Pharma policy needs a cure

Sep 26 2013, 21:17 IST
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SummaryRegulatory delays, confusing FDI policy and pricing norms are crippling the industry

The Indian pharma sector is currently grappling with a number of issues which need speedy resolution.

Regulatory delay in clinical trials is an issue impacting the pharma industry in a big way. The delays have severely derailed the innovation curve and also the growth of the clinical trial industry. Ineffective regulatory oversight, need for safeguards for informed consent for vulnerable populations and compensation guidelines for patients have emerged as major concerns. So in clinical trials, where India could have been a leader, it is losing out on opportunities. This has severely impacted the industry because without research and development, the industry can't move up the value chain. A robust regulatory system which safeguards the interests of all stakeholders is the need of the hour.

Another issue is the lack of clarity in FDI policy. Given the high current account deficit, India does require foreign direct investment. The FDI policy in pharma, however, gives confusing signals. For greenfield investments, 100% FDI is allowed by the automatic route but brownfield investments require Foreign Investment Promotion Board (FIPB) approval which often comes with conditions. The time taken in getting clearances for brownfield investments is a deterrent. The conditions placed by FIPB include the need to maintain production levels for National List of Essential Medicines (NLEM ) at the highest level in the three years preceding foreign investment, the need to maintain R&D expenses at the highest level in the three years preceding foreign investment, the need for information on transfer of technology to administrative ministries and FIPB, etc. The intention behind such restrictions may be good but it discourages investment. So, the need is for a FDI policy which addresses the concerns of the pharmaceutical industry while ensuring the affordability and availability of drugs in India.

The National Pharmaceutical Pricing Policy (NPPP) is another such issue. The government enhanced the scope of Drugs Price Control Order (DPCO) to include all drugs in the National List of Essential Medicines. Combination drugs in which one of the drugs is part of the NLEM were also brought under the ambit of DPCO. The government also changed the formula of arriving at the ceiling price from a cost-based method to a market-based method. Pharma companies are feeling the effects of the price controls associated with NPPP which will have a negative impact on their topline. While companies have accepted the reality of price controls, one issue which has affected

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