A serious attempt is on in the ministry of chemicals and fertilizers to draw up a comprehensive drug act to replace the current drug policy and price control order. The move is in the wake of entangled litigation the government is facing with regard to the Pharmaceutical Policy 2002 draft. The ministry could not, therefore, proceed with necessary policy changes with regard to drug pricing and profitability of this industry for some time now. The need for a suitable act for the pharmaceutical industry is being badly felt in the context of a number of regulatory and structural changes taking place in this industry. With regard to price regulation, the ministry's move is to have only 65 bulk drugs and their formulations under control complying with the Supreme Court order asking to bring all essential drugs under control. The DPCO, 1995 has 74 drugs under price control. The figure of 65 was arrived at after applying the criteria adopted in the Pharmaceutical Policy draft of 2002. Thirty nine of these drugs could be from the essential drug list while the remaining 26 drugs would come in on the basis of turnover criteria prescribed in the Policy draft. The ministry has taken ORG data of March 2004 as the base to identify the turnover and market share of the drugs that are to be included in the list. There are more than 300 new molecules approved for marketing in India after the 1995 DPCO was notified. Many of them are essential drugs and are under patent. The ministry has to be firm in placing some of these drugs under price control. Earlier approach of deciding essentiality of drugs on the basis of turnover criteria and used by masses has to change. Some of life style diseases like diabetes, cardiac problems and stroke are no more confined to rich class and are afflicting poor as well. Another significant change proposed in the new policy is to bring small scale drug units also under price control. The NPPA has recommended to the ministry to do away with the notification of S.O.134(E) of 2nd March 1995 on SSI exemption in order to regulate the prices of scheduled formulations manufactured by SSIs. Amongst SSIs, there is also a set of companies operating through Propaganda Cum Distribution channel in some states. NPPA informed the ministry that it has observed that the exemption from DPCO is being highly misused by many of them. NPPA is of the view that many SSIs are manufacturing and selling drugs on the assumption that their status as SSI per se accords exemption to their products. The stand of NPPA that exemption should not be automatic to all units is justified as any such blanket concession defeats the very objective of price control. Still the government has to be cautious while taking away this incentive as there are nearly 6000 SSIs in the country which have been manufacturing scheduled formulations for some years. Many of them are also not healthy.