The small scale pharma units in the country have sought the intervention of the law makers in preventing the Union Health Ministry’s efforts for export licensing (CoPP) and also the centralization of drug licensing by creation of Central Drug Authority (CDA). The SME Pharma Industries Confederation (SPIC), which claims to represent around 5000 SSI pharma units across the country, has shot off letters to more than 800 Members of Parliament (both Lok Sabha and Rajya Sabha) in this regard.

“We request all concerned, including hon'ble law makers, not to allow amendment in laws or centralization of licensing either by creation of Central Drug Authority or by Centralizing Export Licensing etc,” the letter to the MPs said.

The letter, which all along accuses the Health Ministry for colluding with multinational companies (MNCs) to eliminate the small and medium enterprises (SMEs), argues that the prices of medicines were brought down by the SMEs, which contribute about 40 percent of the Rs 90,000 crore worth of medicines produced in the country, from 'Highest in the World' levels in 1960s (when MNCs monopolized the drug market) to the 'lowest in the world levels' without any government support.

The SPIC apprises the law makers that the union health ministry during the last some years has been effecting irrational changes in laws and policies to stoke the SSIs. Schedule M of the Drugs & Cosmetics Act was amended in 2001 and implemented in 2005. It mandates upgradation of drug industry to levels exceeding the WHO-GMP standards on the pretext of improving quality. The very Department which amended it could not upgrade its own vaccine units in Chennai, Coonoor and Kasauli till 2008 and closed them despite abundant funds. Unable to comply, hundreds of SMEs have been shut down including 285 in Maharashtra and 90 in Haryana. Thousands are being squeezed into elimination as they are unable to comply due to heavy cost of upgradation.

MRP-based excise on medicines was levied in January 2005 with the stated objective of revenue increase and price reduction. But anomalies caused exodus of 70 percent industry to excise free zones where they found it convenient to print higher MRP on labels without having to pay extra tax. This resulted in upto 326 percent price rise (as per NIPER report) and revenue loss amounting to thousands of crores of rupees. Government does not wish to compile such data as revealed in Rajya Sabha Question 1715. Despite the policy having proved anomalous and counter to objectives, SMEs were deprived of relief, SPIC letter says.

This was followed by Drugs Act Amendment Bill 2008 which increased jail term to 10 years with fine of Rs 10 lakh for spurious drugs. The objective was to deal with clandestine operators whom government admits as being the culprits in Parliament Question 481. But legitimate pharma SMEs have been targeted as there are no legally binding safeguards which were promised by joint secretary and DCGI before implementation of Bill. The motive is clear. Government allowed prices to skyrocket in the last five years. High priced brands of MNCs ought to be counterfeited like 1000 rupee notes. The Bill protects such brands and simultaneously targets SMEs, SPIC regretted.

The letter further says that India exports around Rs.50,000 crore worth of affordable generics mostly to non-patent countries. This adversely affects MNC profits as it deprives them of sales of their patent versions which are extremely high priced. A tablet of Viagra fetches Rs 450 while its generic version is exported for less than Rs 1 each from India. To restrict such exports, issue of Export Licenses known as Certificate of Pharmaceutical Product (CoPP) was recently centralized by depriving states of the powers.

On the CDA issue the letter says that the purpose is simple. Powerful MNCs can use CDA as a single window to eliminate SMEs using laws like Schedule M and Export Licensing whereas 28 States cannot be influenced by MNCs. When such a Bill was originally introduced in Rajya Sabha in 2007, objections were raised with the Select Committee on ministry of health in January 2008 on the grounds that CDA could create an outfit which is absolutely powerful - meaning 'absolutely corrupt'. But several attempts were subsequently made to push the Bill through.