Modifications To Drug Policy

In the light of the experience gained over the years, the Government felt the need to modify the existing Drug Policy,1991, and bring it in conformity with the Industrial Policy,1991, and remove anomalies observed in its working. The salient features of the modifications made in the policy announced on 15th Sep.,1994 are:

• Industrial Licensing for all bulk drugs and their formulations, and intermediates has been abolished except for,
  • Five identified bulk drugs reserved for the public sector.
  • Drugs involving the use of recombinant DNA technology.
  • Specific cell/tissue targeted formulations.
• Automatic approval of foreign investments upto 51% is allowed in all drugs, their intermediates and formulations. Automatic approval for foreign technology agreements is also allowed as per the industrial policy, for all products except those produced by the use of recombinant DNA technology.
• In the case of manufacture of drugs from the basic stage, a new price formula has been worked out.
• It has been decided to keep drugs with an annual turnover of Rs.400 lakh or more under price control. Consequently, the number of drugs under price control will be redeuced to about 73 from the present 142 and the span of control to about 50% from the present 70%.
• A Uniform Maximum Allowable Post Manufacturing Expenses(MAPE) of 100% will be allowed in all cases of drugs under price control.
• In order to provide a more efficient mechanism for ensuring quality control and rational use of medicines, a National Drug Authority(NDA) will be set up.

Centre for Monitoring Indian Economy, Bombay
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Last updated: May 1995.