The Parliamentary Standing Committee on Health and Family Welfare tabled a Report in Parliament on May 8, 2012, on the functioning of the Central Drugs Standard Control Organization (CDSCO). CDSCO is the agency mandated with the regulation of drugs and cosmetics in India. The Report covers various aspects of drug regulation including organizational structure and strength of CDSCO, approval of new drugs, and banning of drugs, among others. Following the Report, the Minister of Health and Family Welfare has constituted a Committee to look into the procedure for drug regulation. The Committee is expected to make its submissions within a period of two months. This post focuses on irregularities in the approval of new drugs by CDSCO. It discusses the regulations relating to drug approval and the Standing Committee's observations on the working of CDSCO. Approval of new drugs Drugs are regulated by the Drugs and Cosmetics Act, 1940 and Drugs and Cosmetic Rules, 1945 [Rules]. The CDSCO, under the Ministry of Health and Family Welfare, is the authority that approves new drugs for manufacture and import. State Drug Authorities are the licensing authorities for marketing drugs. New Drugs are defined as:
The Rules require an applicant for a new drug to conduct clinical trials in India to determine the drug’s safety and efficacy. These trials are necessary for both domestically manufactured and imported drugs. However, the authority can exempt a drug from the requirement of local and clinical trials in the public interest based on data available in other countries. Observations and recommendations of the Committee The Committee found that a total of 31 new drugs were approved between January 2008 and October 2010 without conducting clinical trials on Indian patients. The Report mentioned that drug manufacturers, CDSCO officials and medical experts colluded to approve drugs in violation of laws. Following are some of the Report’s findings:
There have been some recent developments in the sugar sector, which pertain to the pricing of sugarcane and deregulation of the sector. On January 31, the Cabinet approved the fair and remunerative price (FRP) of sugarcane for the 2013-14 season at Rs 210 per quintal, a 23.5% increase from last year’s FRP of Rs 170 per quintal. The FRP of sugarcane is the minimum price set by the centre and is payable by mills to sugarcane farmers throughout the country. However, states can also set a State Advised Price (SAP) that mills would have to pay farmers instead of the FRP. In addition, a recent news report mentioned that the food ministry has decided to seek Cabinet approval to lift controls on sugar, particularly relating to levy sugar and the regulated release of non-levy sugar. The Rangarajan Committee report, published in October 2012, highlighted challenges in the pricing policy for sugarcane. The Committee recommended deregulating the sugar sector with respect to pricing and levy sugar. In this blog, we discuss the current regulations related to the sugar sector and key recommendations for deregulation suggested by the Rangarajan Committee. Current regulations in the sugar sector A major step to liberate the sugar sector from controls was taken in 1998 when the licensing requirement for new sugar mills was abolished. Delicensing caused the sugar sector to grow at almost 7% annually during 1998-99 and 2011-12 compared to 3.3% annually during 1990-91 and 1997-98. Although delicensing removed some regulations in the sector, others still persist. For instance, every designated mill is obligated to purchase sugarcane from farmers within a specified cane reservation area, and conversely, farmers are bound to sell to the mill. Also, the central government has prescribed a minimum radial distance of 15 km between any two sugar mills. However, the Committee found that existing regulations were stunting the growth of the industry and recommended that the sector be deregulated. It was of the opinion that deregulation would enable the industry to leverage the expanding opportunities created by the rising demand of sugar and sugarcane as a source of renewable energy. Rangarajan Committee’s recommendations on deregulation of the sugar sector Price of sugarcane: The central government fixes a minimum price, the FRP that is paid by mills to farmers. States can also intervene in sugarcane pricing with an SAP to strengthen farmer’s interests. States such as Uttar Pradesh and Tamil Nadu have set SAPs for the past few years, which have been higher than FRPs. The Committee recommended that states should not declare an SAP because it imposes an additional cost on mills. Farmers should be paid a uniform FRP. It suggested determining cane prices according to scientifically sound and economically fair principles. The Committee also felt that high SAPs, combined with other controls in the sector, would deter private investment in the sugar industry. Levy sugar: Every sugar mill mandatorily surrenders 10% of its production to the central government at a price lower than the market price – this is known as levy sugar. This enables the central government to get access to low cost sugar stocks for distribution through the Public Distribution System (PDS). At present prices, the centre saves about Rs 3,000 crore on account of this policy, the burden of which is borne by the sugar sector. The Committee recommended doing away with levy sugar. States wanting to provide sugar under PDS would have to procure it directly from the market. Regulated release of non-levy sugar: The central government allows the release of non-levy sugar into the market on a periodic basis. Currently, release orders are given on a quarterly basis. Thus, sugar produced over the four-to-six month sugar season is sold throughout the year by distributing the release of stock evenly across the year. The regulated release of sugar imposes costs directly on mills (and hence indirectly on farmers). Mills can neither take advantage of high prices to sell the maximum possible stock, nor dispose of their stock to raise cash for meeting various obligations. This adversely impacts the ability of mills to pay sugarcane farmers in time. The Committee recommended removing the regulations on release of non-levy sugar to address these problems. Trade policy: The government has set controls on both export and import of sugar that fluctuate depending on the domestic availability, demand and price of sugarcane. As a result, India’s trade in the world trade of sugar is small. Even though India contributes 17% to global sugar production (second largest producer in the world), its share in exports is only 4%. This has been at the cost of considerable instability for the sugar cane industry and its production. The committee recommended removing existing restrictions on trade in sugar and converting them into tariffs. For more details on the committee’s recommendations on deregulating the sugar sector, see here.
