affected by the impact of globalisastion.
Drug Industry situation prior to Indian Patent Act, 1970 : At the time of
independence, total drug production in our country was around 10 corers. At
2
7
that time MNCs taking the help of colonial "Patent and Designs Act, 1911"
exploited the drug market of our country. They were engaged mainly in import
of drugs from their country of origin. Between 1947-57, 99% of the 1704
drugs and pharmaceutical patents in India were held by foreign MNCs. During
that time the MNCs controlling 80% of the market did not come forward with
financial investment and technological help to establish drug production
centres in India. Drug prices in India was one of the highest in the world. In
1954, first Public Sector drug company Hindusthan Antibiotic Ltd. (HAL)
was established with the help of WHO and UNICEF. Indian Drugs and
Pharmaceutical Limited (IDPL) was established in 1961 with help from Soviet
Union. The establishment of these two public sector units and coming into
force of the Drug Policy of 1978 had been mainly responsible forghp
availability of drugs and medicines at relatively lower price in India, mee
country became almost self sufficient in production of drugs.
More over, the number of workers engaged in these units have been
reduced drastically. When IDPL was established it had a strength of more
than 15,000 workers. Today, it has been reduced to less than 7,000.
Indian Patent Act 1970:
The Patent Bill was first introduced in the Parliament in 1967, but the
Patent Act, 1970 came into force only in 1972.
Indian Patent Act 1970 which is in operation in our country does not
allow product patent on medicines, agricultural products and atomic energy.
This is the most suitable patent act for the developing world. Here, process
patents are allowed for 5-7 years. Mainly with the help of Indian Patent Act
1970 India is today selfsufficient in production of basic drugs covering
various group of drugs. Indian scientists developed new processes for 107
drugs. Indian companies are now among the world leaders in the production
of bulk drugs from basic stages. At present, the prices of drugs in India is
comparatively economical than many other countries. As per UNIDO, India
is identified to produce its own drug needs with its own technology and
manpower indigenously. After 1970, many new drug firms were established
by Indian businessmen. At present, around 23 thousand small, big, medium
factories are producing drugs in India.
Attempt to change Indian Patent Act 1970 is a part of this globalis^ron
programme. The imposition of unequal trade treaty like World Trade
Organistion (WTO) is a step towards globalisation in favour of the MNCs of
rich nations. With its help, the market of the developing nations is forced
open for the developed countries. Most of the developing countries were
forced to sign WTO agreement without realising its implication; as a result,
developed countries are always winner. Already, at the dictates of IMF, World
Bank and WTO Govt., of India is slackening all checks and controls to
invite the MNCs in all industries including pharmaceutical industry. FERA
and MRTP Acts have been amended. Customs duties and corporate taxes
have been lowered down. Relief, concessions and facilities have been
extended to MNCs as that of Indian companies. All these, already, had
adverse impact on the indigenous drug industry. As per the requirement of
WTO guideline for product patent regime, the availability of new drugs in our
country may be delayed depending on the desire of patent holder. As per
With pharmaceutical industry taking a leap towards biotechnology
development world-wide, only the public sector drug companies, with the
backing of the Central Government, could have faced the challenge
effectively from the MNCs in the new situation.
Mergers and Acquisitions:
International and national level mergers, acquisitions and take covers
have now become a common phenomenon in the pharmaceutical industry,
^toternationally American Home Product merged with Cyanamid, SKB with
^Sterling, Rhone Poulenc took over Fashions, BSF with Boots, Glaxo with
Burroughs Welcome, Ciba Geigy with Sandoz, Warner Hindustan with Parke
Davis, Hoechst with Rhone Poulenc etc. are some of the examples of big
take avers. By mergers and acquisitions these companies became further
bigger with more financial power at their disposal over their competitors.
(See Table for top pharma merger of the world)
In the coming days, with the help of international financial companies
MNCs will capture and take control of Indian companies to control Indian
market.
To match the situation created by international mergers and take overs,
Indian companies are adopting the same path. For example Wockhardt
took over Merind and Tata Pharma, Ranbaxy took over Croslands, Nicholas
Piramal took over Roche, Boehringer, Sumitra Pharma. Inevitable results
are job loss of workers. Because of over lapping of job large number of
workers are declared excess. After merger Glaxo-Welcome and Ciba-Sandoz
announced reduction of 15 thousand and 10 thousand of work force
respectively world-wide. Upjohn and Pharmacia decided to close 24 of their
57 plants in different countries after merger.
Some companies are adopting 'Buy and Grow1 method. They are taking
over some popular brands and increasing their business. SKB took over
Crocin from Duphar, Ranbaxy tool over 7 leading brands from Gufic, Dr.
Reddy's Lab purchased 6 products of Dolphin and two each from Pfimex
and SOL Pharma. Sun pharma purchased all leading brands of NATCO,after
selling the popular brands the companies are becoming sick and closing
their shutter throwing the workers in the street.
Governments permission to MNCs to come to India with 100% equity
have threatened the existing companies with same origin and their workers.
Through the process of mergers, acquisitions and take overs MNCs
will gradually perpectuate their grip on the Indian industry in the creation of
limited number of mega companies having monopoly control and domination
world wide. In absence of competition people will have to pay any price as
it happens in the sellers market.
3
6
Knoll Pharma (Boots)
Smith Kline Beecham
E. Merck
Rhone Poulenc
Hindusthan Ciba Geigy
Duphar Interfran
Bayer
Abbott
Roche
Boehringer Mannheim
Park Davis
Pfizer
Unichem
1995
1995
1995
1996
1993
1996
1996
1996
1996
1997
1997
1995
1997
All workers aruond 600
208
194
700
907
154
590
All workers
All 320 workers
All 335 workers
All 650 workers
215
All workers
(Source : Annual reports of respective companies and interaction with the
office bearers of the union.)
Thus, the total payment on voluntary retirement scheme by some of
the firms like Glaxo, Hoechst, Pfizer, Knoll Pharma, Rhone Poulenc, Park
davis, Smith Kline Beecham, Duphar, Bayer etc. are more than 200 cores in
last three financial years. The main important thing is employment
opportunities in these units have been reduced for ever.
Impact on Public Sector:
With the reduced role of the state under globalisation the public sector
drug companies are faced with serious problems including imminent closures.
Public sector drug companies like Indian Drugs and Pharmaceuticals Ltd.
(IDPL), Hindusthan Antibiotics Ltd. (HAL), Bengal Chemicals and
Pharmaceuticals Ltd. (BCPL), Bengal Immunity (Bl) and Smith Stanistreet
Pharmaceuticals Ltd. (SSPL) played an important role in the production of
essential drugs at affordable price. Linder the globalistion process the role
of Public sector has been marginalised and they have been made sick.
Attempts have been made to either privatise or close them. The Penicillin
Plant in HAL, the biggest in the country, has been handed over to Pri\^^
hands. Its Streptomycin plant also has been leased to a private company
for manufacture of other drugs. IDPL which is having the biggest
pharmaceutical plant in Asia is closed from 1996 for want of proper financial
assistance from the government. The public sector drug companies used to
supply raw materials to the small scale sector companies. Now, these
companies are facing difficulties in procuring raw materials. Similar is the
fate of BCPL, B.l. and SSPL. These three units were taken over by the
government after they were made sick by the private owners. Proper utilisation
of their capacity could not be made due to lack of will on the part of the
government, mismanagement at the administrative level and high level
corruption.
It is not because of any inherent weakness but due to lack of political
will, deliberate efforts to destroy them, corruption and mismanagement these
public sector units have been rendered commercially unviable.
the guidelines, product patent is granted for 20 years and process patent for
another 20 years. At present, newer drugs are made available in our country
within 4-6 years time. Prices of the drugs will go up by 5 to 10 times as it is
evident from the prices of drugs in India and other countries like Pakistan,
U.K. and U.S.A, where product patent is in force. Ranitidine is sold by Glaxo
in India at Rs7.20. The same product is sold by the same company in
Pakistan at Rs. 65, in U.S.A, at Rs 545. Similarly, anti-viral drug Aciclovir
costs in India at Rs. 33.75 while the same drug is sold in Pakistan at Rs.
363. There are many such examples.The drug prices in U.S.A., U. K. and
other developed countries have gone up so high that the health care
expenditure in those countries is predominantly funded by insurance
companies at a very high premium. In those countries people cannot think
^htreatment without insurance coverage. Product patent regime will definitely
namper India's drug export as countries will be forced to purchase from
patent holders only.
Dilution of Drug Policy and Drug Price Increase :
Unlike consumer goods, drugs are not purchased by the preference of
a person, but on a doctors' prescription. Consumers have no choice of their
own on this matter.
Prices of the drug are increasing by leaps and bounds along with the
prices of other commodities in recent times. The drug manufacturers are
flouting the Drug Price Control Order (DPCO).The DPCO was first introduced
in 1970. In 1970 most of the drugs were under price control. In 1987 this
was diluted and number of drugs which were restricted to 347, in 1987 it
was brought down to 163 drugs and in 1994 only 73 drugs were under DPCO.
Even then the industry is not happy; they want the control to be abolished
totally.They have already demanded decontrol of 17 bulk drugs and further
recommended full decontrol within 3 years time (Economic Times 28th
September' 98). Whereas many developed countries of Europe control drug
prices directly. In U.K., Government determine the profit level of drugs
Applied by individual company. The company has to reimburse the excess
l^ofit to the department of health.
Recent study shows that prices of many life saving bulk drugs have
gone up steeply. Drugs policies in our country are decided not by the need
of our people, pattern of disease or by the purchasing capacity of the people,
but by the profit motive of the industry and Central Government is playing
the role of silent onlooker.
We are giving below the prices of twelve essential drugs before the
liberal decontrol of DPCO in 1995 and today.
Table I
Percentage
For treatment
Packing
Price
Name of
increase.
the drugs.
1995 1998
9.50
204%
3.13
Diazepam
Depression
10’s
Ampicillin
Antibiotic
4‘s
12.85
23.15
80%
4
Antibiotic
Cephalexin
Anti T.B. Drugs
Ethambutol
—-do—Rifampicin
—do—
Pirazinamide
Lignocaine Hcl Anaesthetic
Promethaxine Hcl Anti allergic
Antacid liq.
Gastritics
Oxyfedrine HCI Angina pectoris
Discopyramide
Cardiac problem
Phosphate
Anti anginal
Dipyridamole
1O's
1O's
10's
10's
30 ml.
10's
200 ml.
1O's
45.07
5.92
24.00
17.01
4.16
1.25
13.00
10.44
113.15
33.00
64.00
46.95
12.40
3.23
23.00
21.41
151%
457%
167%
176%
198%
158%
77%
105%
1O's
ID’s
16.50
2.00
50.46
4.73
206
137%
The above list is only indicative. Hundreds of such examples caniJie
given.
Further, under WTO agreement with the imposition of products patent
regime, the prices of all new drugs (Patented) will go up without any control
of domestic law. DPCO will become further irrelevant and Indian people's
accessibility of newer drugs will be restricted only to the rich elite of the
country. We are giving below the high prices of some of the new drugs
introduced in 1977 in Indian market.
Table II
DRUG
Sporanox
Lumicil
Sparlex
Rispid
Livial
Pipracil
Arnate
Adno ject
Roxisara
Celex
COMPANY
Ethnor
Novertis
Sun Pharma
Panacea
Infar
Cyanamid
Mesco Pharma
Inca
Sarabhai
Glaxo
PACK
STRENGTHI
4 Tab.
100 mg
14 Cap
250 mg
6 Tab
200 mg
1 mg/ml cap
50 ml
28 Tab
2G
Vial
12Tab
50 mg
2 ml.vial
3 mg
6 Tab
300 mg
250 mg
4 Tab
PRICE
173.00
1247.00
154.00
141.00
1225.00
215.78
180.00
210.00
165.00
14^p
(Source: Paper of A Guha, placed in the seminar held at Delhi in May, 1998)
World-wide concern has been expressed with the sharp rise of drug
prices. In this dilution WHO's goal of "Health for all by 2000 AD" will remain
a distant dream.
Moreover, with the rapid development in technology, more number of
new drugs are being introduced. Experts say that very few of them are
having theraputic advantages over the existing drugs. "Out of 348 new drugs
introduced by 25 big US companies during 1981 to 1988 only 3 percent
made important potential contribution while 84 percent made little or no
potential contribution" said US federal authority. Hence the introduction of
new costly drugs should be properly monitored by the centra(Government.
MASS KILLING OF JOBS :
I
With the reduction of the customs duties of foreign imports many drugs
manufactured in India have become unviable even in Indian market than
the foreign goods. As a result, the owners of these factories are closing
down their units throwing the workers out of employment. Messrs. Boehringer
Mannheim, and Parks Davis who were the lone producer of Chloramphenicol
in India stopped their production as its prices from the international market
were cheaper than the cost of Indian production. M/s. Sarabhai Chemicals
closed their vitamin 'C plant due to’similar reason. Like Chloramphenicol
and vitamin 'C many other drugs like paracetamol, metronidazole, ampicillin,
amoxycillin etc. are available at a cheaper price in our country from the
international import because of the lowering down of the customs duties
^hd Indian factories have been closed and workers are on the street. Not
only the workers but for the above drugs our country became dependent on
foreign supply.
