The government is considering a proposal to keep medicines made from locally produced ingredients out of price control to promote domestic manufacturing and reduce the dependence of Indian companies on imports, two senior government officials said, on the condition of anonymity.

“What the government is considering is that if an Indian company manufactures a tablet made from a locally-manufactured API (active pharmaceutical ingredient), then the drug will be exempted from DPCO (Drug Price Control Order). However, drugs made from APIs that are imported will be under DPCO," one of the officials said.

APIs, or bulk drugs, are key raw material from which medicines are made. Currently, India imports a majority of its APIs, especially from China.

The Centre is examining ways to tackle the challenges likely to come up, including how to verify claims about the use of locally sourced APIs, the second official added.

The proposal was made during a meeting of a committee led by Mansukh Lal Mandaviya, minister of state for chemicals and fertilizers last month, the first official said. The panel, which includes pharmaceutical secretary P.D. Vaghela, the drug controller general of India V.G. Somani and officials from related government departments, is tasked with giving suggestions to boost bulk drug manufacturing in India.

In 2018-19, Indian pharmaceutical companies imported bulk drugs and intermediates worth $2.4 billion from China, which was about 68% of total imports of the raw material, the government had informed the Lok Sabha last month.

Experts concur that while implementation of the move could be a challenge, if successfully implemented, it could boost domestic manufacturing of APIs.

“Exempting formulations made of local bulk drugs from price control, if implemented, will incentivize pharmaceutical companies to increase domestic production of APIs and would reduce our dependence on China. It would help enhance domestic production and increase capacity utilization, which would reduce cost," Ranjit Kapadia, an independent consultant working with the pharmaceutical sector, said.

However, the second person mentioned above said: “Making changes to the Drugs (Price Control) Order will be one of the challenges. Besides, some manufacturers may claim that they have made their formulation from local APIs, but it may not be the case. Verification of that would be tough."

Last month, the Central Drug Standard Control Organisation floated a draft norm seeking views on the proposal to make it mandatory for the use of quick response (QR) codes for tracking bulk drugs.

If the draft notification by India’s apex drug regulator for tracking of active pharmaceutical ingredients was implemented, the challenge to verify the formulations will not be difficult, said Vishal Manchanda, a pharma analyst with Nirmal Bang Institutional Equities.

Manchanda added the other challenge will be doctors’ loyalty to branded generic medicines in India.

“The bigger challenge would be getting doctors to prescribe drugs made from domestic APIs. In India, brands dominate and until doctors’ loyalty to brands remains, enforcing these changes to price control regime would not bear fruit," he added.

The Centre has been trying to boost local API production for a while. In February 2015, a committee headed by V.M. Katoch, the then secretary, department of health research, had suggested setting up of six bulk drug parks. But there has not been much progress in its implementation since