The Department of Chemicals and Petrochemicals has announced the first part of the draft of Pharmaceutical Policy 2006, today. Details related to price control would be dealt only in Part B, to be announced soon.
The major recommendations include setting up of an independent and autonomous National Drug Authority in place of the Central Drugs Standard Control Organisation (CDSCO) and to merge NPPA and NDA in the long run to form an integrated regulatory system in the country - National Authority on Drugs and Therapeutics (NADT). The daft policy suggests strengthening the existing provisions of the Drugs and Cosmetics Act, 1940 to make the penalties more stringent for various offences, particularly for spurious and sub-standard drugs.
The draft policy said that the patented drugs that are launched in India after 1st January, 2005 would be subjected to mandatory price negotiations before granting them marketing approval. Department of Chemicals and Petrochemicals in consultation with Department of Health would lay down necessary guidelines for determining the negotiated prices. Practices adopted by some other countries particularly Canada, France, Australia and some of the Asian countries and their experience in this regard would be studied at the time of framing the guidelines. An expert committee would be constituted for carrying out the negotiations on case by case basis with the concerned companies.
It said that an early decision on data protection would be taken and the National Toxicology Centre set up in NIPER would be made fully compliant with GLP norms. In order to facilitate pre-clinical trials, tax benefits available to R&D will be extended for clinical trials. Clinical trial samples imported to India will be exempted from payment of import duty based on authorisation/licence issued by DCGI, exemption from service tax for a period of 10 years upto 2015 to promote direct investment in the field of clinical development and data management also have been suggested.
It suggested that the excise duty on all pharmaceutical products to be reduced from 16% to 8% and to enhance the exemption limit of small scale units from the present level of Rs. 1 crore to Rs. 5 crore turnover. MRP inclusive of taxes would be made applicable to medicines sold in the packaged form and industry would be given time of three months to switch over to the new system. The existing DPCO would be repealed to establish a Drugs and Therapeutics (Regulation) Act (DATA), to be announced in the second part of the policy. Revamping of NPPA and a bulk drug procurement system for the government purchases, introduction of quality certification for drugs are also highlights of the draft.
Another major suggestion of the draft policy is to bring branding of drugs and other therapeutics under the Central drug regulatory system. The drug regulator must be required to maintain a database on brands and their compositions, and all brand registrationof drugs must compulsorily be approved by the drug regulator. In particular, no change should be permitted in the composition of a given brand.
It said that a Pharma Development Fund would be created to help PSUs to conduct drug development including clinical trials, patent filing and upgradation of technology. A list of drugs manufactured by the PSUs along with prices (to be certified by NPPA) would be prepared for supply to the government. All departments/hospitals of Central Government purchasing these drugs from the market would be required to first procure these from the PSUs at prices approved by NPPA. A Coordination Committee in the Department of Chemicals and Petrochemicals would be constituted to sort out various issues pertaining to the pharma PSUs.
A public-private partnership programme with the concerned manufacturers and cancer hospitals in the country will be launched to make available anti-cancer and anti-HIV/AIDS drugs at reasonable prices. All medicines pertaining to these categories would be brought under the programme. The government would completely exempt anti-cancer drugs and HIV drugs (bulk and formulations) from all types of Central taxes and states would be asked to exempt it from all types of state and local levies. Industry and trade would be asked to reduce their margins to the bare minimum level and pass on the benefit to the consumers. A subsidy scheme for making cancer drugs would be worked out with the help of concerned manufacturers and the cancer hospitals. A subsidy would be offered on the sale of anti-cancer drugs. Rate contract for the anti-cancer drugs would be worked out with the manufacturers for all the hospitals which join this scheme.
Further, drug banks would be created in major cities where manufacturers would be encouraged to contribute to these drug banks, managed by hospitals and NGOs. Second generation anti cancer drugs would be manufactured in India and stress will be given to import such drugs at negotiated prices with the manufacturers in the case of such drugs not made in India. Further, drugs for other life threatening diseases requiring life long treatment would be identified and brought under the public-private partnership model.
National Illness Assistance Fund, State Illness Assistance Fund, District Illness Assistance Fund and a health cess of 2 per cent has been suggested by the policy. It suggested NIPER like institutions at Ahmedabad, Hyderabad, Kolkata, Bangalore, and Guahati on the lines similar to the Indian Institutes of Technology (IITs).
A dedicated fund would be created for providing interest subsidy (5 per cent) on borrowings to small scale/medium pharma units going in for Schedule M implementation. This assistance would be in addition to any other financial assistance that may be available to the SSI pharma units from Central or State Governments. While SIDBI would be the nodal agency for this scheme, other banks / financial institutions would also be involved in this work. Promotional activity to motivate industry to adopt Schedule M would also be undertaken from this fund with the active involvement of Ministry of Health and Family Welfare and the States. A plan scheme would be prepared in this regard.
It suggested setting up of a special scheme for setting up pharmaceutical parks in the country in the next 5 years. This would be broadly on the lines of Scheme for Integrated Textile Parks, being based on public-private partnership model. Each park would be set up in a minimum area of 250 acres for bulk and 100 acres for formulations. It would be expected to have about 50 to 100 units, investment of Rs. 1000 crore to Rs. 2000 crores and likely employment of about 20,000 persons.
Another major recommendation of the policy is to exempt exports from service tax.