In their attempt to shift the production to the third party manufacturing,
already, Hindustan Ciba Geigy, Roche, Abbot, Boehringer Mannheim, Boots,
Park Davis, Unichem etc. have closed their factories by offering VRS to all
workers and sold the land of their factory premises at a premium price.
Apart from these closures, Pfizer, Rhone Poulenc, Hoechest, Glaxo etc.
reduced their work force. Crores of rupees have been spent to give VRS
amount.These companies are manufacturing their products with the help of
loan license. Some of the companies have opened new smaller factories in
new places and appointed workers with less wages and more work load.
More casualworkers are being appointed. In last two years times in MumbaiThane region of Maharashtra around 30,000 workers lost their jobs in
pharmaceutical industry.
Apart from the factory workers the distribution workers are gradually
being replaced by C&F agency system. In this system, original company
does not have any responsibility of the workers. They are employed by
Agents with more work load and less wages. In the last decade around 15
^mousands distribution workers lost their jobs in the pharmaceutical industry.
Moreover, through the agency system Government is deprived of central
sales tax.
In the marketing also the field workers or the sales promotion
employees are facing tremendous attacks in the name of franchise, co
marketing, appointment of communicator etc. many permanent sales
promotion employees are losing their jobs. Many others are appointed in
the name of so called executives to remove them from the fold of the union.
More casual and contractual workers are being recruited.
Table III
Company
Year
Reduction of work force
Glaxo
1995
1996
1564
1049
Hoechst
DISCUSSION PAPER-PHARMA POLICY 2002
BEGINNING WITH A LIE:
1)
p
“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”
DRUG POLICY 1986 OBJECTIVES:
•
•
•
•
ensuring abundant availability, at reasonable prices, of essential life saving and
prophylactic medicines of good quality;
strengthening the system of quality' control over drug production and promoting the
rational use of drugs in the country ,
creating an environment conducive to channelising new investment into the
pharmaceutical industry, to encouraging cost-effective production with economic sizes
and to introducing new technologies and new drugs, and
strengthening the indigenous capability for production of drugs.
THE POLICY DOES NOT ADDRESS THE ABOVE OBJECTIVES ANYWHERE IN THE
NEW POLICY. INFACT IT GOES AGAINST THESE OBJECTIVES IN MOST PLACES.
TRUTH REVEALED:
2)
“However, the drug and pharmaceutical industry’ in the country’ today faces new challenges on
account of: 1) liberalization 2) globalisation 3) 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 1) promoting accelerated growth of the
pharmaceutical industry and 2) towards making it more internationally competitive”.
P
THE RHETORIC IN THE FIRST FEW LINES ARE RECTIFIER IN THE SUBSEQUENT
LINES.
CAN’T CONTROL, SO LEAVE IT!
3)
•
•
It is interesting to quote from the background note circulated by the government to the
DPCRC prior to its deliberations. "DPCO is used as one of the essential instruments to
achieve the objective of essential medicines of good quality7, at reasonable prices, for the
required health care of the masses. It has been an evolutionary’ process, which has been
taking cognisance of ever-emerging new factors and their resultant effect on the
availability of drugs at reasonable pnces... controls have been gradually diluted with the
promulgation of each subsequent order. However, the common feature of price control
has been the principle of selectiviK with the aim of product-wise price control, mainly
based on the extent of mass usage of drugs.”
The key "ever-emerging new factorM that the note identified was the inadequate
machinery to administer the price control orders, leading to the concept of selectivity’. 11
further observed that the determination of criteria for the selection of drugs under price
lo
-
•
•
control was a ticklish problem because of the need to strike a balance between the
interests of the consumer and the manufacturer. "Therefore," the note said, "certain
working principles were evolved and applied across the board... Industry, keen to get nd
of price controls altogether, has time and again questioned these working principles... To
make matters worse, industry has not been forthcoming in providing data to substantiate
their claims."
The failure to evolve an effective mechanism to monitor the pharmaceutical industry's
adherence to the DPCO, coupled with the liberalisation of the economy, has led the
government to advance the dubious argument - at the behest of pharmaceutical
companies - to justify the removal of price controls that market mechanism and
competition will help check and stabilise drug prices. The questionable premise of
selectivity' on mass usage principle for price control has been further used to whittle
drastically the list of drugs under price control.
Soon after the 1995 round of decontrol and the resultant reduction in the number of drugs
under price control, the prices of drugs went up. Indeed, the policy statement makes the
observation: "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." But it
ends up - based on that very dubious market figures - diluting the DPCO.
WHAT HAPPEN WHEN THERE IS DECONTROL?
4)
•
•
An analysis carried out by the Delhi Science Forum (DSF) on the impact of the 1995
decontrol throws up some interesting facts about the "market behaviour". The price
movement of 28 essential drugs - eight under price control and 20 outside it - showed that
out of the eight controlled drugs there was a decrease in. six of them. On the other hand,
the prices of the 20 drugs showed an increase in excess of 10 per cent and in some cases
in excess of 20 per cent. iMore interestingly, the DSF analysis showed that in all segments
there were wide variations in the prices of different brands of a given formulation and the
top-selling brand in any formulation is not the cheapest one, sometimes twice as
expensive. This is proof enough that the market mechanism does not stabilise drug prices
and the market share of a brand is not dependent on its price. In fact, the very' reason for
putting in place a price control mechanism was this atypical market behaviour in the case
of pharmaceuticals.
The DSF also analysed the increase in prices of 50 top-selling drugs between February'
1996 and October 1998. It showed that the average increase in the case of brands under
pnee control was 0.1 per cent whereas that in the case of brands outside price control was
15 per cent It was also found that the price rise was not a one-time increase owing to an
escalation in raw material costs but was indicative of a trend of continual increase in the
prices of decontrolled drugs, Amit Sen Gupta of the DSF said.
INDIA HAS THE CHEAPEST DRUG PRICES. MYTH OR REALITY???
5)
•
Sen Gupta said that there was a prevailing myth that drug prices in India were the lowest
in the world. "This is at best a partial truth. Drugs that are still patent-protected are much
cheaper in India than elsewhere because of the 1970 Patents Act and we have lost this
advantage after its amendment in the wake of TRIPS (Trade-Related aspects of
Intellectual Property Rights). But for many off-patent drugs, which account for 80 to 85
per cent of the current drug sales in the country, prices are higher in India than in Sri
Lanka and Bangladesh and even in Canada and the United Kingdom. In the United
/
States, the U.K. and so on. there arc effective price control mechanisms and bodies to
monitor drug prices.
DPCO - A POLITICAL TOOL?
6)
When we argued that the change in the Patents Act would result in an increase in prices,
the government said that it would use the mechanism of DPCO to keep the prices in
check. Now that the Patents Act has been amended, the TRIPS argument is being used to
dismantle the DPCO, confirming our fears."
•
WHAT HAPPENS WHEN SELECTION OF DRUGS FOR PRICE CONTROL IS
BASED ON MARKET FORCES INSTEAD OF PEOPLE’S HEALTH NEEDS?
7)
•
For example, an anti-diabetic drug, listed as an essential drug but required to be taken
only once a day, might be low in volume as well as value. Conversely, a very expensive
drug, low in volume sales, could show up as having a high turnover. Similarly, a
reasonably low-priced essential drug, but consumed in large quantities, might be missed
out because the total turnover could still work out to be low. So the bottom line should be
that the selection should be based on health need - namely, the list of essential drugs - and
not on market behaviour which, in the case of drugs, does not follow the norms of other
consumables. But this has been the problem with the Indian drug policy over the past four
decades, in which the inputs of the health sector are never reflected in the policy
articulated by the Department of Chemicals and Petrochemicals which in turn is
influenced by the industry’ lobby.
•
In arriving at the selection criteria, the present policy statement has rejected the new
criterion recommended by the DPCRC to ascertain the mass consumption nature of a
- bulk drug on the basis of the top-selling brand, on the grounds that it gives rise to
anomalies. Yet, the policy does not offer any justification as to the final set of critena that
has the effect of keeping three-fourths of the drugs in the market out of price control.1
POLICY WAS MADE IN A DATA VACCUM.
8)
The policy statement admits that no reliable data exist to ascertain mass consumption
and the absence of sufficient competition m respect of a particular bulk drug - the two
vL- enteria used for the selection of controlled drugs. However, says the document, in the
absence of any exhaustive and comprehensive information, the ORG-MARG data are the
best_aYailabLc. According the ORG-MARG database, 23 drugs belong to the first
selection entenon, Rs.25 crores turnover and 50 per cent market share of any formulator. 2.3.
and 12 belong to the second. However, the NPPA is expected to come out with the final
list of controlled drugs in May, which may include other drugs in addition to those on the p
ORG-MARG list, in'particular the Tess than Rs.2 cost per day per medicine" category.
•
^7^'
A
v-/..
1 The basic data source that the DPCRC has used is the "Retail Store Audit for Pharmaceutical
Market m India”, published by ORG-MARG in March 2001, which lists all major brands and
their sale estimates on an all-India basis.
PROMOTING FORMULATIONS AT THE COST OF BULK DRUGS.
9)
In addition to making higher profit margins for .the manufacturer possible, the policy has
done away with the ceiling on profitability on formulations that existed until now (vide
the Third Schedule of DPCO 1995). In case of bulk drugs, the manufacturer has been
allowed a 4 per cent higher rate of return over the existing 14 per cent on net worth or 22
per cent on the capital employed. Considering that more and more manufacturers are
moving away from bulk drug manufacture to formulations, this provides an additional
windfall. With no restriction on imports, pharmaceutical imports (which is largely of bulk
drugs) have been rising at the rate of 29.3 per cent while exports (wrhich are mainly of
formulations) have been increasing at the rate of 18 per cent, according to the data of the
Centre for Monitoring of Indian Economy (CMIE).
•
LOGIC DEFIES LOGIC.
10)
•
That the government should indulge in such massive decontrol exercise "to promote
accelerated growth and improve competitiveness" defeats logic because
pharmaceutical stocks, even during the current slowdown of rest of industry (except for
the automobile sector), were the most robust in the last quarter of 2001. Now, with the
announcement of the new policy, the pharmaceutical stocks, in particular those of
multinational corporations (MNCs), have further shot up.
COUNTER PRODUCTIVE MOVE.
11)
•
THE move to allow 100 per cent automatic foreign investment in the pharmaceutical
industry’ is not likely to bring any large investment for production or technology’ or R&D,
as MNCs are able to widen their markets now through imports alone. Further, Indian
' firms are increasingly turning into trading houses for MNC products. The existing MNCs
have already shut their bulk drug production and R&D units. And the impending change
in the patent regime will only aggravate this trend when the indigenous drug industry and
R&D base would be completch- eroded because of the removal of competition and the
absence of any regulatory’ framework. While the new policy includes some measures on
the R&D front based on the recommendations of the Mashelkar Committ^ or the-TRDC, —
the policy puts forward no clear strategy that will counter this disturbing trend.
I
R & D - BASIC PREMISE QUESTIONABLE.
12)
•
However, the basic premise on which the Mashelkar Committee worked remains
questionable. Indeed., this premise is one of the chief arguments used by the DPCRC to
dilute the DPCO under the new policy. The committee had observed that stiff price
control measures under the DPCO left little scope for the firms to generate resources for
R&D. This argument is dubious because the progressing reduction in the control span
under the DPCO - down to 40 per cent after 1995 - does not result in any corresponding
increase in R&D spending by me pharmaceutical companies. The overall R&D
expenditure by the Indian drug industry (comprising about 150 companies) remains at a
meagre 2 per cent of the total turnover. There is no guarantee, points out Sen Gupta, that
the control relief will be channelled into R&D and not used to fatten the balance sheets of
individual companies.
GOLD STANDARDS - TOO COSTLY?
13)
DPCO 1995 provided several incentives to drug manufacturers for R&D, which exempt
them from price control. But the companies that have qualified for this price control
exemption on grounds of indigenous R.&D efforts over the years are fewer than the
fingers on one hand. Interestingly, the Mashelkar Committee had set certain ’gold
standards’ for a company to qualify as an R&D-intensive company eligible for price
benefits under the DPCO. Considering that hardly any company has qualified for
exemption from the DPCO even without such standards being set, it is highly unlikely
that such 'gold standard' companies would emerge as desired by the committee. Now that
most drugs have been put outside DPCO controls, the DPCO docs not any longer offer an
incentive for R&D.
•
HRD, EDUCATION, QUALITY CONTROL - A FOND HOPE?
