Pharmaceutical Policy 2002

Pharmaceutical
Policy 2002

Intended Learning Outcomes

At the
end of this lecture, the student will be able to:

  1.  Indicate the reasons for the
    implementation of Pharmaceutical Policy 2202

  2.  Recall
    the objectives of Pharmaceutical Policy 2002

  3.  Discuss the salient features of this
    policy

Pharmaceutical Policy-2002

       The
basic objectives of Government’s Policy relating to the drugs and
pharmaceutical sector were enumerated in the Drug Policy of 1986.

       The
drug and pharmaceutical industry in the country today faces new challenges on account
of liberalization of the Indian economy, the globalization of the world economy
and on account of new obligations undertaken by India under the WTO Agreements.

       These
challenges require a change in emphasis in the current pharmaceutical policy
and the need for new initiatives beyond those enumerated in the Drug Policy
1986, as modified in 1994, so that policy inputs are directed more towards
promoting accelerated growth of the pharmaceutical industry and towards making
it more internationally competitive.

       The
need for radically improving the policy framework for knowledge-based industry
has also been acknowledged by the Government

       The
Prime Minister’s Advisory Council on Trade and Industry has made important
recommendations regarding knowledge-based industry

       The
pharmaceutical industry has been identified as one of the most important
knowledge based industries in which India has a comparative advantage

       The
process of liberalization set in motion in 1991, has considerably reduced the
scope of industrial licensing and demolished many non-tariff barriers to
imports.

Important steps already taken in this regard are: –

        Industrial licensing for the manufacture of
all drugs and pharmaceuticals has been abolished except for bulk drugs produced
by the use of recombinant DNA technology, bulk drugs requiring in-vivo use of
nucleic acids, and specific cell/tissue targeted formulations

        Reservation of 5 drugs for manufacture by the
public sector only was abolished in Feb.1999, thus opening them up for
manufacture by the private sector also

       Foreign
investment through automatic route was raised from 51% to 74% in March, 2000
and the same has been raised to 100%

       Automatic
approval for Foreign Technology Agreements is being 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 procedure prescribed by the
Government would be followed

        Drugs and pharmaceuticals manufacturing units
in the public sector are being allowed to face competition including
competition from imports. Wherever possible, these units are being privatized

        Extending the facility of weighted deductions
of 150% of the expenditure on in-house research and development to cover as
eligible expenditure, the expenditure on filing patents, obtaining regulatory
approvals and clinical trials besides R&D in biotechnology

       Introduction
of the Patents (Second Amendment) bill in the Parliament. It, inter-alia,
provides for the extension in the life of a patent to 20 years

       The
impact of the policies enunciated, from time to time, by the Government has
been salutary. It has enabled the pharmaceutical industry to meet almost entirely
the country’s demand for formulations and substantially for bulk drugs

       In
the process the pharmaceutical industry in India has achieved global
recognition as a low cost producer and supplier of quality bulk drugs and
formulations to the world. In 1999-2000, drugs and pharmaceutical exports were
Rs.6631 crores out of a total production of Rs.19,737 crores

       However,
two major issues have surfaced on account of globalization and implementation
of our obligations under TRIPs which impact on long-term competitiveness of
Indian industry

       These
have been addressed in the Pharmaceutical Policy-2002

       A
reorientation of the objectives of the current policy has also become necessary
on account of these issues:-

  1. The
    essentiality of improving incentives for research and development in the
    Indian pharmaceutical industry, to enable the industry to achieve
    sustainable growth particularly in view of anticipated changes in the
    Patent Law;

  2. The
    need for reducing further the rigours of price control particularly in
    view of the ongoing process of liberalization

Objectives

The main objectives of this policy are:-

 a. Ensuring abundant
availability at reasonable prices within the country of good quality essential
pharmaceuticals of mass consumption

 b. Strengthening the
indigenous capability for cost effective quality production and exports of
pharmaceuticals by reducing barriers to trade in the pharmaceutical sector

c. Strengthening the system of quality control over drug and
pharmaceutical production and distribution to make quality an essential
attribute of the Indian pharmaceutical industry and promoting rational use of
pharmaceuticals

d. Encouraging R&D in the pharmaceutical sector in a
manner compatible with the country’s needs and with particular focus on
diseases endemic or relevant to India by creating an environment conducive to
channelizing a higher level of investment into R&D in pharmaceuticals in
India

 e. Creating an
incentive framework for the pharmaceutical industry which promotes new
investment into pharmaceutical industry and encourages the introduction of new
technologies and new drugs

       In
order to strengthen the pharmaceutical industry’s research and development
capabilities and to identify the support required by Indian pharmaceutical
companies to undertake domestic R&D, a Committee was set up in 1999 by this
Department by the name of Pharmaceutical Research and Development Committee
(PRDC) under the Chairmanship of Director General of CSIR

        To qualify as R&D intensive company in
India, the PRDC has suggested following conditions (gold standards) :-

  1.  Invest at least 5% of its turnover per
    annum in R&D

  2.  Invest at least Rs.10 Crore per annum in
    innovative research including new drug development, new delivery systems
    etc. in India

  3.  Employ at least 100 research scientists
    in R&D in India

  4.  Has been granted at least 10 patents for
    research done in India

  5.  Own and operate manufacturing facilities
    in India

Pharmaceutical Research and Development Committee (PRDC)

       The
Pharmaceutical Research & Development Committee has recommended in its
report, submitted inter-alia, the setting up of a Drug Development Promotion
Foundation (DDPF) and a Pharmaceutical Research & Development Support Fund
(PRDSF). Necessary action in this regard has been initiated

       As
far as the question of price control is concerned, the span of control has been
gradually reduced since 1979. Presently, under DPCO, 1995 there are 74
bulk drugs and their formulations under price control covering approximately
40% of the total market

       The
functioning of the Drugs (Price Control) Order, 1995, has brought to light some
problems in the administration of the price control mechanism for drugs and
pharmaceuticals.

