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Date: 18 February 2009
Venue: Centad conference Hall.
The
meeting began with the screening of IBN7 news report on excise duty
malpractices of pharma companies in Himachal Pradesh and Uttarakhand.
After a round of self introduction by each person present, Jagdeep
Singh from SPIC made a presentation titled “Small scale pharma
-problems and prospects’.
Jagdeep
Singh, SPIC (SME Pharma Industries Confederation)
SMEs
play an important role in Indian pharma sector. Around 5000 SMEs
produce 40 per cent of Rs. 70000 crores worth medicines in India.
They are the largest employer in pharma sector. For a long time,
these SMEs have been playing an important role in providing cheapest
medicines in abundance. Because of its competitive nature the
multinational pharma companies want to get rid of small pharma. There
have been concerted efforts to wipe out entire small pharma.
Policies, regulations and legislations are being amended to
jeopardise the independent existence of Small pharma. Changes in the
policies should be seen in this context of this ‘politics of
elimination.’ Amendment of Schedule M of the Drugs and cosmetic Act
is one of the major changes that have affected small pharma on a
considerably large scale. Multinationals have played an important
role in bringing in Schedule M/GMP standards in Indian pharma sector.
They have also spread the paranoia of quality among policy makers and
common people using various channels, while not sufficiently and
scientifically justifying their contentions and consequent actions.
With
the introduction of Schedule M, hundreds of SMEs were closed down.
The government has been completely indifferent in tackling the issues
of small pharma. The Pharma Technological Upgradation Fund (PTUF)
which was supposed to provide financial support for SMEs to make
their units Schedule M complaint is still stuck up in the pipeline.
It is a well accepted fact that making pharma units GMP/Schedule M
complaint requires a lot of financial investment. However the Indian
government has not been pro active in rendering any financial support
to SMEs in this regard. Najma Heptulla committee which studied this
issue very closely is expected to submit its report very soon. In a
study conducted by NIPER (National Institute of Pharmaceutical
Education and Research), it is observed that compliance of
GMP/schedule M would require a minimum investment of Rs. 20 crore
annually (?). This will hasten the extinction of small pharma from
the marketplace, thus threatening the closure of the pharmacy of the
developing world.
The
following are the other important points from Mr. Singh’s
presentation:
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Proposed
Central Drug Authority (CDA) Bill will have dire consequences to small
pharma as the States will have to divest their power to license
manufacturing units.
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96
per cent of SSI who went to Excise Free zones (EFZs) has lost their
money. All well to-do SSIs have collapsed
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294
drugs that were banned by DCGI are in fact, not irrational.
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GMP
compliance needs an investment of Rs. 20 crore. Why shouldn’t the
government subsidise or provide loans if they want compliance based on
international standards?
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A
minimum turnover clause of Rs. 20-50 crore stipulated as a condition
for participating in government tenders was anti-competitive as it
restricted entry of small pharma in government procurement activities.
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Civil
society organisations should not ask for complete waiving of taxes. It
is always good to have a tax deterrent.
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Over
the years the percentage of overheads has gone up to a great extent.
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Inexpensive
drugs are not of poor quality. Cited the example of Theophylline
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MRP
on excise duty has been counterproductive to a great extent as the
prices of drugs have gone up. This move also pushed the well-to-do SSIs
to Excise Free Zones (EFZ). Subsequently it led to unmanageable
disparity in taxation.
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New
stipulations under Minimum turn- over clause creates problem for small
scale pharma.
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The
amendment of Drugs and Cosmetics Act took place in the parliament
without proper discussion. According to the new amendment, if the
potency of the API (Active Pharmaceutical Ingredient) goes down due to
faulty storage, the manufacturer will be punished under a no-fault
liability rule.
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Overcharging
of medicines is very rampant. Government is supposed to collect Rs.
2000 crores as penalty fees from pharma companies for overcharging. In
this CIPLA happens to be the largest defaulter with 1500 crores.
Discussion
The
discussion that followed the presentation threw light on the issues
flagged off by Jagdeep Singh. At the very outset of the discussion,
Dinesh Abrol said that he was not in favour of EFZs at all. There is
a need to argue against these EFZs. Since the prices are largely
determined by market forces the price control is very necessary. He
also said that the presence of public sector was more effective than
DPCO. He also conveyed that he was not in favour of any unrestricted
small scale pharmaceutical industry. In the discussion that followed,
Gopakumar also supported Dr. Abrol’s take on DPCO. He also added
that if there was an effective DPCO then MNCs would be out of the
market. He was also very keen to know about the kind of incentive
environment small pharma is looking for. Then he informed that there
are two types of regulation in Europe. Meant for domestic needs and
for export purpose respectively- which may not require WHO-GMP
compliance. He also explained the definitions of ‘fake Drugs’,
‘misbranded drugs’ ‘Substandard’ and ‘Spurious drugs’.