14)
1
I | pO-A-iJ-
The policy makes only cursory remarks about the aspects of quality control And education
and human resource development which should actually have received greater attention,
especially with the increase in the spread of spurious drugs in the market. With licensing
completely abolished, it is going to be even more difficult to keep a check on quality. The
policy has endorsed the recommendation of the Mashelkar Committee to establish a new
structure for the Central Drug Standard Control Organisation (CDSCO) under the
MoHFW. With no clear indications of where the funding and manpower will come from,
the hope of establishing a network of "w orld class" CDSCO laboratories can at best be a
fond hope, if not mere rhetoric, like the rest of the policy document with matters
regarding healthcare.
•
INDUSTRY RESPONSE TO POLICY - GOVT. HAS SHOW LARGESSE
15)
•
•
The secretary general, Indian Pharmaceutical Alliance, and former director, Pfizer, D. G.
Shah, said, "The two enteria that have been considered are steps in the right direction.
For drugs of mass consumption where there is inadequate competition, there is a need for
pnee control. Where there is already enough competition, the large number of drugs has
brought prices down over the years”.
According to Mr. Shah, "The size of ihe_phannaceutical industry is around Rs. 20,000
crores and the government felt that where the sales of a drug exceeds Rs. 25 crores, it
qualifies as mass consumption. In the case of monopoly, the Monopolies and Restrictive
Trade Practices (MRTP) Act prescribes 66 per cent market share but they have chosen to
go for 50 per cent market share".
<
POLICY BASED ON PVT. DATA - MOTIVATED?
16)
•
Mr. Shah felt that at least it is a positive step. "Earlier which drugs come under
price control was a subjective criteria and the database used to determine the
drugs was not disclosed. One of the industry’s demands was that the database used
should be in the public domain and accordingly, the ORG-MARG March 2001 .
list was used. The criteria now are only arithmetical and there is no subjectivity.
This shows transparency and there can be no favouritism. The focus is the
consumer and the fine print of the policy is now awaited".
17)
OVER-RULING GOOD SENSE
•
18)
BIG FRY WITH SMALL FRY - PROTECTION TO WHOM?
•
L-
PP 2002s overall emphasis has been on reducing the price control to facilitate industry’s
investment in R and D and help small units to comply with the Schedule M requirements.
However, by reducing the span of price control, the PP 2002 overrules the suggestion of
the Drugs Price Control Review Committee (DPCRC) of 1999. The DPCRC had
recommended that in the absence of health cover for majority of the population in the
country, price controls should be continued till the government expenditure on health
rises to a substantial level and the availability of essential drugs is improved. Neither of
these has been achieved, yet PP 2002 has recommended that price controls should be
reduced.
•
1
19)
There are about 24,000 pharmaceutical units (including loan licensees) in the country
[GITCO 2000]2 of which only about 300 are estimated to be large-scale units. The rest
23,700 are in the small and medium scale sector.
Impact of DPCO : DPCO is applicable to al! units irrespective of their size and turnover.
In practice the impact of DPCO is relatively greater on the small-scale units than on the
large units because of the differences in production volume between the two [Lalitha
2001]3. Larger units with wide range of production of items have the advantage to
balance the production between the items under price control and those, which are not.
Since most of the small units do not have such flexibility, they get adversely affected.
Also, larger units have the capacity to argue their case with the government to justify the
higher prices based on their cost of production or other reasons and charge higher
prices. Smaller units have also cited reducing profit margin due to DPCO as one of the
reasons for not complying with the Schedule M4 requirements of the Indian Drugs and
Cosmetics Act.
ARBITRARY AND INNEFFECTIVE:
•
PP 2002 states that besides the list of drugs under DPCO, a bulk drug will be kept under
price regulation if (a) the total moving annual total (MAT) sales value of any bulk drug is
more than Rs 25 crore and the percentage share of the formulators is 50 per cent or (b)
the MAT value of a bulk drug is less than Rs 25 crore but more than Rs 10 crore and the
percentage share of the formulator is 90 per cent or more. These cut-off figures are
purely arbitrary. It is a known fact that the subsidiaries of large companies are commonly
used to split the production and sales of the parent firm to escape from such ceilings
fixed by the government. This makes it difficult for the regulating authority to cast a wide
net to bring other drugs under control.
" GITCO (2000): ’Industrial Status. Sickness Level and WTO frapact Study: Drugs and Pharmaceutical Sector’, Gujarat, .‘kueust
3 Lalitha. N (2001): ‘Product Patents and Pharmaceutical Industry’, a report submitted to the Indian Council of Social Science
Research. Xew Delhi.
Schedule M provides guidelines on quality aspects to be adopted in drug manufacturing which covers various siases from
procurement of raw materials to the final stage of packing fre finished formulations. Also known as the Good Manufacturing Practices
(GMP), the central government has stipulated that all exissg units will have to comply with the GMP requirements by Decern her
2003. failure of which will lead to cancellation of its liceas: and closure of the unit While GMP is a must for all the units, it is
imperative for units functioning on contract basis for a parent unit especially in the context of the WTO regime. Though GMP
compliance will provide the units a relative advantage in fre context of exports over units which do not comply, critics observe that
not all the conditions are relevant It is estimated that a minmum of Rs 40 lakh will be required to comply with the requirements and
m some cases it may necessitate shifting to new premises. I ns may force some of the units to exit How ever, w hether the reduction in
the span of control would result in improved compliancy rate w£s have to be observed in the next few years.
20)
TRIPS AND PHARMA
•
POLICY DOES NOT DEAL WITH THESE:
21)
•
Product development requires different levels of expenditure and facilities compared to
the infrastructure available in public funded laboratories today, which possibly are good
for the initial phase of discovering new molecules. Unfortunately, economic liberalisation
has meant a squeeze on public spending on medical and biotechnology research in
general, which in any case was only a little over 2 per cent of the overall government
R&D expenditure. But there is no mention of improving public-funded R&D in the new
policy statement.
•
A main issue with the pharmaceutical drugs in India is that in the place of 452 drugs (279
that appear on the National Essential Drug List 1996 and 173 considered important by
the ministry of health and family welfare), there are about 80,000 formulations in the
market, a sizeable percentage of which is considered to be irrational combination drugs.
Easy entry of drugs, absence of prescription and sales by generic drugs and thorough
scrutiny to examine the therapeutical contribution of a product before allowing entry in the
market are the reasons for the mushrooming growth of irrational combinations in the
country.
•
Such irrational combinations have created twp kinds of problems in the country. One is
that the patients are prescribed unnecessary drugs, which besides causing side effects
also result in increasing the cost of treatment and duration of treatment. This often
happens in the private health care. In the public health care, absence of effective
implementation of a Essential Drug Policy (EDL) has resulted in irrational combinations
being procured in the hospitals and essential drugs are often in short supply. This
obviously results in poor people buying the required medicines from the open market,
which they should have normally got free of cost. Hence, it has been suggested that the
EDL should be at least in the government health care to ensure adequate supply of
essential drugs. Both these crucial aspects of pruning and weeding the irrational
combinations and implementation of EDL have not found a place in PP 2002. Ideally, the
policy should have dealt more on the subject of the availability of essential drugs. This is
essential in the context of reducing price controls and foreign competition.
PP 2002 does talk about ceiling prices for formulations. However, the problem is
monitoring these prices at the retailer level. The policy admits that while the price of the
bulk drugs is brought down through price control, its effect on formulations is not felt
immediately and companies continued to charge higher prices and hence suggests
stricter monitoring. Here unless the consumer cares to compare the prices of similar
combinations (normally the patient goes by what has been prescribed), the pharmacist is
going to dispense only the high priced drugs.
•
k/d i
Assuming that a product has effective protection for a period of 12 years, it means that
domestic producers will enjoy absolute monopoly status for 12 long years and reap a
monopoly profit. Two major apprehensions of adopting the TRIPS Agreement in the
pharmaceutical sector were regarding the higher prices of the patented products and
their accessibility. By providing a blanket exemption from price control, the government is
making the access to drugs difficult. It appears that ‘who patents the product’ matters
more for the government than what is patented. Rather than exempting drugs from price
control, providing easy access to credit, promoting venture capital funds and streamlining
the procedures would help in promoting innovations.
P ‘i l/^- -
?.
•
•
•
•
One-Sided : The problem with the pharmaceutical policy 2002 is it is one-sided echoing
mostly the business interests and fails to reflect the health needs or the approaches to
the health-related issues in the economy. The policy does not suggest ways of improving
the domestic production of anti TB drugs, antimalarial, CNS stimulants or antileprotics,
where the supply is less than the actual demand.
The policy does not mention facilitating contract research, which will be useful in reducing
the initial costs for the domestic R and D firms and help concentrating on commercial
development of a product Industry should also be encouraged to collaborate with
academic institutions to improve R and D. Presently the collaboration between
academics and industry in India is at a low level, which needs to be drastically improved
by paying attention to the IPR issues. These aspects need a more detailed discussion in
the policy and government support.
Improving the availability of essential drugs most of which are off-patent should be the
immediate concern of the government, besides weeding out irrational combinations.
Adopting generic sale of drugs and effective implementation of essential drug policy will
automatically lead to reduction in the prices of drugs.
SUGGESTIONS
•
The upshot is that to meet the emerging challenges, in the wake of globalisation and the
impending new product patent regime on the one hand and the new developments in the
area of biotechnology' on the other, there is no substitute for enhanced public spending
in drug R&D. Even in advanced countries such as the U.S., significant R&D in
pharmaceuticals is still public-funded. Indeed, what the country needs is a paradigm shift
in medical research, drug development in particular, with a national-level strategic
planning and new institutional mechanisms in public funded R&D.
S -
ANNEXURE
The prices of vitamins, aspirin and ciprofloxacin will now be decontrolled while
maxformin, norfloxacin, salbutamol sulphate, ibuprofen, cinarbin, pentazocine
bisacodyl, chlorophenarmin and streptomcyin are among the new drugs which’will come
anti tST
' Am°Cg bulk dmgS WhlCh W1U remain on 1116 controlled list are the
hAr
fa.rnp,<;,n’ betainethazone and aminacin sulphate. Companies likely to
ROm th.e devel°Pments are Ranbaxy, Pfizer and Glaxo. Novartis, Knoll and
cnntml
165
a™0118111056 whose Products will continue to remain under price
coniroi.
~
HiJc S’VfdnP^naXy'S Cifran WliI n°W C°me °Ut Ofpnce controL With Ranbaxy's
DPCOEMer
UPr0, 80 P6r Cent of
Portfolio will be out of the new
l.kdy.otlToutrftte'S GI“tfsZi”e“"dZ™t“'iSmi*Kli„e'sSepOa„lre
Among those to have entered the list are Novartis’ Voveran which contributes nearly 20
OtnX whichhiT^5 tUm°Ver Td ?°yS 51 PCr Cent °f the diclofenac market and
SSpXi n
P .Lt6"1
1 Share ’n xy’om^oline market. Aventis’ Daonil
methd ?
T*
56 mC UdSd ln 016 llSt Glax°SmithKlme’s Dilosyn is the only
methddazine product in the market and would qualify for control as it is a rT 13 crore
of
data fOh MarCh>200fonnulatlons of 23 molecules have turnover in excess
Rs. 25 crores with a single manufacturer having market share of more than 50 per cent
fmmvii" m°leCU‘eS H?e amikacin sulPhate’ betamethasone, cefotaxime, erythromycin
framycetin, glipizide, ibuprofen, metronidazole, norfloxacin, chloroquine, phenytoin ’
piroxicam predmsolene, prondone iodine and rifampicin will continue under price ’
control and only eight molecules are relatively new.
t^an R^n alS° Shr ^^“^ons of 12 molecules have annual turnover of more
an Rs. 10 crores with a single manufacturer having market share in excess of 90 per
cent. In this category, barring streptomycin, pentazocine, phenobarbitone and
quindiodochlor, all eight molecules are new.
Apart from the 35 molecules, a tew more could come under control when the government
decides on the basis of surveillance of price of movement of the list of 180 essential
drugs prepared and forwarded by the Union Health Ministry.
Molecules with turnover more than Rs. 25 crores
and with a marketshare of 50 per cent
Bule drug
Brand
Conqaany
Afrikadn
Betamelhifior®
Mkadn
Betneed
Cefijsffie
lH3dff>O
CedcrtaxirnG
CHcroqjirae
□dctenac
E/yltTOTydn
FexotenarinB
Taxi hi
Lanago
■ybveran
Alfred n
Aleja
Aneto
QSK
Ah«n
Afamn
IPCA
Morvaie
Atertic
Awertie
Cmj-e !■
I I A44 I
r-e
I I
GiibendHir»de
Gfipiade
fctipreden
Mertomin
Me^odcprajrade
Metrondazde
biirrtrioDe
Mcrik»cacin
PheriraHinB
Phef^tain
Rrosaan
Povidone kxine
Predfiadone
Rlanpidn
^ae ’X'-- s *
Cteni
Giyf^e
Bruien
OiudphagB
Perincrri
Metro®!
Decadjratodin
NcrfloK
AS
Epbn
DoionsK
Detsdne
V^yedone
R-dn
a^^r^o.
