A new policy draft for the pharmaceutical industry was finalised and announced last week by the government after a gap of 11 years. An exercise to repeal the 1994 drug policy and the subsequent Drug Price Control Order, 1995 has been on as the industry was opposed to several provisions in the 1994 policy and the DPCO from the very beginning. And the government has been sympathetic to the industry's suggestion for a major overhaul in the drug policy. Thus a modified Pharmaceutical Policy, 2002 was notified with great expectations of giving a big boost to the Indian pharmaceutical industry. However, the government initiative got stuck in the courts soon after it was announced when a Karnataka-based NGO challenged the whole policy draft. The main part of the new draft policy, now announced, does have some excellent features and also seeks to bring a revamped regulatory system for the country's pharmaceutical industry. A key proposal in this regard is to establish an autonomous National Authority on Drugs and Therapeutics(NADT) in place of Central Drugs Standard Control Organisation. The existing National Pharmaceutical Pricing Authority is expected to be merged into the proposed NADT. The policy objective is to provide an integrated regulatory system for the industry along with strengthening various provisions of Drugs & Cosmetics Act including the ones pertaining to penalties for various offences. Regulatory compliance in terms of manufacturing standards, quality control, drug prices and business ethics is considered critical for the orderly growth of pharmaceutical industry world over. But, in India, government has not been quite effective in most of these fronts although a beginning has been made now by stipulating a minimum manufacturing standard through enforcement of Schedule M norms for all drug units. Drug pricing and drug safety are other two areas where frequent violations are taking place in the country as there is no integrated machinery to suitably monitor these activities. There are several cases pending in various courts against all the top pharmaceutical companies for overcharging the consumer. The government has not been successful in recovering these overcharged amounts estimated to be several hundreds of crores of rupees because of the inadequacy of the current enforcement machinery. The part two of the new policy will also have a list of drugs under price control although their number could be reduced by half. The government should ensure that NADT should be able to ensure the price discipline in the market. Now in the case of patented drugs, the policy has indicated that their prices will be subjected to negotiations before marketing approvals are given. This is an area where the government should expect considerable pressure from MNCs as they will come with their pet argument of huge research costs to extract high prices for the patented products. The recent pricing of Viagra by Pfizer for Indian market is a case in point. The proposal to centralise approvals of all branded drugs with the Central drug authority and to maintain a database of brands and their compositions will enable the government to have a check on the proliferation of brands in the country. This was a long overdue measure. The move will also help to bring an end to the unethical practice of changing the composition the brand several times during its life without taking permission from neither the Central nor the state drug authorities.