A planned law to control drug prices which raised fears of backdoor nationalisation in the industry seeks to confer the government with sweeping powers to regulate the production, supply, distribution and the maximum retail prices of both bulk drug intermediates and end-use formulations. Differences have already erupted within the government over the Bill.
The Chemicals and Fertiliser Ministry has come out with the draft Drugs ( Price Regulation and Control) Bill, 2006, a copy of which was obtained by Hindustan Times.
The Bill categorically states that “government, by order, may provide for regulating the production, supply and distribution” of bulk drugs or formulations if the government feels that it is necessary to do so.
Section 3 of the Bill also seeks to confer the government with powers to impose a ceiling on the maximum sale price or control the price in any manner of "any individual, class or category of drug or formulation" for any period of time. This is irrespective of whether a drug is manufactured in India or outside.
The price control, the draft Bill says, may be imposed by the government if it "considers it necessary to do so in public interest".
In addition, the Bill also seeks to provide the government with powers to inspect the premises of drug manufacturers for verification "through on-the-spot study of manufacturing processes and facilities."
The proposed Bill seeks to replace the existing Drugs (Price Control) Order (DPCO) which comes under the ambit of Section 3 of the Essential Commodities Act, 1955.
Another contentious area in the draft concerns price negotiations on patented drugs, In the proposed Bill, Section 9 provides for price negotiations in respect of patented drugs, a measure which has been opposed by the Commerce and Industry Ministry.
In its comments on the draft bill, the commerce ministry has said that “this is a provision, which may not be able to meet strict standards of transparency, and needs to be kept out of legislation."
A top-level executive in a leading pharmaceutical company, who did not wish to be identified, told Hindustan Times that under the proposed Bill, the government would be able to fix the price of any bulk drug or formulation and a distinction between scheduled and non-scheduled formulations appears to have been dropped.
Last week,Chemicals and Fertiliser Minister Ram Vilas Paswan had asked the industry to have a heart for the poor who cannot afford expensive medicines.
The minister has been in the thick of a controversy, in which he clashed with industry officials over price controls after realising that some voluntary restraints on margins proposed by the industry would in effect mean little for retail customers.
"There is still a wide gap between the reasonable prices and affordable prices in a country such as India where almost 30 crore of its population lives below the poverty line," the minister had told pharmaceutical industry leaders at an industry conference.
The managing director of Pfizer India, the Indian arm of American drug giant Pfizer, Kewal Handa, had said that measures outlined in the new draft policy amounted to "de facto nationalisation" of the pharmaceutical industry.