Asente
□SV
Kirf
franco Indan
FCA
UricpeifLsfcar
lrrtar
Opia
Amm^
Kirf
Ptzer
Vin Medcsre
Wyeti
Lupin
Molecules with turnover ranging from Rs. 10-25
crores with a market share of 90 per cent
Bule drug
Brand
Acarfoose
Eelateine
EJeacodyl
Dyd^ogeeierone
UgnocainB
Melhdiazine
Mcrerth' nderona
PeniazecinB
Pheocbarbjone
Quri riodocHcr
Snreptomysi n
Xy lomelazwii ne
GhKntoay
Berlin
CUicd ax
□uphaefon
XyiocainB
Cflosyn
FfegesleronB
Fcnwn
Gardenal
Errteroqjind
Affixatin
Otfwn
Cernparry
Bayer
Duptar
Cierman Reredee
Duphar
Aera
QSK
Movarlie
Rarbayy
Rhone Pculenc
F.ael fritfa
Sarah hai
Mowartie
r
NATIONAL HUMAN RIGHTS COMMISSION
SARDAR PATEL BHAVAN
NEW DELHI
Case NO.778/96-97/NHRC
Name of the Complainant :
Indus Hospital Shimla
Referred by the Himachal
Pradesh State Human Rights
Commission, Shimla
Case NO.158/6/96-97/NHRC
Name of the Complainant :
Suo Motu cognizance of the Press
Clipping in the 'Indian Express7
dated 9.9.1997
CORAM:
JUSTICE SRI M.N VENKATACHAUAH, CHAIRPERSON
JUSTICE SRI V.S. MALIMATH, MEMBER
SRI VIRENDRA DAYAL, MEMBER
101
8.0
broad findlngs and recommendations
8.1
General
(1)
Fungal contamination in IV fluids is a serious health risk. Glucose/) mtnents
in the fluid provide an excellent medium for microbial growth. Funeal
contamination can occur through contaminated ingredients during
manufacture, or cracks/leakage of faulty containers during transportation
and/or storage. Gross fungal contamination can be detected bv visual
observation as suspended, white to blackish, cotton-like matter A.
Cautionary labelling regulation provides for the hospital staff to visually
inspect and examine the IV fluids before administration to patients It ooes
to the credit of the hospital staff at the Indus Hospital in Shimla and the
Ram Manohar Lohia (RML) Hospital in Delhi to have spotted the fungal
contamination before administering the defective FV fluids to patients ~
• (2) The purpose of the present investigation has been to examine: (a) critical
steps during manufacture, transportation or storage of LVPs upto the stage
of admimstration to patients vulnerable to fungal contamination; (b) to
identify the possible cause(s) or failures which lead to the observed
contamination; (c) suggest checks/counter-checks/measures to minimiye.
if not to completely eliminate, occurrence of such lapses, and (d) in case it
still happens and complaint is received, suggest reporting system which
must be in place to minimize consequences and to prevent recurrence of
such happenings.
(3)
8.2
Unfortunately there is no reliable mechanism for obtaining a feed back on
the magnitude of the fungus problem in TV fluids in India? Though fungal
contamination in FV fluids is a serious health risk, neither the manufacturer,
or the regulatory authorities or hospitals have adequate record-keeping
which could indicate the extent of the problems. Rather a certain percentage
of defectives due to fungal contaminated bottles is taken as an acceptable
norm. This mindset needs a change. We must aim for zero-defective batches.
Fungus infested LVP is not common any were in the developed countries.
As per^the Gold Sheets, in the USA no recall of LVPs took place after
cany /u s. similarly, Australia has not recorded such recall after the eariv
90’s.
Core Healthcare Limited
(1)
Core Healthcare's manufacturing operations are located at two senarate
spacious sites, Sachana and Rajpur near Abmedabad.
(2)
Core Healthcare manufactures IV products by the world-class Rommelas
technique of Blow-Fill-Seal technology; As per the Company, manufacturins
processes are validated for aseptic filtration prior to filling, sterilization of
the Blow-Fill-Sealed containers and leak testing of filled containers
102
However, fungal contamination as reponed has occurred ver\' likelv dmHno
The^6' ^P01131!011-due 10 defective contamers and/or damaue incurr-d
fyrh™anU/aCmrer dc7s not have a proper system of monitoring the quahtx
i the product particularly trom the angle of contamination after the produc
teaves the manufacturing plant. The Batch Production Records of tb’
anufacturer invariably show no evidence of damaged stocks. Further the
formal free replacement of defective stocks by the Companv's field star
avXbirfnT tthe Pr°blem “ norrecords of such transactions are made
-v»nt of’th f ; I1"
rnC£ °f dara °n defectives- d seems that th ■
of this proolem is under-reported.
(a.) Sachana and Rajpur plants have different levels of practices' whik
drawbacksRajP“r
(b’ ^sXeX^LTate'0^ h3''
< C.) Weak secondary packing of corrugated shinpers could have furtheaggravated the problem especially when stacking was hisher than
welaht £ height v’^ch couId have damaged the containers due to heaxy
(d) Manufacturer s warehousing facilities in Delhi, are shcddv and not
rodent-free; rodent can damage shippers which can damage containers
B.
i.e; The batch records, contain .information related to manufacturing. But
the records on market complaints, distribution, quarantined or recalled
batches at company s warehouses is not easilv accessible
(g) Lack of system in attending to complaints from hospitals and lack
ol
ownership for remox al of rejected goods from the hospital stores
(h) Important processes like sterile aseptic filling with broth fill
and
container suitability are not validated regularly
it)
There is an immediate need for the manufacturers to take up improvement
oi system involved in the management of quality of LVPs as a major project
and 1bang about improvement results in the shortest possible time-frame so
° ma^e n Ps a detect-free product. Blow-Fill-Seal equipment is a
purpose-built mactune that contains an extrusion, moulding, filling and
sea mg station to produce product under aseptic conditions. As xvith anx
machinery, tunction is directly related to training and the validation exercises
required to establish the operating limits of this machinery. In rex-iewmg
s issue there are several areas of manufacturing and validation that should
103
be examined:
extrusion process, cycle time, MDPE plastic granules, and
sterilization.
eSre^^'T21' mUSt
at.genmS a defect-free product dunna the
j
ppl> chain management including manufacture, transportation and
.rdLX.0 Th\ ineS 01 the S1X Sigma P™?3™16 Copied by the electronic^
mdustn. Six Sigma is a stanaard of qualitv which has onlv 3 4 defect ner
million opportunities for error. The qualitv impro'vement within
°f LVPS
be “1’-ieved b>'
tools and technolod
hign speed repetitive process of Blow-Fill-Seal technology'.
The manufacturer must benchmark to international standards to raise
standards of
. . quality
■
- It iis not just the manufacturing process which'is
• important. It involves the whole cuitu^an^^LTJ^^L^c^
in the supply chain. Benchmarking involves fmdine the best-in-class tor
any world-standard. To mstimtionalize this culture, an extensive training
. programme must become the central focus.
'
—~
I
I
;
Present
mindset of LVP
i manufacturers is to measure
detect in terms of
percentage
detects per million
i
j _ i?
.
•
1%
= 10.000
j 2%
20.000
50 <)
30.000
I 4%
= 40.000
i
LVP manufacturers need to
move towards perfection
i 5°o
= 50.000
\ 6%
- 60.000
defects per million
I
I
I
I
i
I
6 Siema
= 3.4
5 Sigma
-jj
4 Sigma
6200
3 Sigma
= 66.803
2 Sigma
= 308.733
1 Sigma
697.700
Indusny must change mindset of measuring defects from percentages to Sisma level
s.
It is well recognised that the fungal contamination in plastic containers
develops due to microleaks. Therefore, select critical materials/processes
wmcii afreet the integrity of the container during manufacture, transportation
and storage and require special attention are:
(a)
Material of construction, weight, size, shape of container
(b) Sterilization cycle
fc)
Leak test in during production and also during storage
i
104
(d)
Secondary packaging system
(e)
(f)
Mode of handling and transportation
Stacking of the corrugated shippers at the company's warehouse.
MSD and hospital stores
(g)
Environmental and rodent control measures durins storage, etc.
i ne continuous management of change tor quality in the manufacture of
LVPs in plastic containers should be achieved for-which the following
programme is suggested:
(a)
For each critical process, from raw material to customer map the
process, break down operations into steps and tasks, chan the flow of
work, identify tasks that are prone to error, identify' measurement
points and measure processes and defect levels. If a task adds no
-value, discontinue. Form partnerships with suppliers and customers,
e.g. manufacturers, transponers. depots and hospital stores. Mapping
is only successful when it is done by the people actually involved in
the process. Empowered teams are perhaps the most powerful force
in making quality' part of the supplv chain process.
b)
The next step is to carry out annual review and record defects for
each and every process. These measurements of defects become pan
of continuous improvement model. From measurement move to
analysis. The team may use techniques ranging from brainstorming
io sophisticated pareto analysis or root cause identification. The
analytical results, in turn, are used to solve the problem and devise an
action plan. This is where training becomes so imponant.
< c ) Institutionalize the solutions. Apply new procedures at each
appropriate step of the process. Then the process starts ah over again.
It is a closed loop. Thus, it is a process of continuous improvement-of
continuous learning. It includes the supplier and the customer.
(5)
(d)
Finally, set goals. No quality' programme can succeed unless tough
goals are set and are measured. For instance, initial goal could be” a
10 times improvement in quality- in five years.
(e)
Goal should be towards approaching zero defects in LVPs and
maximum customer satisfaction.
The various processes involved in the IV fluid life cycle and steps where
quality is to be addressed by the manufacturer alone or through partnership
with hospital, FDA or MSD etc. for manufacture, storage, and distribution
are described in the following flow charts 5 (a) and (b).
105
5 (j)
’ntravenocs fluid life cycle
u
s 1 .'•-PS ^address critical ql Al 1T-,
^ATERSYSTEM
&
-OTHER INPUTS
MF
| Water system must be validated.
9
• Regular monitoring for bioburden enrinmv
iRegular
Regular m-process control must be perto^ed^'5'
I Area must meet specified cleanliness level
: 0 ZaZ11' r.USt
COMPOCXDFNG 1-
m°n,tOred 3nd ConTOi1^
I p,pP; _
dge fiitraIi°n is a must.
1 L'P. SIP’ processes must be validated
i RIan“fa™g system must be of closed rvpe
L^lar m-process control must be performed
■ o lOTidg. a" ™
filling
';
' BFS-TECHNOLOGY.';
MeSfil'l'Pr°Ce?S C°ntrOi mUS' be ?erf0™^
■ edia fill must be
be performed,
performed, atleast
atleast once a vcar
changes are made
•
-c m rhe system
!
FILLING
j|
OPEN -TECHNOLOGY H
^VC. GLASS)
J
I
SSK* l,z““ PTO“S of
i
Personnel momtonng must be oertbrmed
Regular in-process control must
be performed
-Media fill must Ibe performed atleast once a year
or a
£?anues are made in the svstem.
‘^udation of sterilization j------process
Sterilization technology must
be must be pei formed.
automatic & equipped
recording device.
Quality of input steam and
water mus* be rnoniiurcc
conirolied.
R£gu£ar in-process control
must be performed.
TER.MIX.AL
sterilization
INSPECTION
labelling
packing &
storage
I
Leak testing procedure must be validated
■nr change af-
SSs°ftd™“"d taes * •“"W”
I
DESPATCH
Area must meet specified cleanliness level
I™,'r° pment mUSt be monitored and controlled
LIP SIP processes must be validated
™
j
Precespatch inspection must be performed
• Despatch b.
'ay must protect the goods being loaded from weather
i
■ errect.
i^ng operanon must be supervised appropriately.
•
j
i I
5
106
5 (b)
INTRAVENOUS FLUID LIFE CYCLE
PARTNERSHIP
Manufacturer
Manufacturer
Transporter
FDA
i
i
DESPATCH FROM •
M-ANUFACTURER’S j
SITE
J To strengthen FDA monitorinc a:
' manufacturer's site.
TRANSPORTATION
Careful selection of transporter u.be made.
. Basic training to be given to
transporter on handling of soods
; Strict &. continuous monitorinc to be
; done of transpon services.
DISTRIBUTORS
‘ MSD
FDA
Manufacture!
MSD
-HOSPITAL
STORES
STOCKIST
RETAILER
CUSTOMER
Hospital -
Hospital
FDA
Manufacturer
COMPLAINTS
’CIP : Clean-ln-Place
ETO : Ethylene Oxide
IV
: Intravenous
FVPs : Large Volume Parenterais
SIP
: Steam-In -Place
WFI
: Water For Injection
> n-.-r.
Good Waterhousing Practices training
to be imparted to the concerned
personnel.
FDA to increase periodic monitorinc.
Manufacturer must initiate post
marketing surveillance.
Reuse of Intravenous sets must be
banned.
Only ETO* sterilised &. disposable
IV* sets must be used.
Ail LVPs* must be inspected for
integrit}- of theproduct before use
Batch must be quarantined to ’No: for
sale" or “Not for use" area.
Concurrent information to
manufacturer.
