Emergence of a parallel drug distribution system run by the doctors and hospitals is badly hitting the pharmaceutical trade in Kerala. Many of the retail chemists are witnessing a sharp drop in their daily sales since several months now.

According to All Kerala Chemists and Druggists Association (AKCDA), the only organisation in the state for drug traders, at least 30 per cent of the Rs.700 crore annual drug sales in the state is being taken away by the hospitals and doctors.

Clause 5 of the Schedule K of the Drugs and Cosmetics Act grants an exemption to doctors with regard to supply of specified medicines to their patients provided such doctors will not open shops and sell the medicines across the counter.

Taking advantage of this provision, the hospitals and doctors are operating a well organised parallel drug trading machinery dealing in medicines worth many millions of rupees with the motive of profiteering and in the process bypassing all ethics, AN Mohan, president of AKCDA told Pharmabiz.com.

He said that while the government has stringent rules to monitor and control the drug trade, the rules are rather lax with regard to this parallel drug distribution system. Medical shops are subjected to routine inspections by the drug control authorities for quality, storage, purchase and sales of medicines. But, no such inspections are carried out to check the practices followed by operators running this parallel trade.

There is no such system of checking quality, purchase, sale and preservation of the drugs with such counters. "It is a matter of great concern for the government and the public as there is no mechanism to monitor whether substandard and counterfeit drugs are getting routed through these channels and reaching the public," says Mohan.

He said the provision to allow hospitals and doctors to freely stock and sell medicines from outside the state also lead to loss of revenue for the state government in the form of sales tax, as transactions do not come under the purview of Kerala Government Sales Tax Act.

He also said that all the 9000 odd drug traders in the state are registered ones and are making purchases from registered dealers only. As far as the retail members of AKCDA, they purchase medicines from the stockists of the companies, situated within the state, and thus their trades are only non-taxable and secondary sales are done in clear and transparent circumstances. Whereas, doctors and hospitals buy, stock and sell medicines from outside the state.

While the government insists on submission of full purchase details along with monthly submission of Sales Tax returns in Form No.9, the same is not made applicable to the hospitals and doctors. In some cases, the companies directly supply medicines to doctors and hospitals in bulk, he pointed out.