Financial Daily from THE HINDU group of publications
Tuesday, Dec 16, 2003
Financial Daily from THE HINDU group of publications Tuesday, Dec 16, 2003 |
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Industry & Economy
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Pharmaceuticals Move to create level-playing field for life-saving drugs P.T. Jyothi Datta
New Delhi , Dec. 15 THE debate on the definition of `life-saving' drugs has brought varying fortunes to pharmaceutical companies operating in the segment. Following-up on past Budgets that have first removed and subsequently imposed customs tariffs on life-saving drugs, this time around the parent Ministry is looking to provide the proverbial "level-playing field" between domestic and foreign pharma companies in the "life-saving" drugs space. The proposal from the Ministry of Chemicals and Fertilizers (C&F), as part of the pre-Budget exercise, seeks "to keep excise and customs duties at zero for drugs categorised as life-saving. If that is not the case, then the incidence should be equivalent on both the segments of the pharma industry, so that prices would be on par and the end-user benefits from reduced prices," Mr Vinay Kohli, Secretary, Chemicals and Petrochemicals, told Business Line. The categorisation of a "life-saving" drug is a tricky one, with pharma industry representatives often arguing that it was erroneous to define a select few drugs in the category, as even a paracetamol could be life-saving to a child with high-fever. However, for import purposes, about 126 drugs are categorised as life-saving. Two budgets ago, a basic customs duty of five per cent was imposed on some imported drugs, to appease players in the domestic drug industry who were seeking parity, since they were subject to excise duties of about 16 per cent. To resolve the feeling of discrimination in the domestic segment, last year's Budget further expanded the list of imported drugs that drew a 5 per cent basic customs duty. But the pharma industry is divided on who benefits from this move. Meanwhile, even the revised Drug Price Control Order (DPCO), the regulatory pricing framework from the Government, remains within legal jurisdiction over the issue of life-saving drugs. The existing life-saving list spans segments such as oncology or cancer drugs, virology (including anti-AIDS drugs) and nephrology or kidney-related drugs. Companies active in the oncology segment include Novartis, Nicholas Piramal India Ltd (NIPL), Dabur Pharma and Dr Reddy's Laboratories; virology includes companies such as Ranbaxy, Cipla, Hetero, etc and the nephrology segment comprises Johnson & Johnson and NIPL, among others. The proposals made by manufacturers of anti-retrovirals or anti-AIDS drugs would be taken forward to the Finance Ministry by the Health Ministry, which requires these drugs for its Government-supported programmes. The "life-saving" definition may bring with it anomalies. But Mr Kohli points out that the idea is to make these "critical" drugs accessible and affordable to the consumer. And there in lies the rationale behind the proposal that the C&F Ministry is set to make this year to the Finance Ministry.
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