Responding
to Dinesh Abrol and Gopakumar, Jagdeep singh said that DPCO has been
a failure. He said the present price control mechanism has a lot of
flaws. If it has to be effective the price control has to be extended
to all the drugs. He also suggested that ideally MAPE (Maximum
Allowable Post-manufacturing Expense) should be increased to 300 per
cent. Or at least 250 per cent should be ensured. While discussing
about the quality of drugs, he shared the information that 22% of the
substandard drugs came from a place called Buddi.
Dr.
Mira Shiva shared her concern on the pattern of drug production in
India. She brought in the issue of essential medicines and irrational
FDCs. She also enquired about the present waste management systems of
small pharma. One of the concerns raised was that of emergence of
drug resistance due to unethical practices. As she thought the issue
of EFZs is very crucial she wanted to know more about these units and
Excise duties. Apart from this she also opined that there was a need
to be very specific in opposing Schedule M. She also brought in the
issue about the growing presence of USFDA in India. She opined that
the setting up of USFDA offices in Mumbai and Delhi might have
serious implications on Indian regulatory system.
Thereafter,
LK Jain from SPIC made an intervention and said that most of the MNCs
do not have production units in India. Almost all of them are
operating on contract manufacturing. He also pointed out the issue of
unethical promotional practices. In some cases doctors are directly
paid cash for prescriptions.
Patenting
issue was discussed later. Dinesh Abrol was of the opinion that
ideally the pharma industry should get rid of product patent regime.
In the present context we should allow only the patents of New
Chemical Entities/molecules. He also suggested that we should explore
the possibilities of using Compulsory Licensing. Contributing to this
discussion, Gopakumar said that Compulsory Licensing had two bottle
necks. First, the three years of time period required to apply for CL
and second, no time limit given to dispose the application. It was
also suggested that SPIC should actively engage in both pre-grant and
post grant opposition as many patents have already been granted to
the so called ‘non patentable’ molecules. He exhorted upon the
SPIC members to make use of the CL mechanism in view of changing
alliances of the big Indian generic pharma, who may not be willing to
use such a mechanism.
The
issue of drug pricing was again raised by Gopakumar and he suggested
that SPIC take an open position on Price control. Subsequent to this,
Jagdeep shared that whenever the government introduced the price
control the pharma industry had threatened to stop production. He
held the view that DPCO was a good idea but something very difficult
to manage. He also opined that the NPPA had not been pro-active
enough ever since its inception. He said that when there is a
fluctuation in the prices of raw materials NPPA could not intervene
timely to readjust the drug prices. On the issue of Minimum turnover
clause restricting the entry of small players in the drug procurement
market, Mr. Yogesh Pai sought clarity on the issue and asked if the
matter was referred to the MRTP Commission. He raised a concern that
restricting entry of small players into the drug procurement would
drive out effective competition in the generic market. In replying to
the query raised in this regard, it was clarified by SPIC members
that they have not sought any opinion or advice from the MRTP. SPIC
was of the opinion that small players should be allowed without
placing standards on turnover requirements. If the concern was
regarding possible failure of small players to fulfil the procurement
orders, then it should be based on a fault rule/imposing penalties
etc… and not by setting turnover requirements.
Jagdeep
said that there was an urgent need to ask for relaxation of schedule
M for domestic market. He also pointed out that the Schedule M of
1990 and 2003 are entirely different.
Apart
from these major discussions, the meeting concluded with the
following decisions/action points:
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Organise
one more meeting in March to decide about future course of action
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Take
up study on the present status of small pharma in India. SPIC has
agreed to provide all necessary support for the research.
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To pursue the government to allow Cluster
Approach for Testing of medicines in view of exorbitant costs in terms
of Equipment and overheads.
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Explore the possibilities of local production of
HPLC and GC
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Excise duty is better deterrent for price control.
Taxation disparities created by TAX Holidays not to be supported. Since
the government is ending up with huge loss due to CST, GST is more
beneficial for the government as well as patients.
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All Contract Manufacturing of formulations
should be stopped as it leads to unwarranted price rise and
unhealthy marketing practices.
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Explore the possibilities of compulsory
licensing for drug production.
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Make use of pre-grant opposition provision to
stop ever-greening of patents and challenge frivolous patents. This may
also reduce the effect of patent thickets being strategically managed
by the big pharma to fence inventions from getting into the public
domain.
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Schedule M rationalization to be sought. Pursue
the government for the relaxation of Schedule M for domestic Market.
Trade and Public Health Programme of Centad is supported by Open Society Institute(ZUG)
List of Participants Attached
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