‘’Recent regulatory changes are impacting the industry significantly’’

Dr Milind Antani

Pricing of drugs: The Ministry of Chemicals and Fertilizers notified the DPCO 2013 on May 15, 2013 that replaced the old price control order. The DPCO has put forth a mechanism to control prices of essential drugs using an objective formula. Under the formula, ceiling price is derived by calculating the average of retail prices charged by manufacturers who occupy more than one per cent market share. The operation of the Order has brought down the prices of the essential drugs but has affected large portion of the industry which is involved in manufacturing essential drugs. The formula forces all the players in the essential drug market to match the low prices charged by some other players. An important factor which has been overlooked while preparing the DPCO is that the quality of raw material makes a big difference in pricing of drug. Thus, because of DPCO, a significant number of market players have been forced to cut necessary margins or reduce quality of the drug, which has naturally impacted their growth.

Anay Shukla

Clinical trials: The Ministry of Health and Family Welfare notified the compensation related amendment to the Drugs and Cosmetics Rules, 1945 (Amendment) on January 30, 2013. In its present form, a sponsor is liable to pay for medical management of injury sustained by the trial subject even when the injury does not have any connection with the clinical trial. Further, the Amendment imposes a responsibility on the sponsor to pay compensation to the trial subject when the investigational drug does not produce the intended therapeutic effect. The regulators appear to have failed to understand that a clinical trial is an experimental trail, where in there is high likelihood that the investigational drug will not produce the intended therapeutic effect. As a result, the amendment has multiplied the risk of liability relating to compensation faced by the sponsor, and this has deterred numerous pharma companies, both local and international, from conducting clinical trials in India. This would in turn lead to reduced number of new drugs in Indian market as conducting clinical trial in India is a pre- requisite for marketing of a new drug in India. Audio-Video recording of informed consent process is likely to affect stakeholders as an additional infrastructure needs to be set up. The Drug Technical Advisory Board (DTAB) has submitted recommendations to the authorities to the Government considering the above concerns raised by various stakeholders.

Track and trade: The Director General of Foreign Trade, Department of Commerce enforced requirement of bar- coding on secondary level packaging of all exported pharma from January 1, 2013. The requirement to bar- code exported drugs is a welcome step since it enhances track and trace capability. However, the manner of its implementation has severely crippled small and medium size enterprises’ capacity to export pharma. The Government did not provide any relaxation or financial support to these cash- starved enterprises. Considering bar- coding equipment is costly, adhering to the requirement led to increase in packaging cost which in- turn eroded margins. Moreover, the requirement added procedural burden since existing label approved from the country of import had to be modified to accommodate the bar-code. This clearly demonstrates what was stated at the beginning, that recent regulatory changes are impacting the industry negatively.

– Dr Milind Antani, Nishith Desai Associates, Legal and Tax Counseling Worldwide & Anay Shukla, Member, Pharma and Life Science team, Nishith Desai Associates