INTRODUCTION
Over the past couple of months, regulatory authorities in the healthcare and pharmaceutical sectors have been highly active in the enforcement of good manufacturing practices amid drug quality concerns across India. In addition, the formulation of guidelines for regulating commercial usage of de-identified biological samples, the landmark injunction order issued by the Delhi High Court against Zydus' product 'Sigrima', and the lack of emphasis placed by the Union Budget on the healthcare industry dominated headlines in the space.
In this edition of 'Checking the Pulse', we delve into key updates from June 2024 to July 2024 in the healthcare and pharmaceutical sectors, while also tapping on notable deals that have gained interest from the industry.
RECENT LEGAL & REGULATORY DEVELOPMENTS
The Union Budget's lack of emphasis on the healthcare sector raises concerns among industry stakeholders
The Ministry of Health and Family Welfare ("MoH&FW") received INR 89.287 crore (eighty-nine thousand two hundred and eighty-seven crore rupees) as part of the budgetary allocation under the Union Budget for the year 2024-25 ("Budget").1 While this is marginally higher than the allocation last year, the Budget has left industry stakeholders dissatisfied. The Budget failed to address significant issues, such as the rapidly rising out-of- pocket healthcare expenditures, the need to create an inclusive health insurance framework in view of the lack of penetration of health insurance among lower income groups, as well as planned investment in the public healthcare infrastructure. Additionally, the modest increase in budgetary allocation for a sector where the gap between supply and demand is already substantial has led some experts to characterize this year's allocation to the sector as a "token budget for healthcare".
On a positive note, the Budget provided customs duty exemption on three targeted cancer drugs: (a) trastuzumab deruxtecan; (b) osimertinib; and (c) durvalumab, in a welcome move geared towards easing the financial burden on cancer patients. While trastuzumab deruxtecan is used to treat breast and stomach cancer, osimeritinib treats specific types of lung cancers. Durvalumabs treats multiple cancers of the biliary tract, endometrial, liver, non-small, and small cell lung cancers.
These drugs were previously subject to a customs duty of 10% (ten percent) but will now be exempt from import duty, resulting in a significant price reduction and higher affordability amongst the masses. The decision further consolidates the Government's aim of providing relief to patients, having exempted the drug pembrolizumab, used in the treatment of various cancers, from basic customs duty in 2023.
CDSCO plans to roll out key projects amid drug quality concerns
As the quality of drugs manufactured in the country continues to be a cause of concern, the Central Drugs Standard Control Organisation ("CDSCO") will initiate four key projects that will help the Indian pharmaceutical industry in maintaining and improving the quality of the drugs manufactured in India. These projects involve: (a) CDSCO coming up with its own digital platform, to be known as the Digital Drug Regulatory System, with the aim of bringing all stakeholders i.e., regulatory bodies, manufacturers and retailers aboard; (b) establishing a capable scientific cadre at CDSCO for review of its internal files; (c) assessment of the CDSCO's internal processes as well as the removal of redundancies in the Drugs and Cosmetics Act, 1940 ("D&C Act"); and (d) setting up Digital IP for the Indian Pharmacopoeia Commission for ensuring quality and safety of drugs.
These projects are the need of the hour following staggering revelations by the Drug Controller General of India that risk-based inspections conducted by CDSCO of over 400 (four hundred) pharmaceutical manufacturing units over the past year and a half resulted in the closure of 36% (thirty six percent) of these facilities owing to failure in meeting compliance requirements.2 DoE exempts over a hundred drugs from GFRs to facilitate Global Tender procurement The Department of Expenditure ("DoE"), under the Union Ministry of Finance, has allowed government procurement of 120 (one hundred twenty) drugs through Global Tender Enquiry ("GTE") by exempting these drugs from the General Financial Rules, 2017 ("GFRs"), until March 31, 2027. The DoE issued an office memorandum dated June 7, 2024, confirming that "in view of the request of MoH&FW, a general exemption has been granted herewith under Rule 161(iv) of GFRs, from the instructions issued by DoE for issuance of GTE for procurement of 120 drugs listed at Annexure-A till March 31, 2027, or further orders."3
As per Rule 161(iv) of GFRs, a GTE is floated when a particular Ministry or Department feels that the goods of required quality, specifications, etc., may not be available in India and finds it necessary to look for suitable competitive offers from abroad. This procurement is facilitated by sending copies of tender notice to: (a) Indian Embassies abroad; and (b) Foreign Embassies in India. Pertinently, while the minimum limit for inviting tenders is INR 200 crore (two hundred crore rupees), a relaxation can be sought from the competent authority specified by DoE.
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Footnotes
1. https://www.indiabudget.gov.in/doc/bh1.pdf
3. The office memorandum can be accessed at: https://doe.gov.in/files/circulars_document/Relaxation_under_Rule_161_iv_of_General_Financial_Rules_2017_for_issuance_of_Global_Tender_Enquiry_GTE_for_procurement_of_Drugs_reg.pdf
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