labels: industry - general, pharmaceuticals
New Drugs Act: What''s in store for Indian drug industry?news
19 October 2006

CNBC-TV18 has obtained a copy of the draft Drugs Act, which arms the government with sweeping powers over drug prices. CNBC-TV18's exclusive report on what's in store for the Indian drug industry.

Medicines are sure to become more affordable for Indians. The government is arming itself with the power to regulate prices of drugs, and not only those produced in the country but also imported drugs in segments such as cancer and heart diseases.

It plans to do this by bringing in a legislation to control drug prices. CNBC-TV18 learns that a new Act called the Drugs Price Regulation and Control Act has been drafted. This would replace the current system of price orders issued under the Essential Commodities Act.

The intention is clearly to ensure that patented drugs meet the health care needs of the nation and are made affordable. This move seems intended to curb the profit motive of unscrupulous producers.

The new Act will empower the government to seek cost data of all drugs, whether manufactured domestically or abroad. The Draft Act also proposes that patented drugs can only be sold after companies negotiate prices with the government. The negotiated price will then be the maximum selling price including taxes.

The Act, if passed in its current form, will empower the government to control prices of drugs manufactured in India or abroad for as long as it wants. And in a case of Health emergencies or when there is an urgent requirement of a particular drug, prices could be further reviewed.

The government would also determine different sets of prices of drugs, one that will be sold at market price and another sold to the Government for public health needs. Importantly, certain medical devices like 'stents', which are becoming increasingly popular for heart patients and are often higly priced will also be brought under the price control.

Moreover, to regulate production and distribution of drugs, manufacturers could also be told to sell bulk drugs to other manufacturers. Companies could also be asked to furnish information on bulk drugs and formulations to the government whenever it deems fit. Those manufacturers, who do not comply would be penalised.

The government would also fix trade margins for distributors and retailers from time to time. In keeping with its promise to boost original research, the government has also made enough provisions to reward innovative research done by drugmakers within the country.

The government will also have the power to approve a brand name and can prevent changes in composition of products marketed under approved brand names. The Act also provides for a Drugs and Pharma Appelate Tribunal to be set up for the settlement of cases of price overcharging.

The tribunal would hear all appeals against orders passed by the national pharma pricing authority. The intention is not just to temper pricing powers of manufacturers but also to check abuse of regulatory powers. The Draft Act has been circulated to key ministries - comments from whom are expected by the month end.

 search domain-b
New Drugs Act: What''s in store for Indian drug industry?