Setting up of the Central Drug Authority of India may prove `too heavy' for the pharmaceutical industry in the country with the proposal to have a flat increase in the present fee structure and introduction of a new fee for GMP certification inspection. These are the two key proposals to raise funds for running the Authority.

With no grant-in-aid being proposed to run the new CDAI and to meet the additional expenses including those required for creation and maintenance of new posts, the additional cost burden of CDAI is thus going to be directly passed on to the industry, it is learnt.

``The CDSCO earns revenues through import registration fees, new drug registration, licence fees etc. But it has the grant-in-aid funds too. Once the CDAI becomes functional, it is proposed to add new fees for GMP certification inspection and to increase the rate of present fees for import registration (started in 2002), new drug registration, licence for manufacturing/inspection/products (last revised in 2001) and clinical trials,'' sources said.

Except for new drug registration and licence fees, there would be an yearly increase of 5 per cent of fees in all other categories. In the first two categories, increase would not be on yearly basis. And the rate of increase proposed in all the categories would be clear only when the CDAI comes into force.

Interestingly, the Finance Ministry and the Planning Commission had already made clear to the health ministry that there would not be any budgetary or Plan support for the new authority. The health ministry is planning to mobilize the resources for operational and administrative costs and additional burdens of the CDAI fully through fees and other charges.

According to the proposal, the expenditure of the authority would vary from Rs 7.30 crore in the first year of operation to Rs 23.67 crore in the 10th year and the revenue would vary from Rs 21.37 crore to Rs 32.94 crore during the same period. Hence the net inflow of cash would also vary from Rs 14.07 crore to Rs 9.27 crore.

The Planning Commission had already noted this downward trend in the cash inflow. Normally it should be on the upward trend, as per the Panel. The health ministry cited the 10 per cent increase expected in the establishment costs and nominal increase in the fees as the reasons for this trend.

It also means that the fees could be increased anytime marginally to rectify the trend. The health ministry feels that if the rates could be enhanced at a five year interval, the cash flows would improve better.

The absence of grant-in-aid for the CDAI also throws up another threat to the industry. The fee structure could go up any time without restraint, proportionate to the rise in operational costs or any other future expenses of this autonomous body.