Thorough investigation &. testing
. must be carried out.
, To recall batch, if found defective
l6>
107
I” BPS technology' Medium Density PolvethvlenefMDPFlo, ,
"'^ndeon^
LvP in MDPE container rhe
j
inererore, tor producins
not only on the temwranie h™ 7 P
'o'0 heaI trear?d d'P<tnds
and the heat JeststZi oZe mic^orSm"™
<Bi°b”d^
see the sterilization as an isolated orocess hut on.
me:ms thaI one cannot
iteration in the composition onhe^' Theref°7’ Uneven a significant
.
orprocess
equipment
IS made, the manufacturer must set workable ctandarH f
3 chan?e
size/shape and secondary packing Tnd vafida e^he n Or b°n]e We<sht-'
mat at least 3000 units of'produminn
' i 5
1 IS reconimended
As target is zero
anvS^ove 0 pz^-m each bro^fill trial,
be considered unacceptable Am n r
/o of^s c°maminated should
Broth nu studies shX^dZ^e
“VKti*dKd-
( /
7 ‘ taSfiZ"?nXaSe“en,r
fOT efiem e and
it any container in a batch is FoimH tr\
>
it
supply must be quarantined dll it is cleared aTebT^
bnicncs.
°f the
£Massbslc °n "Mm
imponant role in the assurake Ofsted. Even”’one^5“ bori “
^“b—^oT
cbd
■S:
“d
«—■
2S2"KS h“ »be re“
• 8;
rr3naPortation of such products,3ne customers i e uheMSD
“f
m dus case, should also be provided -with detailed SOP o^
storage of the LVPs to rerhirp nnee-kT aei?1Iea
on handling ana
products in the MSD warehoui
TOei?' °f
Regular trainine should be imV^'L’h
JtvlV3’ X--“banes
wards.
and handling of-such products afterrecemlXXSaXnXpbf'
3.3
RAIL Hospital, New Delhi
(1)
po”dX'
,n Delhi mdiCMd drfci'“
HandlinaoftheZS-sct,veh‘l“aran,‘n'sys'™fcr<leftclive stocks.
108
warehousing facilities seems to have received the lowest priority at the
planning stage of the hospital. The warehouse is located in the basement
with open pipelines and ducting running over storage racks.
(2)
The cautionary labelling on the containers to the effect that *;if the container
is found leaking or the solution is hazy7 or contains visible solid panicles,
the contents should not be used” has prevented use of defective I V fluids
by the hospital staff. However, the documentation in respect of such defects,
procedures for handling of market complaints and recalls are inadequate
for tackling the complaints in an effective manner.
(3)
There is no centralised hospital pharmacy set up under the charge of a
qualified pharmacist for procurement, storage and issue of IV fluids. Heads
of Radiology and Blood Banking look after this important acthity resulting
in misuse of precious time of medical experts and not providing the value
addition which a pharmacist is qualified to provide and manage these tasks
effectively.
(4)
The importance of proper hospital pharmacy administration for
procurement, storage, manufacturing, dispensing and distribution etc., of
medicaments by professionally competent and legally qualified pharmacists
was highlighted in the report of the Expert Committee on Hospital Pharmacy
by Drugs Control Department, Government of Mysore in 1967. The report
also recommended that a post of Deputy Director (Pharmacy) be created in
the health sendees department of the state drugs control sei up.
Even the report of the Hospital Review Committee for Delhi hospitals set
up by Ministry' of Health, Family Planning and Urban Development in
1968. recommended an effective organisation for quality control of drugs
supplied to hospitals.
The Report of the Committee of Drugs and Pharmaceutical Industry' headed
by Shri Jaisukhlal Hathi in 1975. recommended that a chief pharmacist
with at least, a graduate in nharmacv decree should be annointed for
maintaining quality' of drugs supplied to patients in hospitals. It is
unfortunate that till now these recommendation have not been
implemented. It is high time that it is done.
(5)
There is urgent need to set up a full fledged Hospital Pharmacy Department
under the Head of Hospital Pharmacy, who should be at least a post-graduate
in Hospital Pharmacy and reporting directly to the Medical Superintendent
(M.S). He/she must be a member of the Drug Therapeutics Committee of
the hospital.
(a)
The Head of Hospital Pharmacy, with approval and support of the
M.S. must develop policies and procedures for Procurement oi
r
109
receipt
Systems, such as, just-in-time IJITl
10n
dlsPensing etc
consequently reduce requirementlarg^wX!”^017 leveis
be encouraged. The need for purchS?oO W
V Space’ shouJd
supplies from intermediariesfoflcTfoeOther medi^
and Super Bazaar shouldTe review^.
D’ 1116
Bh^dar
I
(b)
Selection of drugs
Distribution of drugs
Safe administrati on of drugs
Rational use of drugs
Labelling, including cautionary labelling
Recall of drugs
Reporting of drug product defects
additi<>"- d=«■elop
' written policies
<'’
manufactaer Md'tte cOTcS'i^SS L r'P°n dir“,13' “
sub-sundard LVP for spesdy followauthm“«
(7)
The hospital staff mncr
r-
~
instance of
__ j_.j •
t_'V
U.rl'’,r“[!
rungus-contaminated IV fluids.
1rl
documentation and disposition of
enviroXnLTcOTfroir^lll^j ei^of
Whereb proPer
Facilities should be regularly msnected'an/0^^-15 effectively checked
authorities. The hospital
d accredlted by the regulatory
Warehousing Practices The concerned stiff gU^ehnes for the Good
thXS£ iG°Od Wa“g P-tice ^ehn^^
<’) As Pes .he
of
iro
Delhi, all consignments of drugs including LVPs to Government Hospitals
are required to be tested by the testing laboratories approved by the Sure
Drug Control Administration. This practice is counter productive because
inspection and testing of 3-5 bottles from a batch cannot assure sterility of
the entire batch. Also quality cannot be inspected . It has to be built in to
the finished product during manufacture by following GMPs and carrying
out adequate quality control checks at critical steps of manufacture and
distribution. Neither the staff of hospitals or of a public testing laboratory
were equipped with adequate knowledge of sampling procedures. Attention
to this has been drawn in sub-para (11) of para 1.3. A poorly maintained
laboratory, defective record keeping and weak quality culture make things
worse. Further, the approved testing laboratories visited lacked adequate
space, competent staff, documentation and validation of equipments, etc.
Everything is taken as routine and the working culture was far from
satisfactory.
8.4
Indus Hospital, Shimla
(1)
Indus Hospital has a hospital pharmacy for indenting, receipt, storage and
distribution of LVPs.The problem of fungus contamination in the products
of M/s Core Parenterals was first brought to the notice of the Drug Control
Department of Himachal Pradesh by the enlightened management of Indus
Hospital on November 30, 1995. Thereafter when the Quality Control
Committee of Indus Hospital again detected fungus in the products
manufactured by M/s Core Parenterals they reported the matter to the State
Human Rights Commission on April 23, 1996.
(2)
The Expert Committee visited the Indira Gandhi Hospital in Shimla, and
the Government Analyst Laboratory at Kandaghat where the samples were
referred for analysis by the Drug Control Department of Himachal Pradesh.
Table 2 (a) summarizes the results of the sterility tests performed on samples
from defective batches by the Government .Analyst at Kandaghat drawn by
the Drug Control Department of Himachal Pradesh.
(3;
The time taken for sterility testing by the Government Analyst in Himachal
Pradesh was 1-5 months. It was also not clear as to why the drug control
administration in HP did not send for analysis certain batches allegedly
containing fungus to the Government analyst. Similar situation must be
prevailing in other states. At the time of the visit to the Government Analyst s
Laboratory at Kandaghat, the sterility testing facilities were not operational
and was used for storing furniture. Question therefore arises as to how' can
1 '/
I
the laboratory cany out its sterility testing programme under such circumstances?
2 (a)
Government Analysist Reports - Kandagliat
Product
!
5% Dextrose
Batch No.
E-01-1071
Date of
Manufacturing
Date of
Expiry
NA
NA
No. of bottles
with fungus
NA
Sample
No.
Date of
Date of
receipt
Report
SML-96/9
30.04 96
21.05.96
Injection
5% Dextrose
i
Sample Does Not
Pass Sterility
E-01-1224
May-94
Aug-99
3
SML-96/10
30.04.96
Injection
5% Dextrose
Findings
20.05.96
Fails Sterility
and Fungus
E-01-2004
Dec-94
Nov-99
2
SML-96/il
30 04.96
20.05.96
Injection
Fails Sterility
and Fungus
i
5°/o Dextrose
F-Oi-1093
Feb-94
Jan-99
3
SML-95/189
02.01.96
01.05.96
Sid. Quality
F-01-0459
NA
NA
NA
SML-95/190
02.01.96
01.05.96
Std Quality
Irngasol
E-35-1295
Na
N.A
NA
SML-95/191
02.01.96
01.05.96
Std. Quality
R/L injection
F-40-1513
NA
NA '
NA
SML-95/192
02.01.96
01.05.96
Std. Quality
5% Dextrose
F-01-0496
Aug-9 4
Jul-96
1
NA
NA
NA
Not Sampled
Iniprodex
E-23-3127
Dec-9 3
Nov-96
2
NA
NA
NA
Not Sampled
bijection
5% Dextrose
I
Injection
I
I
I
112
(4) The Government Analyst Report does not mention if containers were
damage or they were intact whenever the sample failed in sterility7 thereby
making it difficult to decide whether to quarantine or recall the remaining
stocks from the market. It may be noted that sample drawn from the
defective bacthes sent to the Central Drugs laboratory (CDL) at Calcutta
by the Drug Control Administration at H.P. were declare to be of standard
quality by CDL
(5)
8.5
The recommendations mainly pertain to the Drug Control Administration
and are reported in the Chapter under Central and State Drug Control
Organisations.
Central and State Drug Control Organisations
XD In view of the serious health hazards due to microbiological contamination
in sterile preparations, requirements were laid down in Schedule ‘M’ to
the Drug and Cosmetic Rules in which the GMPs to be followed in the
manufacture, storage and distribution are included. The Drug Control
Authorities are expected to monitor the compliance to Schedule M provi
sions in the manufacture and quality7 control of such preparations through
tightened inspections to reduce the chances of failure of the systems or
accidental contamination. A review of Schedule ‘M’ of the Drugs and
Cosmetics Rules with a view to improving current GMP guidelines for
manufacture, storage and distribution of IV’ fluids revealed that
(a) The existing schedule is very general and lacks specific guidelines for
LVP manufacture.
(b) Schedule M having been adopted a decade back, a review should be
undertaken in consultation with the manufacturers of LVPs (both
glass and plastics) and regulatory authorities.
(c) Looking at the current international trends in manufacturing, quality
control and distribution, the existing requirements of Schedule M arc
less than adequate from the point of view of harmonizing them with
other international practices.
(2)
In accordance with the Drugs and Cosmetics Rules, grant or renewal of a
manufacturing licence for LVPs is now done by the Central Licence
Approving Authority (CLAA) (approval by the Central Government) after
joint inspection with the State Licencing Authority' and necessarv
recommendation by the State Licencing Authority; Similarly the CLAA
also gives permission for manufacture of additional products. WHO
Certification Scheme is operated by the CLAA and State drug control
authorities. Routine enforcement of the complaint investigation is done by
the State Drug Control Authorities. This joint responsibility; which exists
113
I
be undertaken twtce a year. The six-monthly statutory audit and miction
P “j15
Core. HeaIJbcare by FDA Gujarat have not been carried out
ol^r
The^eglster°f 511011 inspections maintained at the Core Healthcare
plant at Sachana did not reveal specific investigation for funeus
^anunation although such a major problem was reported from t^e§ to
time. The government drug control machineiw should adequately monitor
the quahty of LVP’s. Regular audits and statutory inspections^ no[
undertaken due to lack of manpower and other resources. This is an area of
action C°nCern and StepS must be taken t0 focus attention on preventive
i
J
(3)
^ngthy correspondence between the hospital and the Drug Control
Department. The manufacturer is informed later.
(4)
The specifications and test methods for an appropriate grade of polvmer to
be used m the manufacture of plastic containers is not defined in the Indian
pharmacopoeia. In the absence of such requirements, the manufacturer can
use any grade of material leading to quality problems later.
(5)
The regulatory must change from its present reactive role of discussine
concerns to proactive role of influencing the industry hospital MSD'
distributors retailers, approved testing laboratories etc. to provide
uC
t01116 Patients as Per 5 (a). The proactive role once adopted
snail aenmtely manage the present concerns also.
(6)
Efforts must be made to bring Schedule M and the GMP requirements in
line with international standards with the following
objectives:
(a) To elaborate the entire chapter on sterile preparations and to make the
same more specific.
(b) To include the BPS technology for the manufacture of LVPs which is
used in India today.
"" 1
(c) To up-grade the entire Schedule M wherever necessary keeping in
mind the present GMP requirements.
(d) To separate GMP requirements for LVPs as an exclusive chapter which
is fully specific and in-line with cGMP practices as followed in India
and the developed countries.
