The Drug Controller General of India last month issued a draft order proposing a sharp hike in the license fee for pharmacies and drug manufacturing units besides registration fee for domestically manufactured new products and imported pharmaceutical products. The annual licence fee for pharmacies is proposed to be increased to Rs.30,000 from the current level of Rs.3,000. For domestic manufacturing licence and loan licence the fee will go up to Rs.50,000 from the existing fee of Rs.6000. And the charge for site inspection will increase to Rs.15,000 from Rs.1500 now. Registration fee for imported drugs will go up to 5000 dollars from the current rate of 1000 dollars. Again, the fee hike proposed for registration of locally manufactured products is Rs.2,50,000 from the existing fees of Rs. 50,000. The DCGI has invited suggestions from all stakeholders and a final decision on these changes will be taken in the second week of this month. Approval of the draft rules will enable the DCGI to adopt these proposals as amendments to the Drugs & Cosmetics Rules.

Both pharmaceutical industry and trade associations have predictably objected to these proposals. Indian Drug Manufacturers Association, representing mostly medium and small scale drug units, has stated that such sharp hikes in licence fee would burden its members and can result in higher drug prices in the domestic market. In case of exporters, their ability to compete in the overseas markets may get seriously affected as many of them are already having licences for several products. Many of the small scale drug units may get seriously affected as they are already facing hardships because of the need for upgradation of plants, denial of adequate opportunities in government tenders, high interest rate and difficulty in getting and retaining technically qualified personnel. Retailers, already upset on account of falling sales and changes in the D&C Rules, may find the proposed sharp increase in annual licence fee unaffordable. This is despite the fact that many chemist shops are being operated by owner pharmacists themselves. On the other hand, the DCGI is of the view that fee hikes in pharmaceutical industry and trade are required and long overdue considering the growth achieved by the sector over the years with steep increase in revenues year after year. To tackle the corresponding increase in application load efficiently, the government needs funds and this has to be generated from the industry. But the revenue generation from the industry and trade for the increased regulatory work could have been done without pain if the fee hikes had effected over a period of time and not all on a sudden.