India: Proposal For Clear Provision In Law To Promote Generic Drugs

On March 5, 2013, the officials at the Health Ministry said that they are planning to bring in a clear provision in the law to promote generic drugs. The Health Ministry has invited comments from stakeholders on amending rules pertaining to conditions for grant of renewal of licences for manufacture of drugs to facilitate approval of drug formulations by state licensing authorities in their proper/generic name only. The Centre has also asked the states and Union Territories to formulate time-bound action plan for promotion of general drugs.
PSA view  – It is too early to comment as the proposal is still at a very nascent stage where the Health Ministry is seeking the stakeholders's comments on the same.

Confederation of Indian Pharmaceutical Industries versus CBDT
The Indian Medical Council had imposed a prohibition on "medical practitioners" taking any gift, travel facility, hospitality, cash or monetary grant from pharmaceutical and allied health sector industries. The CBDT issued a circular in January 2012 stating that the expenditure incurred by the assessee in providing such freebies had to be regarded as incurred for a purpose which is either an offence or prohibited by law and disallowed under the explanation to s. 37(1) of the Income Tax Act (any expense incurred by the assessee which is an offence under any other law shall not be deemed to have been incurred). The Confederation of Indian Pharmaceutical Industries challenged the validity of this circular on the basis that it went beyond s. 37(1) and was invalid. The Himachal Pradesh High Court held that "The regulation of the Medical Council prohibiting medical practitioners from availing of freebies is a very salutary regulation which is in the interest of the patients and the public. This Court is not oblivious to the increasing complaints that the medical practitioners do not prescribe generic medicines and prescribe branded medicines only in lieu of the gifts and other freebies granted to them by some particular pharmaceutical industries. Once this has been prohibited by the Medical Council under the powers vested in it, s. 37(1) comes into play. The Petitioner's contention that the circular goes beyond the section is not acceptable. In case the assessing authorities do not properly understand the circular then the remedy lies for each individual assessee to file an appeal but the circular which is totally in line with s. 37(1) cannot be said to be illegal. If the assessee satisfies the assessing authority that the expenditure is not in violation of the regulations framed by the medical council then it may legitimately claim a deduction, but it is for the assessee to satisfy the AO that the expense is not in violation of the Medical Council Regulations."

PSA view  –  This decision has reinforced the circular. Though in all likelihood, this decision will be appealed, the issue seems to be much settled because unless the circular itself is invalidated, which can only be done if the Medical Council changes its regulation. Until then any expense incurred by the assessee which is an offence under any other law shall not be deemed to have been incurred and no benefits can be availed by the assessee on such expenses.

Assistance for storage of food products
The MoFPI will provide financial assistance under the Scheme for Cold Chain, Value Addition and Preservation Infrastructure. The aforesaid scheme relating to different aspects of storage of food products was consolidated in the 11th Five year plan. Under the scheme the MoFPI will provide assistance of up to 50% and 75% of the total cost of plant and machinery and technical civil works in general areas and difficult areas respectively. The assistance is subject to a maximum of Rs.10 crore. The initiative is aimed at filling the gaps in the supply chain, strengthening of cold chain infrastructure and establishing value addition with infrastructural facilities like sorting, grading, packaging etc. Other agencies of the Government like National Horticulture Board, Agricultural and Processed Food Products Export Development Authority, National Cooperative Development Corporation and State Government are already providing assistance for cold storages under their respective schemes.

PSA view  –  Various surveys by government and non-government agencies indicate that most of the loss of food items occurs through lack of appropriate storage facilities. The said scheme is not a new one, rather it's a amalgamation of a new scheme. The impetus now lies on the government to properly implement the provisions of the scheme which benefits the food producers and manufacturers.  

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