Drug Development Promotion Foundation (DDPF) and a Pharmaceutical Research & Development
Support Fund (PRDSF).

       In
order to review the current drug price control mechanism, with the objective,
inter-alia, of reducing the rigours of price control, where they have become
counter-productive, a committee, called the Drugs Price Control Review
Committee (DPCRC), under the Chairmanship of Secretary, Department of
Chemicals & Petrochemicals was set up in 1999, which has given its report

       The
recommendations of DPCRC have been examined and taken into account while
formulating the “Pharmaceutical Policy – 2002”

       It
has emerged that the domestic drugs and pharmaceuticals industry needs
reorientation in order to meet the challenges and harness opportunities arising
out of the liberalisation of the economy and the impending advent of the
product patent regime

       It
has been decided that the span of price control over drugs and pharmaceuticals
would be reduced substantially

        However, keeping in view the interest of the
weaker sections of the society, it is proposed that the Government will retain
the power to intervene comprehensively in cases where prices behave abnormally

       In
view of the steps already taken and in the light of the approach indicated in
the foregoing paragraphs, the decisions of the Government are detailed below :-

I.           
Industrial licensing for all bulk drugs
cleared by Drug Controller General (India), all their intermediates and
formulations will be abolished, subject to stipulations laid down from time to
time in the Industrial Policy, except in the cases of

·        
bulk drugs produced by the use of recombinant
DNA technology

·        
bulk drugs requiring in-vivo use of nucleic
acids as the active principles and

·        
specific cell/tissue targeted formulations

II. Foreign
investment upto 100% will be permitted, subject to stipulations laid down from
time to time in the Industrial Policy, through the automatic route in the case
of all bulk drugs cleared by Drug Controller General (India), all their
intermediates and formulations, except those, referred to in para 12.I above,
kept under industrial licensing.

III. Foreign Technology Agreements Automatic approval
for Foreign Technology Agreements will be available in the case of all bulk
drugs cleared by Drug Controller General (India), all their intermediates and
formulations, except those, referred to in para 12.I above, kept under
industrial licensing for which a special procedure prescribed by the Government
would be followed

IV. Imports of drugs and pharmaceuticals will be as
per EXIM policy in force. A centralized system of registration will be
introduced under the Drugs and Cosmetics Act and Rules made thereunder.
Ministry of Health and Family Welfare will enforce strict regulatory processes
for import of bulk drugs and formulations

 V. Encouragement
to Research and Development (R&D)

(a)   
In principle approval to the establishment
of the Pharmaceutical Research and Development Support Fund (PRDSF) under the
administrative control of the Department of Science and Technology, which will
also constitute a Drug Development Promotion Board (DDPB) on the lines of the
Technology Development Board to administer the utilization of the PRDSF.

(b)  
(b) With a view to encouraging generation of
intellectual property and facilitating indigenous endeavours in pharma R&D,
appropriate fiscal incentives would be provided

VI. Quality aspects The Ministry of Health &
Family Welfare would

     (i)           
progressively benchmark the regulatory
standards against the international standards for manufacturing,

   (ii)           
 (ii)
progressively harmonize standards for clinical testing with international
practices

 (iii)           
 (iii)
streamline the procedures and steps for quick evaluation and clearance of new
drug applications, developed in India through indigenous R&D, and (iv) set
up a world class Central Drug Standard Control Organisation (CDSCO) by
modernizing, restructuring and reforming the existing system and establish an
effective network of drugs standards enforcement administrations in the States
with the CDSCO as a nodal center, to ensure high standards of quality, safety
and efficacy of drugs and pharmaceuticals.

VII. Pharma
Education and Training

       The
National Institute of Pharmaceutical Education and Research (NIPER) has been
set up by the Government of India as an institute of “national
importance” to achieve excellence in pharmaceutical sciences and
technologies, education and training

       Through
this institute, Government’s endeavor will be to upgrade the standards of
pharmacy education and R&D

        Besides tackling problems of human resources
development for academia and the indigenous pharmaceutical industry, the
institute will make efforts to maximize collaborative research with the
industry and other technical institutes in the area of drug discovery and
pharma technology development

Summary

       Policy
relating to the drugs and pharmaceutical sector were enumerated in the Drug
Policy of 1986

       The
policy norms are directed more towards promoting accelerated growth of the
pharmaceutical industry and towards making it more internationally competitive

       The
process of liberalization set in motion in 1991, has considerably reduced the
scope of industrial licensing and demolished many non-tariff barriers to
imports

       The
pharmaceutical industry has been identified as one of the most important
knowledge based industries in which India has a comparative advantage

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