New Delhi: The industry ministry today suggested that local pharmaceutical makers should be allowed to produce patented drugs to check medicine prices in wake of acquisition of Indian companies by multinational firms.
The ministry also suggested putting restriction on foreign direct investment in the sector.
"... The Department of Industrial Policy and Promotion (DIPP) has prepared a discussion paper examining the option of introducing compulsory licensing under the Indian Patent Act (in the pharmaceutical sector)," commerce and industry minister Anand Sharma said in a communication to health and family welfare minister Ghulam Nabi Azad.
He said the acquisitions of Indian pharmaceutical companies by foreign multi-national companies (MNCs) in the recent past has lead to articulation of public concern on its impact on the availability of low-cost medicines.
The discussion paper has also suggested a review of the foreign direct investment (FDI) policy in the sector. At present, 100% FDI is allowed in the sector through the automatic route.
"This (FDI) could be shifted to government route so that proposals for mergers and acquisitions in this important sector could be scrutinised by the Foreign Investment Promotion Board (FIPB)," the discussion paper said.
In 2008, the country's largest drug maker Ranbaxy was acquired by Daiichi Sankyo (Japan) for $4.6 billion and recently the US-based Abbot Laboratories acquired Piramal Healthcare's domestic business for $3.7 billion.
Compulsory licensing is a system where by the government allows third parties (other than patent holder) to produce and market patented product without the consent of patent owner.
Though imports of pharma products have been growing, the emphasis on exports has resulted in a significant lower growth of domestic consumption. During 2008-09, domestic consumption in value terms fell from Rs45,953 crore to Rs44,579 crore.
As per a World Health Organisation (WHO) report, 65% of Indians still lack access to essential medicines.
While several developed and developing countries like the US, Canada, the UK and South Africa have introduced compulsory licensing, India is yet to explore this WTO compliant option.
This is the first time that a regulator is planning to keep an eye on players in an industry by accessing their systems
The Insurance Regulatory and Development Authority (IRDA) chairman J Hari Narayan has said that the regulator is designing a method that would allow it to access various insurers' systems to do random checks on claims. This is the first time that any regulator has come out with such an idea to keep a check on players in an industry by accessing their systems directly.
Earlier, the regulator had emphasised that it would be necessary for insurers to have automated systems that would enable online registration and tracking of the status of grievances. These systems will be integrated seamlessly with IRDA's own system.
According to Mr Narayan, the insurance companies have "robust" grievance management systems and both life and non-life insurers receive around 2 lakh complaints each. The regulator is seeking classification of complaints as many of them are policy administration complaints like documents not being received and addresses not being corrected in official records.
While admitting that "about 18% to 19% of complaints are for mis-selling," the IRDA chairman said, "We are designing systems to be able to access insurer systems to do random checks, see cases when rejected or accepted (and the reasons for the same)."
"In the later part of the year we will have a far better way to address complaints. We need to know if the complaints are contractual issues or administrative problems," Mr Narayan added.
Earlier in March, minister of state for finance Namo Narain Meena told Parliament that the claim pendency ratio of private firms was higher than the Life Insurance Corporation of India (LIC) but it had come down due to intervention from IRDA. The pendency ratio of private firms was 13.32% in 2006 which came down to 10.88% in 2007 and to 7.75% in 2008-09, the minister said, hoping that this would be reduced further in coming years.
Separately, IRDA had told insurers to abstain from doing business with 884 corporate agents who had not registered their permanent account numbers (PANs) with the agency licensing web portal.
Earlier in July, the regulator had asked all insurers to update the PAN numbers of their corporate agents on the agent licensing web portal before 31st July.
"In this respect, the insurers are advised to issue a show cause notice to the corporate agents to furnish reasons for failure to produce the PAN number and why the insurer should not recommend to the authority for the cancellation of their corporate agent license," the regulator had said in a statement.
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