The government of Tamil Nadu will convene pre-tender meeting of medicine suppliers of the Tamil Nadu Medical Services Corporation (TNMSC) in order to resolve their problems including charging of ‘liquidated damages’ for breach of contract, it is learnt.

According to sources, the state health secretary has agreed to a delegation of pharma manufacturers that he would consider measures to encourage suppliers to participate in tender proceedings for smooth supply of medicines to the state’s requirements without putting the industry into troubles.

A team of delegation comprising leaders of Pharmaceutical Manufacturers Association of Tamil Nadu (PMA) and TN IDMA called on the state health secretary recently, and apprised him of their predicament in fulfilling the promises agreed upon by them in the tenders. The health secretary, J Radhakrishnan, assured the delegation that he would convene a meeting of tender participants before the notification inviting tenders is released and heed to their problems. Most probably the first pre-bid meeting of suppliers will be held in the first week of February and the secretary will chair it, sources informed Pharmabiz.

While sharing with Pharmabiz the meeting details with the state health secretary, an industry leader said the government is very much aware about the problems and the loss borne by the suppliers when a default of supply is occurred in the stipulated time. So to become industry-friendly and attract more participants to the tender process, government will reach an understanding with the industry people for a win-win strategy.

As per the present tender conditions, TNMSC is charging liquidated damages at a rate of 20 per cent value of unsupplied quantity for 61-90 days and above 100 days it is charged at 30 per cent. The memorandum given to the health secretary by PMA says that its members supplying to TNMSC are losing money because of the impracticable liquidation damages system adopted by the Corporation. Quoting other departments, the association wanted the government to raise the period calculated for charging liquidated damages of 0.5 per cent from per day to per week.

The representation to the government  further states that TNMSC currently allots only 40-50 per cent supply of the total requirement of medicines to Tamil Nadu pharmaceutical manufacturers, and diverts the balance quantity to other states. The delegation claims that all other states in the country place the full quantity order with their own manufacturers, and only for those not available with them are outsourced.

The delegation complained to the health secretary that TNMSC is charging penalty for liquidated damages without any prior information or show cause notice. They wanted the government to inform the suppliers the details of LD assessment, and deductions should be made only after discussion with them.