A
k*
£
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DRUG CONTROLS’S SPHERE OF INFLUENCE
I
REGULATORY
•f
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i
SPHERE OF
N
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i
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s
■
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•"■SF
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DRUG CONTROL’S
SPHEREOFINmUENCT
-p ■
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•• •.•.E
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IL.
CONCERN
'•
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DISTRIBUTORS/RETAILERS
'J MSB: ■
115
(e) To provide an opportunity to LVP manufacturers in India to up-grade
practices to international standards.
(f) To provide guidelines to LVP manufacturers and distributors bo as to
improve the quality standards of such products.
(g) To provide guidelines to regulatory bodies, public testing laboratori
:ones.
hospitals. MSD etc. for monitoring the LVP product quality.
To carry out amendment to the Schedule M, a committee may be constituted
m consultation with the manufacturers of LVPs (both glass and plastics)
Once the changes are finalised, they should be implemented in a dynamic
time-bound manner. The proposed ammendment to Schedule ‘NT is
enclosed in the Appendix-2
(7)
The member of total manufacturers of LVPs are about 175 (both glass and
plastics) compared to the large number of about 25,000 total pharmaceutical
manufacturers in India. The Central Government must immediatelv take
steps to examine the entire system of licencing (including loan licencing)
new product approvals, certification and complaint handling under effective
Central Government control through CLAA or other suitable means. The
present dual system of control doe.s not appear to be very effective. A
mechanism must also be created so that speedy grant of free-sale and such
other certificates for export purpose are available and the manufacturers
are not put to any undue hardships.
It is also necessary to expand the sphere of influence of the regulatorv
authorities beyond manufacturers to include hospitals. MSD. Government
testing laboratories, approved testing laboratories, distributor/retail outlets
etfLVpere Pen°dlC insPection 311(1 certification are required to ensure qualitv
^n0^A1?nfra5Trucrure “d facilities d° not exist with either CLAA or even
1
vjujarat so mat once in six months statutory audit of everv
manufacturer’s premises is carried out and record of any market complaints
during the penod are examined thoroughly. The Drug Inspectors must be
imparted adequate training for carrying out audit and inspection To focus
on these issues, a post of Director (Pharmaceutical Services) may be created
under the DCGI at the center. Simultaneously, a'post of Deputv
Commissioner or Deputy Director (Pharmaceutical Services) be created
under the Director, Health Services at state levels. The Drug Control
Departments need to strictly enforce the provisions of the Drug and
Cosmetics Act so that the consumer is protected against sub-standard LVPs.
(8)
A GMP Certification Scheme for LVP manufacturers on the lines of WHO
Certification Scheme for exports must be made mandatory for domestic
requirements. Let us have only one quality standard of LVP manufacture
LI
116
both for domestic and export requirements. There must be pre-inspection
audits by the manufacturer prior to grant of GMP certification bv the Drua
Control Authorin'.
“
(9)
8.6
Approved Testing Laboratories
(D
8.7
Ensure upgradation of the quality of the approved testing laboratories
without any delay. As per the current practice, result of testing of a few
bottles is inadequate in number and cannot guarantee the qualirv of the
entire batch. Such an activity provides only a false psychological satisfaction
and needs to be reviewed.The statutory' sampling must be in accordance
with the appropriate statistical sampling procedures.
Medical Stores Depot
(1)
’
All contamination-related quality complaints must be reviewed bv the
Hospital, the concerned Drug Control Organization and the Manufacturer
wdthin 72 hours and suspected stocks must be quarantined immediately
pending further testing or market recall of batches.
i
In 1996. the Government of India constituted an Expert Committee under
the chairmanship of Shri C.R. Vaidyanathan to examine the procedure for
the purchase of drugs and medicines through the MSD and suggest measures
for streamlining the procedures. The Expert Committee made important
recommendation for procurement, organisational set-up, computerisation,
inventory control and monitoring, date expired goods, drug formulary,
quality control etc.
As per information available, the total requirement of Government hospitals
of IV fluids per annum in Delhi is 10 lac bottles per annum. The Government
hospitals purchase their requirements through either the MSD or Kendriya
Bhandar. On receipt from the manufacturer, the MSD stores bottles in
their own warehouse which is not a rodent-free facility. Bringing stocks to
hospital require further local transhipment which involves unnecessary
handling and storage.
The MSD must immediately take steps to upgrade their warehouse facilities
and make them free of rodents and pests.
(4)
Purchasing system must be modified so that while the hospitals continue
to place orders for their IV fluids requirements through MSD. they receive
the stocks directly from the manufacturers. On a longer term, there is a
need to review the outdated and cost in effective roles of MSD, Kendriya
Bhandars and Super Bazars in procurement of mam ernes including IV fluids
for hospitals. Possibilities for large hospitals to deal directly with the
manufacturers and negotiate annual contract and indent IV fluids on a
monthly basis or even just-in-time must be explored. This will not only
117
eliminate bureaucratic purchase procedures and extra handling but also
save costly warehouse space of MSD. It is must be understood that chronic
quality problems can be eliminated or at least minimiyed bv removing
wasteful activities in the process.
MEDICINES BANNED ALL OVER THE WORLD
Page 1 of 2
SOME OF THE MEDICINE WHICH
BANNED
IN ALL OVER THE WORLD BUT ARE
SOLD IN INDIA
In our country we have only 515 medicines, which are sold by 3000 different names. These
medicines are banned in all of the countries of the world and the production and selling of
those is considered as a crime. Doctors and Scientists have said that these medicines are
dangerous and can produce paralysis, cancer, blindness, and produce many other dangerous
sickness. This medicine makes the immune system of the man weak and the man can
die.Here are names of some of the medicines which are banned all over the world but are
sold here without any restriction.
Sr.
NAME OF THE j
MEDICINE
|
BANNED IN COUNTRIES
EFFECTS
By taking a small
Oxyfi n Botazon,
amount of this
Oxypoz, Laijesic,
imedicine the
Neurojesin, Sungril,
intestine get small
Oxyzen,
punctures and can
Britain, Japan, Germany,Sweden, Finland,
Parabutazon,
America, Italy,Bangladesh, Australia,Maylasiaj'cause blood
Kliocvinal, Phynil
Israel, Jordan
I.■cancer.• These
Butazon, Actimal,
medicines have
Aljiril, Aristopyrin,
jtaken more than
Butacartidan,
;15000 lives. It has
Butaproxyvan,
been given ’B’
jwhere it is banned
Ambkvinal,
Eliqueen,
Em bijay am Fort,
Emicure, Emicleen,
Emigil Plus,
paralysis in legs,
Choi oropecti den,
Japan, Norway, Sweden,Germany, Denmark, blindness Because
02. Dyedoqueen,
bf these 10000
Spain, France,Sri Lanka
Introgyem, Aydojol, Nepal,Bangladesh,
f
people got
Aydocyclin,
paralysed in Japan
Metaqueen,
Neutrojyem,
Aydohydroxyqueen, i
Queenijol, Analjin, i
i
it destroys the
jWhite Blood Cells
03. Beralgun Buskapan, !
in the body of the
Butaljin Faijesic
Australia, Austria, Belgiun,Billi, Denmark,
human body due to
Marlajin Oxypoz
France,Grease,Israel,Italy,Japan,Korea,Mexico,jit the structure of
Sinaljesic Jimaljin Nepal,Sweden, America,Britain,Germ any,
the bones and the
;• .
. I
http://www.freedomindia.com/indian/medicines_intemationally_banned.html
rv
07/09/2003
Page 2 of 2
MEDICINES BANNED ALL OVER THE WORLD
i
Altrajin Finoljin
Pamajin
\
Denmark, Nepal,
imuscles of the
human beings gets
■effected and can
’cause death of a
person_________
A.T.Fort,
Mayestrojanfort,
If it is given to a
Orosekronfort,
pregnant woman
Orgalotin, Ostron,
then makes the
Australia, Austria, Belgiun, Denmark, Greece, 'child handicap .It
S.G.Fort,
Cholorostrap, Cuper Italy,New Zealand, Norway,South Africa,
^also effect in the
Thailand, Britain, Singapore,America,
‘ Strap,
’production of the
holoromfenical and Germany, Bangladesh
[white blood Cells
Straptamysin,
in the body of the
ilntrostrap,
tauman
Intestostrap,
Straptophinakle,
Drooling Drooling,
Dekadyurabolin,
> effects the
Brufen, Ivabolin,
Bangladesh, Britain and all of the country of ^immune system of
OS.Novaljin, Aspirin,
the world
the body and the
iKaimer, Kaimoral,
person soon dies
Kaimoral Fort,
\Alfapsin,
They effects the
’Acetophen eti deen,
liver of the humans
Fenasitin,
The Vitamin
j
Acromysine,
present in these
Docabolin,
^medicines only
Canada, Chili, Cyprus, Denmark etc
Histaprade, Peri cart,
increase the cost of j
Parydron, Irgofen,
■the medicine and
Mygril, Mygrenil,
nothing other than i
Stiptoment,
that_______
The colour of the I
Tetracyclene Thoron !
‘teeth of the
Trynarjick Restil
Bangladesh, Denmark, Italy, Jayen, New
Children gets
07. Kamaslip Plasidox 2 ^Zealand, Peru,Greece, Italy, iNonway,
brown and gives
Plasidox 10 Plasidox Spain,Venezuela, Bangladesh, Nepal etc.
[severe damage to
5
I
the body
j
1
http://vvAvw.freedomindia.com/indian/medicines_intemationally_banned.html
07/09/2003
List of Drills Banned by the Government of India under Section 26A of the
Dm»s & Cosmetics Act 1940,
\. G.S.K. 578(E) Dated 23.7.83
I
3.
4.
5.
6.
y
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
• 20.
21.
22.
23.
24.
25.
i
i■
i'
h
26.
27.
i!
28.
29.
Amidopyrine
Fixed dose combinations of Vitamins with anti-inflammatory agents and tranquilisers.
Fixed dose combinations of Atropine in Analgesics and Antipyretics.
Fixed dose combinations ofStrychine and Caffeine in tonics
Fixed dose combinations of Yohimbine and Strychnine with Testosterone and Vitamins.
Fixed dose combinations of Iron with Strychnine, Arsenic and Yohimbine.
Fixed dose combinations of Sodium Bromide/Chloralhydrate with other drugs.
Phenacetin
Fixed dose combination of anti-histaminics with anti-diarrhoeals.
Fixed dose combinations of Pencillin with Sulphonamides.
Fixed dose combination of Vitamins with Analgesics
Fixed dose combination of Tetracycline with Vitamin C
Fixed dose combination of Hydroxyquimoline group of drugs with any other drug except for
preparations meant for external use.
Fixed dose combination of Cotricosteroids with any other drug for internal use.
Fixed dose combinations of Chloramphenicol with any other drug for internal use.
Fixed dose combinations of crude Ergot preparations except those containing Ergotamine,
Caffeine. Analgesics, Antithistamines for the treatment of migraine, headaches.
Fixed dose combinations of Vitamins with Anti TB drugs except combination of Isoniazid
with Pyridoxine Hydrochloride (Vitamin B6).
Pencillin Skin/Eye Ointment.
Tetracycline Liquid oral preparations.
Nialamide
Practolol
Methapyrilene, its salts.
Methaqualone
Oxytetracycline Liquid Oral preparations.
Demeclocycline Liquid Oral preparations.
Combination of Anabolic steroids with other drugs.
Fixed dose combinations of Oestrogen and Progestin (other than oral contraceptive) contain
ing per tablet estrogen content of more than 50mcg. (equivalent to Ethinyl Estradiol) and of
Progestin content of more than 3mg.(equivalent to Norethisterone Acetate) and all fixed dose
combination injectable preparations containing synthetic oestrogen and progestorone.
Fixed dose combination of Sedatives/hypnotics/anxiolytics with analgesic -antipyretics.
Fixed dose combination of Pyrazinamide with other antitubercular drugs except combination
of Pyrazinamide with Rifampicin and INH as per recommended daily dose given below:-
r
Drugs
Miniinuni
Rifampicin
INH
_Pyrazinamide
450mg
300mg
lOOmg
i
, Maximum
600mg
400mg
1500mg.
I
Fixed dose, combination of histamine 112-rcceptor antagonists with antacids except lor those
30.
combinations approved by the Drugs Controller. India.
^enfi-d oils with alcoThe Patent and Proprietary medicines of fixed dose combmaltons of esse, tn
h
hoi having percentage higher than 20% proof except preparations given m the Indtan
31.
AhZnteutal pmpm-a.mns eonmimng ehbmfcn,, exceeding 0.5% w/w or v/v which-
32.
ever is appropriate.
.
Fixed dose combination of Ethambutol with INH other than the following.-
33.
INJ.-J
200mg
300mg
34.
35.
36.
37.
38.
Ethambutol
dOQmg
800mS. .
I,
nont sinincr more than one entihistamine.
