Financial sustainability has been a matter of concern for Food and Drug Regulatory Agencies for several years. It has been found that the State Drug Regulatory Agencies have low license fee structure which does not cover the cost of testing of drugs. Also the Agencies have a flat license fee structure for all licenses and not graded by investment, capacity and turnover, according to a recent report prepared and submitted by AF Ferguson & Co (AFF.

Expenses in the Regulatory Agencies are mainly fixed in nature, with about 80 per cent of expenditure made on disbursing salaries to staff, leaving little scope for cost reduction.

AFF was retained by the Union Ministry of Health and Family Welfare, to carry out a study for assessing the financial sustainability of the food and drug authorities and testing agencies, whose capacities are being enhanced under the World Bank assisted Capacity Building Project.

The Central Drugs Standard Control Organisation (CDSCO) has been able to generate sufficient revenues in the last three years by tapping new areas such as clinical trials, registration of new drugs and overseas manufacturing sites, as per the report.

The report also revealed that on the one hand, there are vacancies up to 50 per cent in the 'inspector' posts, on the other hand the existing staff is under-utilised as each inspector draws about three samples a month. And as a result only about five per cent of licensees are subject to inspection each year.

Despite vacancies up to 35 per cent in technical posts, the laboratory staff is under-utilised due to low number of samples from inspectors and samples diverted to private laboratories for speedy testing.

The under-utilised infrastructure and fixed manpower costs have led to alarming per unit costs of testing which are higher than the testing charges of private laboratories for similar tests. The recovery in terms of fee being charged by the Government laboratories for sample testing obviously falls short of these costs, the report pointed.

There is an urgent need to improve capacity, infrastructure and testing in the regulatory departments. Effective utilisation and monitoring of existing manpower can lead to better sustainability, the report recommended.