The Hindu Business Line : Finance Ministry to pen pharma fiscal sops story — `Positive proposals are beyond control of Chemicals and Fertilisers Dept'

Industry & Economy - Pharmaceuticals

Finance Ministry to pen pharma fiscal sops story — `Positive proposals are beyond control of Chemicals and Fertilisers Dept'

Our Bureau

The Health Ministry and the Revenue Department have estimated that free medicines for poor through health insurance or otherwise would incur an estimated expenditure of Rs 200 crore in the first two years of trial run in about 60 districts in the country.

New Delhi , Dec. 29

THE Finance Ministry will have to work out a mechanism to fund the various health schemes proposed in the draft pharmaceutical policy.

The policy has suggested either levying a two per cent health cess or providing funds worth Rs 6,500 crore required for implementation of these schemes.

It has also mooted bringing down the excise duty from 16 per cent to 8 per cent.

According to industry sources, "A decision on imposing the cess or raising funds through other sources would have to be taken by the Finance Ministry. While, the reduction of excise duty on pharma products could lead to a reduction in revenue collection, the sops given for research and development would have an implication on expenditure.

These are positive proposals in the policy, but beyond the control of the Department of Chemicals and Fertilisers." Many of the proposed health schemes are in line with the National Common Minimum Programme.

Similarly, the cancer drug subsidy would work out to Rs 100 crore in the first year and the free anti-AIDS drug programme would cost the Government about Rs 1,000 crore.

Contribution to National Illness Assistance Fund, State Illness Assistance Fund and District Illness Assistance Funds would cost Rs 1,000 crore per year. In place of the existing corpus fund of Rs 150 crore under the Department of Science and Technology, a new R&D Fund of Rs 150 crore per year is proposed.

Excise duty reduction: The policy has proposed lowering the excise duty from 16 per cent to 8 per cent on all medicines. Enhancement of exemption limit for small-scale units from excise duty from the present level of turnover of Rs 1 crore to Rs 5 crore has been mooted.

While it is proposed that the new pricing system would be decided in Part B of the policy, a new Drugs and Therapeutics (Regulation) Act (DATA) would replace the existing system of Drug Price (Control) Order.

Trade margins: On trade margins, it has been proposed that drugs under cost-based price control the wholesaler and retailer margins would be capped at 8 per cent and 16 per cent respectively for both branded and generics. For branded drugs not under price control, the wholesaler can charge a margin of 10 per cent and the retailer can charge 20 per cent while for generics, the wholesaler and retailer margins have been capped at 15 per cent and 35 per cent respectively. All the trade margins would be calculated on the MRP of the drug.

The policy has also stressed on promotion of generic drugs as they are priced lower than branded products. It said that procurement and distribution of drugs through the public health system would preferably be for generic drugs and that branding of drugs and other therapeutics should be brought under the Central drug regulatory system. The drug regulator must be required to maintain a database on brands and their compositions, and the drug regulator must compulsorily approve all brand registration of drugs. In particular, no change should be permitted in the composition of a given brand.