Fixed dose combination of anthelmintic with cathetric/purgative except for P.perazme
centrally act
actingg
Fixed dose combination of Salbutamol or any other Bronchodilator with cent.ally
antitussive and/or antihistamine.
Fixed dose combination of laxatives and/or antispasmodic drugs in enzyme prepa at
Fixed dose combination of Metoclopramide with other drugs except for preparations con-
39.
PrepmtiX'clain'ing wrambal cough associated with asthma containing centrally acting
40.
41.
glycerophosphate and/or other phosphates anrhor
central nervous system stimulant and such preparations containing alcohol moic than .
42.
Fixed dose combination containing Pectin and/or Kaolin with any drug which is systemically
absorbed from Gl tract except for combinations of Pectin and/or Kaolin with c uigs not s?s
43.
temically absorbed.
Chloral Hydrate as a drug. (Tooth Pastes/tooth powders containing tobacco cosmetics)
44.
45.
Dovers Powder I.P
Dovers Powder tablets I.P. (Nox-11014/1/83-DMS & PFA)
B. G.S.R. 731 (E) elated 30.09.94
46.
47.
48.
49.
50.
51.
Antidianhoeal formulations containing Kaolin or Pectin or Attapulgite or Activated Charcol.
Antidiarrhoeal formulations containing Phthalyl Sulphathiazole or Sulphaguanidine or Suc
cinyl Sulphathiazole.
.
Antidiarrhoeal formulations containing Neomycin or Sceptomycin or Dihydrostreptomycin
including their respective salts or esters.
.
Liquid Oral antidianhoeals or any other dosage form for pediatric use containing Diphenoxylate
or Loperamide or Atrophine or Belladonna including their salts or esters or metabolites Hyos
cyamine or their extracts or their Alkaloids.
....
. ,
Liquid oral antidianhoeals or any other dosage form for pediatric use containing halogenated
hydroxyquinolines.
Fixed dose combination of antidianhoeals with electrolytes.
C. G.S.R 57(E) dated 07.02.95
52.
Patent and Proprietary Oral Rehydration Salts other than those conforming to the following
parameters:
a) Patent and Proprietary Oral Rehydration Salts on reconstitution to one litre shall contain
Sodium - 5o to 90 millimoles.
Total Osmoloarity - 240 to 290 milliosmoles.
Dextrose Sodium Molar ratio - Not less than 1:1 and not more than 3:1
b) Patent and Proprietary cereal based Oral Rehydration Salts on reconstitution to one litre
shall contain:Sodium - 50 to 90 millimoles.
Total osmolarity - Not more than 290 milliosmoles.
Precooked rice - equivalent to not less than 50gms and not more than 80 gms as total replace
ment of Dextrose.
c) Patent and Proprietary Oral Rehydration Salts (ORS) may contain aminoacids in addition
to Oral Rehydration Salt conforming to the Parameters specified above and labelled with the
indication for “Adult Chloleratic Diarrhoea only”.
D. G.S.R. 633(E) dated 13.09.95
53.
54.
55.
56.
Fixed dose combination of Oxyphenbutazone or Phynylbutazone with any other drug.
Fixed dose combination of Analgin with any other drug.
Fixed dose combination of dextropropaxyphene with any other drug other than anti-spasmodics
and/or nonsteroidal anti-inflamatory drugs (NSAIDS)
Fixed dose combination of drug, standards of which are prescribed in the Second Schedule to
the said Act with an Ayurvedic, Siddh or Unani drug.
E. G.S.R. 499(E) dated 14.8.98
57.
58.
Mepaerine Hydrochloride (Quinacrine and its salts) in any dosage form for use for female
sterlisation or contraceptives.
Fenfluramine and Dexofenfluramine.
E G.S.R.702(E) 14.10.1999
59.
G.
60.
61.
62.
63.
64.
65.
66.
67.
Fixed dose combinations of Vitamin 8] B6, and Br w.e.f. 1.1.200!
G.S.R. No. 170(E) dated 12.3.2001.
Fixed dose combination of Nitrofurantoin and Trimethoprim
Fixed dose combination of Phenobarbitone with any anti-asthamatic drugs
Fixed dose combination of Phenobarbitone with I lyoscin and/or Hyoscyamine
Fixed dose combination of Phenobarbitone w ith Ergotamine and /or Bclladona
Fixed dose combination of Haloperidol with any anti-cholinergic agent including Propcntheline
Bromide.
Fixed dose combination of Nalidixic acid with any anti-amoebics including Metronidazole.
Fixed dose combination of Loperamide Hydrochloride with Furazolidone.
Fixed dose combination of Cyproheptadine with Lysine or Peptone.
i
________ u_
Annexure 1
'
PHARMACEUTICAL POLICY-2002
7^
introduction
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 Pnme
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.
'
-
i
" i
4
■ p
--
.
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.
Reservation of 5 drugs for manufacture by the public sector only was abolished in
Feb.1999, thus opening them up for manufacture by the private sector also.
Foreign investment through automatic route was raised from 51% to 74% in March. 2000
and the same has been raised to 100%.
Automatic approval for Foreign Technology Agreements is being given in the case of all
bulk drugs, their intermediates and
formulations except those produced by the use of recombinant DNA technology, for
which the procedure prescribed by the Government would be followed.
•
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.
•
Extending the facility of weighted deductions of 150% of the expenditure on in-house
research and development to cover as eligible expenditure, the expenditure on fiiinc’
patents, obtaining regulatory approvals and clinical trials besides R&D in biotechnology.
Introduction of the Patents (Second Amendment) bill in the Parliament. It, inter-alia,
provides for the extension in the life of a patent to 20 years.
•
>3
3. The impact of the policies enunciated, from time to time, by the Government has been salutary.
It has enabled the pharmaceutical industry to meet almost entirely the country s demand for
formulations and substantially for bulk drugs. In the process the pharmaceutical industry in India
has achieved global recognition as a low cost producer and supplier of quality bulk drugs and
formulations to the world. In 1999-2000, drugs and pharmaceutical exports were Rs.6631 crores
42
i
’4
^3
out of a total production of Rs.19,737 crores. However, two major issues have surfaced on
account of globalization and implementation of our obligations under TRIPs which impact on long
term competitiveness of Indian industry. These have been addressed in the Pharmaceutical
Policy-2002. A reorientation of the objectives of the current policy has also become necessary on
account of these issues:a.
i
b.
A
—*
I
~£
i
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
The need for reducing further the rigours of price control particularly in view of the
ongoing process of liberalization.
4. It is against this backdrop, that Pharmaceutical Policy-2002 is being enunciated.
OBJECTIVES
5. The main objectives of this policy are:a.
b.
c.
d.
e.
Ensuring abundant availability at reasonable prices within the country of good quality
essential pharmaceuticals of mass consumption.
Strengthening the indigenous capability for cost effective quality production and exports
of pharmaceuticals by reducing barriers to trade in the pharmaceutical sector.
Strengthening the system of quality control over drug and pharmaceutical production and
distribution to make quality an essential attribute of the Indian pharmaceutical industry
and promoting rational use of pharmaceuticals.
Encouraging R&D in the pharmaceutical sector in a manner compatible with the country’s
needs and with particular focus on diseases endemic or relevant to India by creating an
environment conducive to channelising a higher level of investment into R&D in
pharmaceuticals in India.
Creating an incentive framework for the pharmaceutical industry which promotes new
investment into pharmaceutical industry and encourages the introduction of new
technologies and new drugs.
APPROACH ADOPTED IN THE REVIEW
7’
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 followinc conditions
(gold standards)
Invest at least 5% of its turnover per annum in R&D,
Invest at least Rs.10 Crore per annum in innovative research including
development, new delivery systems etc. in India,
Employ at least 100 research scientists in R&D in India,
Has been granted at least 10 patents for research done in India,
Own and operate manufacturing facilities in India.
drug
8. The recommendations of the PRDC in so far as they relate to the Pharmaceutical Policy have
been taken into account while formulating the proposals on pricing aspects.
43
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(Price Control) Order 1995, has brought to light some problems in the administration of the price
contro mechanism for drugs and pharmaceuticals. In order to review the current drug price
control mechamsm, 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
Secre;a„, Departmem M cXSs s
3
Petrochemicals was set op ,999, which has piven its report. The recommendations of DPCRC
2002"been eXam'ned and taken lnt0 account whlle formulating the "Pharmaceutical Policy -
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 pnee 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
aDnormaiiy.
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
' >3r
ii.
iii.
bulk drugs produced by the use of recombinant DNA technology,
bulk drugs reguiring in-vivo use of nucleic acids as the active principles, and
specific cell/tissue targetted formulations.
II- Foreign Investment
*•
Foreign investment upto 100% will be permitted, subject to stipulations laid down from tir to
time in the Industnal Policy, through the automatic route in the case of all bulk drugs clear d by
Drug Controller General (India), all their intermediates and formulations, except those, referred to
in para 12.1 above, kept under industrial licensing.
111 • Foreign Technology Agreements
hed.ht0 n
12 J ab°Ve’ kept Under lndustrial licensing for which a special procedure
presenbed by the Government would be followed.
4-0
44
IV. Imports
FC
K3
Imports of drugs and pharmaceuticals will be as per EXIM policy in force. A centralized system of
registration will be introduced under the Drugs and Cosmetics Act and Rules made thereunder.
Ministry of Health and Family Welfare will enforce strict regulatory processes for import of bulk
drugs and formulations.
-3
V. ENCOURAGEMENT TO RESEARCH AND DEVELOPMENT (R&D)
(a) In principle approval to the establishment of the Pharmaceutical Research and Development
Support Fund (PRDSF) under the administrative control of the Department of Science and
Technology, which will also constitute a Drug Development Promotion Board (DDPB) cn the lines
of the Technology Development Board to administer the utilization of the PRDSF.
3
(b) With a view to encouraging generation of intellectual property and facilitating indigenous
endeavours in pharma R&D, appropriate fiscal incentives would be provided.
5
VI. PRICING
(a) Span of Price Control
The guiding principle for identification of specific bulk drugs for price regulation should continue,
as per DPCRC’s recommendation, to be: (a) mass consumption nature of the drug and (b)
absence of sufficient competition in sucii drugs. However, the DPCRC’s recommendation
regarding the new criteria for ascertaining the mass consumption nature of a bulk drug on the
basis of the top selling brand is not acceptable as it gives rise to anomalies.
3
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3
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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 Phanmaceutical
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)
a.
b.
c.
d.
e.
3
3
Current Index of Medical Specialities (CIMS).
Monthly Index of Medical Specialities (MIMS).
Drug Today
Information provided by some manufacturers
Label composition as indicated on market samples
Though none of these sources can be said to be exhaustive and comprehensive in regard to
market information, yet under the given circumstances, these are the best available. It has also
been noted that the sale value of any combination formulation is not directly relatable to a single
particular bulk drug forming part of the combination formulation. Combination formulations involve
too many variables, viz., strength of a particular bulk drug and its proportion with respect to other
bulk drugs used in the combination formulation, price difference between bulk drugs used in
combination formulation, pack sizes, dosage forms etc. In view of these facts, ORG-MARG sales
45
data for combination formulations does not yield information in regard to mass consumntfon
nature and absence of sufficient competition with reference to a particular bulk drug Also it is 'o
be borne ,n mind that processing of such data, which requires crosXSg wifo other
and Srj and S0UrCef °f.informat|on m regard to composition of each brand, dosage form-wise
and pack-wise may involve instances of omission / commission.
3
3
- 5
In view of above, it would be logical to conclude that although ORG-MARG sale estimates
sale va uro7t9ha?h°if d510916^ h9^'60'formulations of a Particular bulk drug would not yield the
mate rn
f h( bu k drU9 'n he form of a" its forrnulations, yet it would adequately reflect the
mfv ha
.mptl0n nature of ,hat bulk rtrug 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
thi^Ss'X6 n601 T™1,3’10"5
retai' St°re 3Udit data aS Pnbiisrted by ORG-MARG On
s basis, the Department proposes to undertake the exercise of identifying the bulk dmos of
mltShSodoloSgUymPtl0rLnatUre 309 haVin9 abSenCe of sufficient competition according to the following
5
i.
The 279 items appearing in the alphabetical list of Essential Drugs in the National
ii.
ThP npr6 iiADr WhlCh selectl0n of bulk drugs be made for price regulation
"»
“’e span o,
iii.
The Moving Annual Total (MAT) value for any formulator in respect of any bulk drug will
bulkdmg te salS^sfors6
Va'UeS °f a"
sin9le-in9redient formulations of that
duik drug, its salts, esters, stereo-isomers and derivatives, covering all the strenoths
.he
3
iv.
lis"d '!0aina
ln
gr°ups' “"est,rt“0'
V.
The MAT value for all the formulators. as defined in sub-para (iii) above in resoect of a
The MAT taluJ fo9r W'" ba added t0 arrive at the t0,al MAT va|ue in the retail trade.
he MAT value for an individual formulator, in respect of any bulk drug as arrived at in
('ll) above’ wil1 be the basis for calculating the percentage share of that
..np-o, ,n the totat MAT ea.ae a™.d at as
satt-p’ata <„? above
respect of that
Vi.
