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Govt may raise licence fees of global drug makers by five times

LiveMint logoLiveMint 01-10-2017 Teena Thacker

New Delhi: Multinational manufacturers of drugs and medical devices may soon have to pay higher licence and registration fees in India, with the government set to issue a notification to this effect.

The ministry of health and family welfare is ready to notify new rules under the Drugs and Cosmetics Act, 1940, increasing the fee for site registration and product approval by over five times, a government official aware of the matter said on condition of anonymity.

The move comes almost nine months after India’s regulatory body on drugs and devices proposed the fee hike in draft rules for global companies operating or intending to market products in India.

Under the new rules, site registration fee for importing medicines may go up from $1,500 to $10,000 and that for imported pharmaceutical products may go up from $1,000 for each product to $5,000.

The Central Drugs Standard Control Organisation (CDSCO) last updated the fee structure in 2003.

The government charges fees for grant of registration certificates, licences for import of drugs and medical devices, permissions for clinical trials and import of drugs for tests and overseas inspections.

CDSCO, the regulator for pharmaceuticals and medical devices, felt the revision was needed as fee standards were too low and had not kept up with inflation. The draft rules were followed by consultations with the pharma industry.

“The revision of fees was considered necessary as the current fee was not upgraded in spite of the steep price in the expenditure incurred by the government for provision these services,” said the draft notification reviewed by Mint.

The cost of registration in India has been extremely low.

The cost of registration in India has been extremely low. Recently, even the commerce ministry expressed its concern over the cost of registration in India, which is an average of Rs25,000 per product, while in some countries, it is up to the equivalent of Rs2.5 crore per product. Concerns were also expressed over the import of active pharmaceutical ingredients (API) from China, which supplies 60% of India’s requirement.

While registration per product costs about $1,000 in India, similar registration costs about $35,000 per product in China and much more in Japan.

D.G. Shah, secretary general of the Indian Pharmaceutical Alliance (IPA) said the move is consistent with the government policy on indigenisation. “US regulators recently increased the fees by 143%. India is only trying to establish parity with fees charged by foreign regulators”.

The regulatory body also proposed to charging fees for activities carried out by the CDSCO involving inspection, review of dossiers for grant of various certificates and approvals.

“No fee is collected at present in respect of many items. It is proposed to charge fee for these activities. The fees charged for grant of various manufacturing and sale licence by the state remained constant for well over 10 years. The fee for applications for new drugs in US and other development countries is very high as compared to the meagre fee of Rs50,000 charged in India,” the document adds further.

“This is having huge impact on the Indian bulk drug industry. The proposed fee for site registration and product is minimum as compared to other countries’ fee,” said another expert from industry lobby, requesting anonymity.

The Indian Drugs’ manufacturing Association (IDMA) too welcomed the move. “The increase in fee structure for imports specially for bulk drugs is very reasonable and long overdue. We are confident that all API manufacturing units in India will rise to the occasion and increase their production capacities and take up additional APIs for production to ensure that there is no shortage,” said a representative from IDMA who did not wish to be named.

Some believe that costs will be passed on to the consumer.

“Tit-for-tat in this does not work. You have to see what is sustainable to make the import supply chain work smoothly,” said another industry expert.

“The government and India’s drug pricing watchdog-National Pharmaceuticals Pricing Authority (NPPA), have taken a number of steps to bring down the cost of medicines and implants in the country for the benefit of the common man. However, increasing the cost of registration for pharma and medical device companies by the government may have the effect of increasing the price of medicines and devices since these companies will have to recover the increased registration and regulatory costs and fees from the sale of their products only. In increasing the registration fee, the government has to keep the financial viability of these companies in mind,” said Dharminder Nagar, managing director, Paras Healthcare Ltd.

Global pharmaceutical distributor GNH India too shared the same views. “The increase in registration prices by the government of India is a response to the fact that the US has increased its pre-registration fees to $170,000 for registration per product. However, engaging in a price war with the US at this point will not bode well for anyone, especially the consumers, who will ultimately bear the burden of high market prices” said Piyush Gupta, associate director, GNH India.

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