Decisions in Regard to Modifications in Drug Policy '86
22. In the above background, the Government have decided to modify the Drug Policy, 1986 as follows
22.1.1 Industrial Licensing for all bulk drugs cleared by Drug Controller (India) and all their intermediates will be abolished, except in the cases of
22.1.2 Conditions stipulating mandatory supply of a percentage of bulk drug production to Non-associated Formulators will be abolished.
22.1.3 Licensing shall be abolished for formulations except in cases of specific cell/tissue targeted formulations.
22.1.4 Ratio parameters linking bulk drugs and formulations production and limiting the use of imported bulk drugs will stand abolished.
22.1.5 Broad-banding, Vocational restrictions and grant of COB licenses will be in accordance with the Industrial Policy.
(The Memorandum of Information prescribed by the Department of Industrial Development shall include an Addendum, to meet the additional requirement of the Drugs & Pharmaceuticals industry, as would be devised by the Department of Chemicals and Petrochemicals.)
22.2 Basic Stage Production
For achieving manufacture from the basic stages and arresting the regression towards manufacturing from later stage intermediates/penultimates, the tariff mechanism would be utilized. Imports of critical intermediates/penultimates may also be put in the negative list so as to arrest regression from basic stage manufacturing.
22.3 Review of Items Reserved for the Public Sector
Out of the fifteen drugs currently reserved, only five drugs namely Vitamin BI, Vitamin B2, Folic Acid, Tetracycline and Oxytetracycline, shall continue to be reserved for public sector units. The position will be reviewed after a period of three years.
22.4 Foreign Investment
22.4.1 Investment upto 51 per cent will be permitted in the case of all bulk drugs, their intermediates and formulations.
22.4.2 Investment above 51 per cent will be considered on a case by case basis in areas where investment is otherwise not forthcoming, particularly in the manufacture of bulk drugs from basic stages and their intermediates, and bulk drugs produced by the use of recombinant DNA technology as well as the specific cell tissue targeted formulations.
22.5 Foreign Technology Agreements
Automatic approval for foreign technology agreements shall be given in the case of all bulk drugs, their intermediates and formulations except those produced by the use of recombinant DNA technology, for which the existing procedure would continue.
22.6 Encouragement to Research & Development (R&D) Efforts
22.6.1 A new drug which has not been produced elsewhere, if developed through indigenous R&D would be put outside price control for a period of 10 years from the date of commercial production in favour of the Company who undertook the R&D.
22.6.2 The Department of Chemicals Petrochemicals would set up an Inter-Ministerial group to decide, within a set time frame, on measures to give further impetus to R&D in the Drug Sector.
22.6.3 The Ministry of Health and Family Welfare would further streamline the required procedures and steps for the quick evaluation and clearance of new drug applications, specially those developed through indigenous R&D.
22..7.1 Single List of Price Controlled Drugs & "Mape"
The system of price control may be operated through a Single list of price controlled drugs and formulations based thereon with a MAPE of 100 per cent.
22.7.3 Ceiling Prices
Ceiling prices would be fixed for commonly marketed standard pack sizes of price-controlled formulations and it would be obligatory for all, including small scale units, to follow the price so fixed.
22.7.4 Simplified Procedure
22.7.5 Encouragement to Production from Basic Stage
The rate of return in case of basic, manufacture would be higher by 4 per cent over the existing 14 per cent on net worth or 22 per cent on capital employed.
22.8 Setting Up of National Drug Authority
22.8.1 A National Drug Authority would be set up by an Act of the Parliament, to be steered by the Ministry of Health and Family Welfare, to look after the Quality Control aspects, Rational Use of Drugs and related matters as outlined in Paras 16-19 above.
22.8.2 For strengthening the drug control system including GMP and for encouraging R&D, a cess of 1% would be levied on production of drugs and pharmaceuticals through legislation, details of which would be worked out by the Ministry of Health and Family Welfare.
22.9 Coordination Between Ministries
A Coordination Committee consisting of Secretaries of the Ministries/Departments of Commerce, Revenue, Health, Biotechnology and Industrial Development and Chairman, Bureau of Industrial Costs and Prices will be set up under the chairmanship of Secretary (Chemicals and Petrochemicals) for monitoring the areas of key concern every quarter and for taking effective and timely action. The Chairman of the proposed National Pharmaceutical Pricing Authority would also be co-opted on this committee, as and when it is constituted.
22.10 Other Matters
The various aspects relating to promotion of Ayurvedic, Unani, Sidha, Homeopathic and traditional systems of medicines would be actively pursued and the machinery for carrying out these tasks would be adequately strengthened. To provide better focus to this important work, a separate Department, to look after all matters relating to development and promotion of these systems of medicines, would be created.