Bulk Drugs will be kept under price regulation if:-
3
3
brnJdmn13' MAT VtUe' arriV6d at aS in sut>-para W above- in respect of any particular
darn a 9 KmOre than Rs-2500 lakhs (Rs 25 Crare) and the percentage share as
defined in sub-para (v) above, of any of the formulators is 50% or more.
3
LbLT^e 10131 MAT Va,ue’ arrived 3t as in sub-para (iv) above, in respect of anv oartirular
Crore^and thSS than Rs‘2500 ,akhs (Rs-25 Crore) but more than Rs. 1000 lakhs (Rs 10
t.xs.xro™?'’sna"as ae“m s“tpa'a m ato»-»' a"»«
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3
3
3
3
vii.
combi™tion'»h
druo will hp unrip
"t? a “ ‘’f'9 ’S
a“"’' ellher
or In
• U dru9S’ ,nclud*n9 those not identified for price control as bulk
,>nCe “n'r01 Tte
8“' however.retain the Mlowirtg
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f
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T
S'
=4
5
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I
In cases of drugs/formulations listed by the Ministry of Health and Family Welfare, mentioned
in sub-para (i) above, and those presently under price control, having significant MAT value as
per ORG-MARG but not covered under the criteria in sub-para (vi) above, as a result of this
proposal, the NPPA would specially monitor intensively their price movement and consumption
pattern. If any unusual movement of prices is observed or brought to the notice of the NPPA, the
Authority would work out the price in accordance with the relevant provismrs of the price control
order.
(b) Maximum Allowable Post-manufacturing Expenses (MAPE)
Maximum Allowable Post-manufacturing Expenses (MAPE) will be 100% for indigenously
manufactured foimulations.
I
(c) Margin for Imported Formulations
For imported formulations, the margin to coverselling
« "’ ~ and distribution expenses including interest
and importer’s profit shall not exceed fifty percent of the landed cost.
(d) Pricing of Formulations
;;
0
*
0
(i) For Scheduled formulalions., prices shall be determined as per the present practice. The time
frame for granting price approvals will be two months from the date of the receipt of the complete
prescribed information.
■
(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 egual to the retail price, as specified by an order or
notified by the Government, (excluding excise duty, ir any) minus sixteen percent thereof in case
of Scheduled drugs, will continue.
4
13
(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.
Ik
I
(e) Ceiling prices
Ceiling prices may be fixed for any formulation, from time to time, and it would be obligatory for
all, including small scale units orthose marketing under generic name, to follow the price so fixed.
(f) Exemptions
(i) A manufacturer producing a new drug patented under the Indian Patent Act. 1970. and not
produced elsewhere, if developed through indigenous R&D. would be eligible for exemption from
price control in respect of that drug for a period of 15 years from the date of the commencement
of its commercial production in the country.
ci
OO A manufacturer producing a drug in the country by a process developed through indigenous
&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.
it
t
KT.-,
47
;z-
ZX Unde'l°Pe''adian9Pa1em7cte'S for’Zo^676'09^ ,hr0U9h ,nd!^nous
R&D and
new
mmencement of its commercial production in the patent holder
country till the
delivery system
=-
expiry of the patent.
3
t3
isS=;S:=£S==™ - M
passed by the NPPA will
— .j revise the price, he.
—•a—^“==~’~™=.=
3
(9) Pricing_of Scheduled R;
ulk Drugs
-3
i.
ii.
Fz a Scheduled bulk drug
higher by 4 per cent over the the rate of return in case of basic manufacture would be
existing 14 per cent
net worth or 22 per cent on capital
for granting price
— I months from the date of
£SSS=:::.. .
y bulk drug, m public interest.
overriding power of fixing the maximum sale
(d) Monitoring
3
’^«™*Z:“sT,Ten'sys,em “d'»
15
3
entrusted with the
nr • e revamPed and reoriented for this nun™ 9 •uthonty, set up in
empowered to take final de1?< fiXa?i|°n ' PriCe rev's'on and other rela^mAH^" COnt'nue t0 be
3
-'s xr,
p»»» ,he
NPP,
r«
rev,„ M the pfte
3
3
a
^^Pough the prices of sn
k
□
mandatory for the manufArt 9 approPr'ate Powers under the DPrnN 1°^
narmaceutical
folate such paces. whereXXS1511
,nfOmatl°n 35 ca^£
XpT and^ to
0
So^^fTmLllXTfindffiOnS °f DPCRC ,lke 9Jn29 PTrS t0 dru9 contrai authorities to
Act. This suggestion is con h00®5 etC" Wil1 re<’uire
the country as well as "h'Pernefd not practicable.
mechanism in the NPPA
’mported formulations
—
MonZg'XrXe'X
r>
Wl11 re^re developing approve
48
"U w ■
i •
Sr
(') Drug Price Equalization Account (DPEA)
amn,ran^SIOmWK°Kd be made
the new Dru9s <Prices Contro|) Order (DPCO) to ensure that
amounts which have already accrued to the DPEA and those which are likely to accrue as a
resul^of action in the past, are protected and used for the purpose stipulated in the existing
VII. QUALITY ASPECTS
The Ministry of Health & Family Welfare would
(i) progressively benchmark the regulatory standards against the international
standards for
manufacturing,
5
(ii) progressively harmonize standards for clinical testing with international practices,
(iii) stream'ine the procedures and steps for quick evaluation and clearance of new drug
applications, devr.cped in India through indigenous R&D, and
,eV<in,^ UP 3 wodd c'ass Central Drug Standard Control Organisation (COSCO) by modernizino
9 fand refonT"n9 the existing system and establish an effective net work of druas
standards enforcement administrations in the States with the COSCO as a nodal center to
ensure high standards of quality, safety and efficacy of drugs and pharmaceuticals
'
Vl11- PHARMA education and training
*5
the^ Government of^nd J Pharmaceutical Education and Research (MIRER) has been se« up by
nh
er"me,nt of lndia as an 'nstrtute of •'national importance" to achieve excellence °n
phamiaceutical sciences and technologies, education and training Through this institute
ReeidTT^r endeavor Wl11 be t0 upgrade the standards of pharmacy education and R&n
f
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f
I
Indian Pharmaceutical Scene
It is essentially the story of Drug Industry, Govt, and common
man rather than common man and remedy to his ill health
*
70,000 - 80,000 formulations
*
20% sub-standard or spurious drugs - Govt, 80% Inessential
*
Formulation - Irrational, Hazardous, Bannable
*
Shortage of Essential and Life-Saving Drugs
*
Non-availability of unbiased information
*
Unethical Medical Advertising
*
Irrational Prescribing practice of Medical profession induced by
drug-doctor axis
*
Inadequate drug legislation / Drug Control
*
50% of the drugs sold without prescription
*
Beginning - Urea stibamine, vaccines, bulk drug production
*
Indian Independence
Indian Patents Act 1970
•
12 years of protracted debate and deliberations
• National Interest > Patentee Interest
•
Drugs / Defence Equipment / Food & Agriculture
•
Process Patents
5 -7 years - To prevent monopoly capital
• Out of 3.5 lakh patents, 84% belonged to developed nations
• This has necessitated I.P.A.
•
Increased Bulk drug Production ; Decreased drug Prices
I
Hathi Committee Report, 1974
0 Too many inessential drugs - combination
0 Shortage of essential drugs
0 Poor quality control
0 Technology to produce essential drugs available
0 MNCs doing only Formulation activity
0 Brand names - Double Standards
0 Aggressive Sales Practice
0 R & D Activity
Recommendations
♦ Essential drugs for Primary Care
♦ Generic Names
♦ Distribution of quality control
♦ Equity of Foreign participation. Phasing out of MNC's
♦ Bulk drug production
Self reliance
♦ Communication with health professionals, researchers and
planners
♦ NDA
I
♦ Result - WHO Essential Drug List, Bangladesh Drug Policy
I
♦ 1985 Rajiv Gandhi's New Economic Policy
♦ 1986 New Drug Policy - Bonanza for MNCs
♦ 1 994 NDP to suit DDT - WTO
DDT
•
1947 GATT - 1986 Uruguay 1991 DDT
•
Drug, Agriculture, biotechnology , Educative , Research
Computer
• Amendment of Laws
Patent & Constitution
•
DDT accepted on 31 December '94 - without information
•
Product patent
•
No restriction on foreign equity
•
No restriction in the area of investment
•
No licensing
No export obligation
locally available material
No obligation to use
• Foreign investment on par with Indian companies, leading to
more inessential drugs
I
All India Drug Action Network
Consists of numerous health, consumer, legal aid and
human rights organizations and Peoples’ Science
Movements. It is a loose network of academicians,
professional social activists, individuals and organisations
who are deeply concerned about the drug issue and
implementation of Rational Drug Policy.
1. Academy of Young Scientists
2. Association for Consumer Action on Safety and Health
(ACASH), Bombay
3. Arogya Dakshata Mandal, Pune
4. Catholic Health Association of India, Secunderabad
5. Community Development Medical Unit, West Bengal
6. Consumer Education & Research Centre, Ahmedabad
7. Consumer Guidance Society of India, Mumbai
8. Drug Action Forum - W. Bengal
9. Bodhi -West Bengal
10. Drug Action Forum - Karnataka, Bangalore
11 .Delhi Science Forum, Delhi
IZ.Kerala Sastra Sahitya Parishat, Kerala
13. LOCOST, Baroda
14. Lok Vigyan Sanghatana, Pune
1 S.Medico Friends’ Circle, Pune
16.Voluntary Health Association of India, Delhi
I
I
Books
1. A decade after Hathi Committee: Dr. B. Ekbal
Kerala Sastra SahityaParishat
2. The Politics of Essential Drugs: Dr. Zafarullah
Choudhary
Vistar Publication, New Delhi: M32, Greater Kailash
Market, Part I, New Delhi - 110 048
3. The Rational use of Drugs: Community Development
Medicinal Unit (CDMU), 41/1B Garcha Road, Calcutta
- 700 019.
Journals
I
1. BODHI: Editor, Bodhi, 254, Lake Town, Calcutta - 700
089, India. {Tel. & Fax (91) (33) 534 4878
2. ESSENTIAL DRUGS MONITOR: Editor, E.D.M., W.H.O,
CH 1211 Geneva 21, Switzerland
3. FRCH NEWSLETTER: Foundation for Research in
Community Health {FRCH}, 3-4 Trimiti B Apartments,
Aundh Park, Pune -7
4. DRUG DISEASE DOCTOR: DD 35, SEBA, Sector I, Salt
Lake, Calcutta - 700 064.
For further details, please contact:
Community Health Cell, 367, Srinivasa Nilaya,
Jakkasandra I Main, I Block Koramangala,
Bangalore - 560 034. Ph: 5531518
I
I
Drug Action Forum ~ Karnataka
It is a voluntary organisation established in 1986 and was
registered in 1990.
Works towards establishing a rational drug policy for the country
through educating consumers, medical profesionals, health and
drug policy makers.
I
We are a group of 10-15 people actively involved with the
activity. There is no paid staff in our organisation. Activities
include lectures, publishing on Rational Drug Use for General
Public, Doctors, etc.
Works closely with the All India Drug Action Network, Voluntary
Health Association of India.
Supreme Court Litigation
Drug Action Forum Karnataka
NCCDP
Voluntary Health Asociation of Karnataka
I
Advocate Prashanth Bhushan
17th August 1993
DTAB Functioning Banned Drugs.
Problems
Attendance in the Court
Keeping in touch with the others
Supplying Drug Information
Consumer Protection Act 1986
Milestone in the history of socio-economic legislation in the
country.
Simple, speedy and extensive redressal to the consumer’s
grievances.
Three tier quasi-judicial machinery at the national, State and
district levels.
• Protect the rights of the consumer
• It covers oil sectors - Private, Public and co-operative
• The provisions of the Act are compensatory in nature
• The right to be protected against the marketing of goods
which are hazardous to life and property.
• The right to be informed about the quality, quantity,
potency, purity, standard and price of goods so as to
protect the consumer against unfair trade practice.
• The right to be heard and to be assured that consumer’s
interest will receive due consideration at the appropriate
forum
• The right to seek redressal against unfair trade practices as
unscrupulous exploitation of consumers
• Right to consumer education
Complaint
• Suffered a loss or damage as a result of unfair trade practice
• Goods suffer from one or more defect
• No fee for filing a complaint
• Complaint can be sent by post
• Complainant and opposite party should appear before the
Commission for hearing
• Does not include any service provided free of charge or
under a contract of personal service
• Medical Service and doctors have been brought under CPA
through Govt. Hospital and others - providing free services
have been excluded
• Informed consent:
• Do not go beyond the point of your skill
• Keep yourself abreast about latest developments
• In cases of medico-legal implications, inform the police
• Never overstate your qualifications
• Publicity is prohibited
• Keep the patients' interest paramount
• Therapeutics - use drugs judiciously
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