The National Pharmaceutical Pricing Authority (NPPA) has recommended to the ministry of chemicals and petrochemicals to do away with the notification S.O.134(E) of 2nd March 1995 on SSI exemption, with a view to monitor and regulate the prices of scheduled formulations manufactured by SSIs, it is learnt.
If the ministry accepts the recommendation, all the SSI units will have to get prior approval from NPPA for manufacturing scheduled drugs. The notification vide S.O. 134(E) dated 2nd March, 1995 provides for exemption of drug manufacturing units registered as small scale industry unit in respect of price fixation for non-ceiling packs of scheduled formulations under Drugs (Prices Control) Order, 1995 subject to fulfillment/compliance of certain conditions stipulated there in. NPPA says that many SSI units, which do not qualify for exemption, are manufacturing and selling drugs on the assumption that their status as SSI per se accords exemption to their products. The exemption clause is not automatic to all units. NPPA informed the ministry that it has observed that the scheme is being highly misused and are prepared to justify the action supported by facts and figures.
In 1999, the ministry stipulated by another notification that the exemption is allowed on three conditions if, a) it is an independent unit/company and not a subsidiary of or owned or controlled in any manner by any other undertaking which is not so exempted from the provisions of the Drugs (Prices Control) Order, 1995, (b) the formulations are marketed by the concerned unit/company in their own brand names and trade marks or in the brand or trade name of any other small scale industry unit and c) a declaration complying with conditions (i) and (ii) above along with a copy of registration certificate as a small scale industry unit.
Sources told Pharmabiz that if the government accepts the recommendation, it would be the death knell for SSI pharmaceutical units, already in the dying stage due to adverse policies like MRP based excise and Schedule M mandates. The two earlier DPCOs had price ceiling for scheduled drugs, which was also applicable for the SSIs. Sources noted that the move would mandate all the SSI manufacturers to go to Delhi for filing the applications, and then wait for NPPA to fix the prices. Normally, the process delays by at least a month. The SSIs will also have to appoint seasoned professionals for moving the papers and for regular correspondence with NPPA. Most of the 5000 to 6000 odd SSIs are mainly manufacturing scheduled formulations. Though they make 10 or 20 products, product registrations are done for 50 to 60 formulations anticipating job works from large manufacturers. The SSIs would have to pay NPPA the fees for filing applications of all the products registered by them.
S.V.Veeraamani, Vice Chairman, Indian Drug Manufacturers Association (IDMA) and also the SSI Committee Chairman of IDMA noted practically it would be impossible for NPPA to regulate and monitor the prices of drugs manufactured by SSIs, numbering over 5000 to 6000 units in the country. Considering an average 20 products per unit, NPPA will have to process at least 1, 20, 000 applications. This is impossible considering the present infrastructure with NPPA. “SSI units, which constitute 80 per cent of the drug manufacturing units in India have a market share of only 20 per cent of the drug production. We don’t understand why NPPA is so keen to control the drug prices of these small units,” noted Veeraamani.
SR Vaidya, President of All India Small Drug Manufacturers Association and co-chairman of IDMA SSI Committee said it was unfortunate that different government agencies were coming up with different ideas to kill an industry already in doldrums. While the government is considering to increase the turnover limit for excise exemption from Rs 1 to 5 crore on one hand, why another arm of the government is trying to take away the minor benefits enjoyed by the industry. The raw material costs of SSI formulation makers are marginally higher than the big units, which enjoy the advantages of huge quantity purchases, noted Vaidya.
T S Jaishankar, Chairman CIPI said it was unfortunate on the part of NPPA to further suffocate the SSIs under the pretext of finding fault with SSIs. He noted the recommendation of NPPA to the C&F ministry has significance considering the Drugs and Pharmaceuticals (Prices Regulation and Management) Act being planned by the Central Government to regulate the prices of essential drugs in the country.