The ministry of chemicals and fertilisers is expected to send the proposal for setting up of the pharmaceuticals Research and Development (R&D) fund to the Expenditure Finance Commission within the next fortnight.
Once the EFC clears the proposal, it will go to the Cabinet for clearance.
While the note specifies the structure of the drug development fund, the chemicals and finance ministries are reported to be at variance on the issue of whether the Rs 150 crore earmarked for the fund should be a one time contribution from the government or an yearly grant.
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While the Chemicals ministry is pushing for an yearly contribution to the fund, the Finance ministry has been insisting that it be a one time contribution. Finance minister, Yashwant Sinha had announced the setting up of the fund in his budget speech this year.
After six months, and no sign of the money, the pharma industry is apprehensive that the fund may lapse if the Chemicals Ministry does not step up the pace.
The entire process was reported to have been held up over a tussle for control over the fund between the bureaucracy and the industry. The ministry has finally proposed setting up of a two tier body for administering the fund.
The apex body, to be headed by R A Mashelkar, director general, Council for Scientific and Industrial Research (CSIR) will be entrusted with the job of finalising the modalities for fund usage and deciding how to disburse the funds.
The National Pharmaceutical Pricing Authority (NPPA), the next tier, will be incharge of disbursal of funds.
While the nine member apex body will constitute mainly of scientists, the chairman of the NPPA will also be on it.
The pharma industry, which has been lobbying hard for excluding the National Pharmaceutical Pricing Authority from any role in this fund, is however apprehensive over the inclusion of the head of the pricing authority in the decision making authority.
They fear that the National Pharmaceutical Pricing Authority might attempt to tie up pricing issues with disbursement of funds for research.
Meanwhile, with a change of ministers, the pricing policy has also been held up. While the erstwhile Minister, Suresh Prabhu had held a meeting, late last month, to finalise the policy, the meeting was inconclusive said sources.
While the broad structure of the policy has been ready for quite some time, the Minister and his bureaucrats could not agree on the number of drugs should be brought under price control.
The Minister was reportedly pushing for greater decontrol, while a section of the bureaucracy is against reducing the extent of price control, said sources.
The span of price control could go down by anywhere between three to 13 per cent from the current level of 38 per cent.
The extent of price control could be between 25 to 35 per cent depending on the turnover limit and market share fixed for bringing drugs under price control. Currently, bulk drugs with turnover limit of Rs 4 crore and market share of over 40 per cent are under price control.