The department of pharmaceuticals (DoP) is considering to seek the Cabinet approval for the revival of purchase preference policy (PPP), which expired last year in August. The state-run Indian Drugs and Pharmaceuticals Ltd (IDPL), one of the 5 sick units under DoP, has started making more losses after the policy lapsed.
Over the last five years, the government has provided purchase preference for 102 medicines manufactured by the public sector units through this scheme. The scheme has helped in increasing capacity utilisation, improving top-line and bottom-line for profit making PSUs while helping in reduction of loss for the PSUs in rehabilitation mode.
“PPP is likely to be revived, especially to boost earnings of the sick units,” said Raja Shekhar Vundru, joint secretary of DoP. “We are contemplating to draft a cabinet note. The department has already informed the state governments that extension of PPP is in active consideration and it is one of the ways to provide cheap, high quality drugs to public.”
Withdrawal of this preference at this crucial juncture will nullify the benefits achieved and endanger the benefits of the budgetary support envisaged in the 12th Five Year Plan.
“It is absolutely essential to continue this preference for the period of 12th five year plan,” said an official familiar with the developments on the proposal draft. “Instead of the bidding system followed presently, the procurement agency can sign five-year contract with the PSUs under the policy.” The drugs procured under the scheme are discounted up to 35%.