Purchase preference policy for pharma CPSEs' products cleared

New Delhi: The Union Cabinet on Thursday gave its approval to the purchase preference policy for products of Central Public Sector Enterprises (CPSEs) in the pharmaceuticals sector and their subsidiaries. The policy would be applicable in the case of 102 drugs/pharmaceuticals and would be valid for five years.

Addressing a press conference after the Cabinet meeting, the Information and Broadcasting Minister, Mr Priyaranjan Dasmusi, said purchase preference would also be applicable to purchase of 102 drugs by State Governments under health programmes funded by the Centre. The policy would be applicable to a maximum of 102 medicines as notified by the Department of Chemicals & Petrochemicals from time-to-time.

`Limited tenders'


The purchasing departments, PSUs and autonomous bodies may invite limited tenders from pharma CPSEs and their subsidiaries or purchase directly from them at National Pharmaceutical Pricing Authority (NPPA) certified or notified price with a discount up to 35 per cent, the Minister said.

According to officials, by offering a 35 per cent discount, the CPSE pharma companies would stand to make reasonable profits. This is because the NPPA certified/notified rates provide a 100 per cent mark up over ex-factory cost of the particular drug. This would, in turn, cover the manufacturers margin plus margins for traders and promotional expenses. Currently, wholesale trader margins alone work to 8 per cent with retail margins of another 15 per cent.

Since, in the case of the preference purchase policy, there is no traders margin nor promotional expenses involved, it was not reasonable to ask the CPSEs to supply at 35 per cent discount to the NPPA notified price.

In case of medicines not covered under Drug & Price Control Order (DPCO), prices would be certified from NPPA, only for the limited purpose of supply to Central Government Departments and their PSUs, the policy said. On the certified price, the pharma CPSEs and their subsidiaries would provide a discount of up to 35 per cent.

The medicines covered under DPCO would be supplied at the rates fixed by NPPA minus discount up to 35 per cent.

The purchasing departments would purchase from pharma CPSEs and their subsidiaries subject to their good manufacturing practices (GMP) norms as per the Drugs & Cosmetic Rules.

'If no pharma CPSE is forthcoming to supply these 102 medicines, the purchasing departments would be at liberty to purchase from other manufacturers,' the Minister said. Besides, if the CPSEs or their subsidiaries fail to perform as per the purchase order, they would be liable to pay liquidated damages or any other penalty included in the contract, he pointed out.

The existing annual pharma market in the country is approximately Rs 50,000 crore (including exports of about Rs 17,000 crore). Of this, total purchases by Central Government Departments are estimated to be about Rs 2,000 crore. The purchase of State Governments account for another Rs 1,500-Rs 2,000 crore per annum for specified health programmes.

Cabinet nod for NRHM


The Cabinet also gave its nod for a detailed framework for the implementation of National Rural Health Mission (NRHM).

In another decision, the Cabinet approved amendments in the Central Silk Board (Amendment) Bill, 2005. The decision of the Cabinet would result in the production of seeds of authorised races only. It would also enable protection of farmers' interest against sudden crop losses due to unidentified and non-guaranteed results and possible diseases.