Objectives of Pharmaceutical Policy - 2002

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Chapter: Forensic Pharmacy : Pharmaceutical Policy - 2002

Ensuring abundant availability of good quality of drugs and pharmaceuticals at reasonable prices within the country.


The main objectives of the Pharmaceutical Policy-2002 are:

(i) Ensuring abundant availability of good quality of drugs and pharmaceuticals at reasonable prices within the country.

(ii) Strengthening the capabilities for cost effective production of quality drugs.

(iii) Creating an encouraging environment and a good network for introduction of new drugs and technologies by ensuring new investments in Indian pharmaceutical industry.

(iv) Encouraging export of drugs/drug formulations by reducing barriers to the trade in pharmaceutical sector.

(v) Promoting rational use of pharmaceuticals.

(vi) Strengthening the system of quality control of drugs and pharmaceuticals

(vii) Encouraging R&D ventures in pharmaceutical sector especially, with focus on diseases endemic or relevant to India.

The Pharmaceutical Research and Development Committee (PRDC) was constituted in 1999 under the Chairmanship of Director General of CSIR to make recommendations for strengthening research and development in pharmaceutical industry and to identify areas where Government support is required for domestic R&D efforts. The PRDC suggested following conditions (Gold Standards).

(i) Investment of 5% turnover of industrial production in R&D

(ii) Employment of atleast 100 research scientists in R&D in India.

(iii) Investment of atleast Rs. 10 crore per annum in innovative research in India including, new drug development, new delivery systems, etc.

(iv) A minimum of 10 patents for research done in India.

(v) Facilities for Own and Operate Manufacturing in India.

(vi) Establishment of a Drug Development Promotion Foundation (DDPF) and Pharmaceutical Research and Development Support Foundation (PRDSF)

A Committee called the Drugs Price Control Review Committee (DPCRC) under the Chairmanship of the Secretary, Department of Chemicals and Petrochemicals was set up in 1999. The recommendations in the report of this Committee have been examined while formulating "Pharmaceutical Policy-2002".

Keeping in view the interest of the weaker sections of the society, Government reserves the right of intervening in cases where prices behave abnormally.

The Central Government has taken following important decisions -

1.        Industrial licencing for all bulk drugs cleared by Drugs Controller General ofIndia shall be abolished except, for bulk drugs produced by recombinant DNA technology and bulk drugs requiring in-vivo use of nucleic acids.

2.        Foreign investment upto 100% will be permitted, subject to stipulations laid down in Industrial Policy.

3.        Imports of drugs and pharmaceuticals will be as per the EXIM policy in force.

4.        Liberalized approval policy for foreign technology agreements.

5.        Establishment of Pharmaceutical Research and Development Support Fund (PRDSF) under the control of DST.

6.        Constitution of Drug Development Promotion Board to administer utilization of PRDSF.

7.        Provision of fiscal incentives to promote indigenous R&D efforts.

8.        279 items appearing in National Essential Drug List, 1996 of Ministry of Health and Family Welfare and other 173 items considered important by the same ministry in various health programmes, emergency care, etc. shall be for price regulation. The ORG-MARG data shall be the basis for determining the span of price control as suggested by Drugs Price Control Review Committee (DPCRC)

9.        Bulk drugs shall be under price regulation if-

(a)     Moving Annual Total (MAT) value for the drug is more than Rs. 25 crores and percentage share is 50% or more (b) The total MAT value for a particular drug is less than Rs. 25 crore but more than Rs. 10 crore and percentage share is 90% or more.

10.   Maximum Allowable Post-manufacturing Expenses (MAPE) will be 100% for indigenously manufactured formulations.

11.   For imported formulations, the margin covering selling and distribution expenses including interest and importers' profit shall not be more than 50% of the landed cost.

12.   The time frame of two months from the date of the receipt of complete prescribed information for granting price approvals shall be fixed.

13.   Ceiling prices of any formulation may be fixed which will be obligatory for all to follow.

14.   A new drug developed through indigenous R&D efforts would be exempted from price control for 15 years.

15.   A formulation involving a new delivery system developed through indigenous R&D and patented shall be exempted from price control till the expiry of the patent.

16.   The NPPA (National Pharmaceutical Pricing Authority) will be authorized to exempt such formulation from price control, if its cost to consumer-patient does not exceed Rs. two per day.

17.   The NPPA will be revamped and reoriented to monitor prices of decontrolled drugs and formulations and over-see implementation of DPCO.

18.   It shall be mandatory for manufacturer to furnish alI information called by NPPA.

19.   The Government's endeavor will be to upgrade the standards of pharmacy education and R&D through NIPER (National Institute of Pharmaceutical Education Research), Mohali, Punjab.


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