The Chennai High Court in an interim order has asked the Tamil Nadu Medical Service Corporation (TNMSC) to procure half of its drug purchases from the local drug manufacturers, in an important verdict related to the many year long price preference issue involving TNMSC and the manufacturers based in Tamil Nadu.

Sources informed Pharmabiz that the court in its interim judgment ordered TNMSC to ensure 50 per cent of drug procurement from manufacturers based in Tamil Nadu with price preference, and would have to reimburse the amount to the manufacturers if the final verdict was against it when the court takes up the case by the end of January, next year. The interim order was to ensure the local firms get at least half of the business from this year's tender process, which was in the final stages of completion, said sources.

By this verdict, if a manufacturer outside the state quotes Rs.12 for a drug, and the local manufacturer quotes Rs.12.40 for the same, TNMSC will have to consider the L1 higher quote by the local manufacturer, and will have to reimburse the additional amount if the verdict goes against it. The interim verdict is based on a series of cases filed recently by about eight drug manufacturing units in the state, which are participating in this year's tender process. The petitioners pleaded court's intervention to ensure 15 per cent price preference offered to SSI units based in Tamil Nadu while purchasing drugs and surgical items for the state run PHCs and hospitals, elaborated sources.

TNMSC has been 'misinterpreting' the state government rules on price preference for the last few years and the local manufacturers have not been able to get the benefits so far, petitioners and Pharmaceutical Manufacturers Association (PMA), Tamil Nadu, had contended in the court. PMA had been pursuing the case for more than two years in the High Court and with various authorities.

As per the Tamil Nadu Transparency in Tenders Act 1998, and amended by the Tamil Nadu Transparency in Tenders (Amendement) Act, Rule 29 (f), 'the evaluation and comparison shall include fifteen per cent price preference for domestic small scale industrial units and ten per cent price preference for the Public Sector Undertakings of the government in respect of products and quantities manufactured by them', the petitioners had said.

Responding to a PMA petition two months ago, the High Court had directed the drug manufacturers to approach the TNMSC to get a clear clarification on the matter and had observed the court could not act on assumptions of the petitioner. Thereafter the firms filed cases individually.

TNMSC, the nodal agency for procuring drugs and surgical items for the state run PHCs and hospitals in the state, purchases Rs.100 to Rs.130 crores worth of drugs and surgical items annually.