Pharma policy draft for halving excise duty to 8 percent

Posted AtWebIndia

The draft of New Pharmaceutical Policy 2006 seeks to strengthen the Drug Regulatory System, Public-Private Partnership for anti-cancer and anti HIV/AIDS drugs while recommending reduction in the excise duty on all Pharmaceutical products from 16 to 8 per cent and levying of health cess of 2 per cent.

It also suggested keeping trade margins under check by fixing Maximum Retail Price (MRP) inclusive of all taxes at 15 per cent for wholesale and 35 per cent for retail besides mandating the bulk purchases by the Government for public health requirements at a price 50 per cent of MRP in case drugs under price control by NPPA and 65 per cent for other drugs.

In addition to this, the draft suggested that there would be negotiated price of all patented drungs and debranded generics be preferred for the government's procurement.

After eliciting views from various stake-holders and general public, the New Pharmaceutical Policy circulated by the Ministry of Chemcials and Fertilizers, will go for Cabinet in the middle of February 2006.

The major initiatives of the New Draft Policy will be as follows: Strengthening of Drug Regulatory System.

Public-Private Partnership Programme for Anti-Cancer and Anti-HIV/AIDS Drugs.

Price negotiations mechanism for Patented Drugs.

Fixing a ceiling on trade margins.

Reduction in the Excise duty on all pharmaceutical products from 16 to 8 per cent.

Enhancing of the exemption limit of small scale units from excise duty from the present level of turnover of Rs 1 crores to Rs 5 crores.

Maximum Retail Price (MRP) of the medicines should be inclusive of all taxes.

Strengthening/Computerisation of NPPA Streamlining of Bulk Procurement system for Drugs by the Government.

Promotion of Generic Drugs by keeping them outside price control and by giving them preference in Government purchases.

Strengthening of Pharma PSUs and revival of IDPL, HAL and BCPL.

Purchase Preference to Pharma Public Sector Undertakings. (Rs 300 crore out of the estimated Rs.3000 crore of Govt purchases) Introducting of a New scheme by the name of ‘Rashtriya Swasthya Bima Yojana’ is proposed to be launched in the country for the BPL families.

Larger allocation of funds for National Illness Assistance Fund, State Illness Assistance Funds & District Illness Assistance Funds for people below poverty line through four public sector insurance companies.

Health Cess of 2 per cent for funding the following the Schemes for poor, he subsidy scheme for anti-cancer drugs and to finance the expansion of AIDS treatment centres for additional AIDS patients throughout the country through NACO.

Expenditure incurred on clinical trials to be made eligible for above tax benefits under R&D etc.

Introduction of Pharmaceutical Technology Upgradation Fund Scheme of 51 pr cent Interest Subsidy for implementation of Schedule M of Drugs and Cosmetics Rules for Good Manufacturing Practices.

Creation of Settlement Commission to settle ongoing disputed amount by way of overcharging and launching of One-Time Settlement scheme on the lines of Amnesty schemes under Income Tax for DPCO 979 cases.

Creation of Drug Policy Monitoring and Awareness Fund out of proceeds of overcharged amount.

Creation of World class infrastructure in order to enable India to achieve a leading position as the Drug Maker of the World through Pharma Parks/SFZs for Pharma Industry. Creation of 25 Pharma Parks in 5 years on the lines of Textile parks.

Greater Thrust on Pharma Exports.

Creation of Pharmaceutical Advisory Forum constituted under the chairmanship of Minister of Chemicals and Fertilizers in order to have a meaningful dialogue amongst all stakeholders on various issues concerning Drug Policy.

December 29, 2005