Pharma industry divided as govt likely to increase drug licensing fee

Price hike likely to arrest the number of bogus drug registrations

As the government is expected to raise the fee for site registration and product approvals by over five times, the pharmaceutical industry seems to be divided on the matter. While the MNC lobby feels that importers of niche and speciality medicines would be impacted, the domestic lobby of major pharma manufacturers say the overall impact wouldn't be much as it is a one-time cost. 

Analysts, however, are of the opinion that if the fee increase goes through, irrational combinations and products that do not have the potential to do well in the market will weed out. “If this happens, companies will only register those products which will give them good returns,” said Ranjit Kapadia, pharma analyst at Centrum Broking.

The government charges fee for grant of registration certificates, licences for import of drugs and medical devices. In India, the fee for regulatory licences is very nominal as compared to countries such as USA and China and has not been revised for over 10 years. The government has been mulling a fee hike to boost domestic drug manufacturing. This would essentially mean that the site registration fee for importing medicines and product approvals would increase significantly. 

At present the government charges around Rs 50,000 for applications for new drugs as against around $58,700 charged by the US regulator. For imported pharmaceutical products, the fee is expected to go up from $1000 per product to around $5,000 once the new regulations are notified. 

According to the Organisation of Pharmaceutical Producers of India (OPPI) that represents the multinational pharma firms in the country, importers of speciality medicines and niche products are likely to be most impacted by this increase in fee. 

The proposed escalation is not only five times as it seems but is many fold because of two additional practices that the Central Drugs Standard Control Organisation (CDSCO) has initiated in the registration process, it said. In 2013, the CDSCO started registering all facilities with same registration fee instead of the prior practice of registration of final dispatch facility. Further, the recent 2018 CDSCO practice of registering all stock keeping units for a brand, which was done on a molecule basis earlier, has added to the burden, OPPI said. 

“This cascading effect will make launch of products and vaccines particularly for low disease burden unviable in India,” said OPPI President A Vaidheesh, who is also the vice-president, South Asia and managing director, GlaxoSmithKline Pharmaceuticals. 

However, supporting the increase in fee, the Indian Pharmaceutical Alliance (IPA), which represents the leading domestic pharmaceutical companies, said it would be a fair play if it happens because when Indian firms go abroad they are charged heavy fee for new drug implications and active pharmaceutical ingredients. “It won’t affect the industry as it is a one-time cost and will have a very insignificant effect on the volumes,” said D G Shah, secretary-general, IPA.

BRACING FOR ONE-TIME COST

• Countries like USA and China have higher drug licensing fee than India
• In India, the fee for regulatory licences has not been revised for over 10 years
• Fee hike would mean that the site registration fee for importing medicines and product approvals would increase significantly
• For imported pharmaceutical products, the fee is expected to go up from $1,000 per product to around $5,000 once the new regulations are notified