Even as hectic efforts are going on in the Union Chemicals Ministry for framing a method to control the prices of drugs patented abroad and marketed here, the American pharmaceutical industry has come down heavily on the move and expressed reservations on the related clause proposed in the National Pharmaceutical Policy.

"We are extremely concerned about the proposed requirement, under the National Pharmaceutical Policy, for mandatory price negotiations prior to marketing approval of patented drugs launched in India," said the latest submission by the Pharmaceutical Research and Manufacturers of America (PhRMA).

The strong reservations of the US industry comes at a time when the Centre is in the process of evolving consensus on the issue, ahead of announcing the policy which is now under the scrutiny of the high-powered Group of Ministers. The Centre had set up a panel to consult the industry associations and other interested groups, and already held several rounds of meetings. According sources, in the Union Chemicals Ministry, the report of the committee is likely to be finalised soon.

"PhRMA members feel that this proposal represents an effort to effectively nullify the benefits of product patent protection and will discriminate against importers of drug products," the association said in its special 301 submission 2007, which has put India on the priority watch list.

India's effort is to ensure that drugs patented abroad remain affordable as and when the multinational companies launch them here, especially against the backdrop of expanding the list of medicines under price control as per the proposed national pharmaceutical policy.

"The draft policy contravenes the government's stated goal of liberalising the pharmaceutical sector by reducing government control over pricing of pharma products in India," the PhRMA said. The association claimed that its member companies operating in India faced high effective import duties for active ingredients and finished goods.

"Though the basic import duties for pharmaceutical products and devices average about 12.5 per cent, additional duties commensurate with the excise duty applicable on the same or similar product, even when there is no such product manufactured in India as well as other assessments, brings the effective import duty up to 38 per cent," the submission said.

It also alleged that the excessive duties on the reagents and equipment imported for use in R&D and manufacturing of biotech products make biotech operations difficult to sustain. "Compared to other Asian countries, the tariff rates are indeed very high," it said, calling for cut in import duty to enable the sector to realise the potential.

"The government of India has stated its intention to progressively lower import tariffs on pharmaceuticals. In 1996, the tariffs were brought down to 85 per cent with plans to further decrease rates to 25 per cent by the end of 1999. Progress has been however slow and rates remain unreasonably high. PhRMA urges US officials to insist that tariffs be brought down to zero, the level of many WTO signatories,'' the submission further said.