The Union Cabinet has given its approval to the Central government departments, PSUs and other Central government bodies for preferential purchase of 102 drugs and pharmaceuticals exclusively from Pharma CPSUs and their subsidiaries.

Purchase Preference Policy (PPP) in respect of a maximum of 102 medicines would be valid for a period of five years. This would also be applicable to purchase of 102 drugs made by State Governments under health programmes which are funded by the Centre.

PPP will extend only to Pharma Central Public Sector Enterprises (CPSEs) and their subsidiaries, where Pharma CPSEs own 51 per cent or above, shareholding. It would be applicable to maximum of 102 medicines as notified by Department of Chemicals & Petrochemicals from time to time.

The Purchasing Departments 1PSUs autonomous bodies may invite limited tenders from Pharma CPSEs and their subsidiaries or purchase directly from them at NPPA certified/notified price with a discount up to 35 per cent.

The purchasing departments would purchase from Pharma CPSEs and their subsidiaries subject to their meeting Schedule M norms. If no Pharma CPSE is forthcoming to supply these 102 medicines, the purchasing departments would be at liberty to purchase from other manufacturers.

If the Pharma CPSEs or their subsidiaries which has the benefit of PPP, fail to perform as per the purchase order, it would be subject to payment of liquidated damages or any other penalty included in the contract.

The medicines covered under DPCO would be supplied at the rates fixed by National Pharmaceuticals Pricing Authority (NPPA) rates minus discount up to 35 per cent.

In case of medicines not covered under DPCO, prices would be certified by NPPA, only for the limited purpose of supply to Central Government Departments and their Public Sector Undertakings, autonomous bodies' etc. On the certified price, Pharma CPSEs and their subsidiaries would provide discount up to 35 per cent.

Pharma CPSEs and their subsidiaries would strengthen their marketing capabilities for a larger market share in the open market. The existing annual Pharma market in the country is in the range of approximately Rs 50,000 crores.

Out of this, total purchases of Central Government Department [CGHS, Defence, Railways, ESIC, National Rural Health Mission (NRHM), National Aids Control Organization (NACO) etc.] are estimated to be approximately Rs 2,000 crores. The purchases of state governments account for another Rs 1,500 to Rs 2,000 crore per annum for their health programmes.

The decision of the Cabinet will help Government Institutions in making available quality drugs to the beneficiaries under various Health Schemes. It will also help in optimum utilization of assets of PSUs created with public funds.