The sub-committee formed to address the issues relating to the commencement of retail generic outlets, planned by the Department of Pharmaceuticals in each district has finalized a draft which suggested turnover criteria to pick up suppliers instead of inviting open tenders for supply.

The panel, headed by Rajasthan Drugs and Pharmaceuticals Ltd managing director R K Vashistha, has reworked the list of unbranded generic medicines to be sold through the outlets. Although most of the members of the joint forum in the last meeting held on October 26 suggested tendering process, the panel has viewed that quality may be compromised in tender process as 'manufacturers may be quoting exceptionally low rates as witnessed in the government tenders, which sometimes are even below API cost'.

"Therefore, in order to ensure the quality, factors like criteria of turnover, compliance of revised Schedule-M, etc need to be considered. Further, if anybody offers the rate below the estimated cost, it should not be considered keeping in view the vital importance of quality and affordable prices. Further, the Pharma CPSEs are responsible to implement and run special outlets. The entire responsibilities may be put on Pharma CPSEs to identify manufacturers/suppliers and source the generic medicines. While arriving at the minimum acceptable cost, the details can also be had from established manufacturers i.e. members of OPPI, IDMA, etc. in addition to the members of SSI associations, specially leading Companies dealing with generics/branded generics in the market," the draft note said.

The sub-committee also recommended starting of generic outlets with the existing facilities available in government hospitals and medical colleges to begin with as fresh outlets would increase the costs and private parties may not be interested to invest in this business model. "A request can be made with their pharmacies for providing specific counter in the hospitals for generic medicines. The existing infrastructure of the outlets can be used including their manpower at initial stage. Once a reasonable turnover is achieved for generic drugs, specific outlets can be opened with necessary infrastructure ensuring viability of the retail outlets," it said. Turning down the proposal for appointing C&F agent for various companies, the panel favoured the distributor as the only lawful choice to store generic medicines and suggested 10 per cent margin for them.

"It was agreed in the Joint forum Meeting by members of OPPI, IDMA, SSI Associations that they may be offering 60 days site. However, their payment need to be ensured, for which Pharma CPSEs would provide necessary Bank Guarantee as they are the nodal agencies. Pharma CPSEs would be procuring the entire requirements and would be sourcing generic medicines and will also be ensuring supplies to the distributors. Therefore, the responsibility of making payment will have to be ensured by CPSEs. However, in turn CPSEs can obtain bank guarantee or can supply against post-dated cheques of nationalized banks to the distributors. The payment terms can subsequently be reviewed after minimum turnover is achieved. Since purchases from outlets would be on cash payment basis by the patients, the distributors will be able to invest their funds and it would be faster rotation of employed capital," the draft said.