Now that the Union Budget 2024-25 has been analysed, feted and criticised, it is time to remember that budgetary allocations are only a signal of the government’s intentions. The actions that follow and their implementation are more crucial. Given that we have around seven months before the next budget, it’s fair to say that most postbudget criticism could be aimed at setting the stage for February 2025’s Union Budget 2025-26.
Unfortunately, budgetary allocations are sometimes not matched by the capacity to absorb these resources, for a variety of reasons. For instance, budget documents show that Rs 75 crores has been allocated for the strengthening of the state drug regulatory system Budget Estimates (BE) 2024-2025. This allocation is slightly more than the Rs 72.14 crore set allocated for the same task in 2023-2024 (BE), of which Rs 52 crores are the Revised Estimates 2023-2024, indicating that actual spend on this expense head was less than the funds available.
This is surprising. The country’s drug regulator, the Central Drugs Standard Control Organisation (CDSCO), has been undergoing a massive revamp, gearing up to start risk-based unannounced audits as per the revised Schedule M. Pharma companies with a turnover over Rs 250 crores are supposed to have upgraded to the revised norms by this July while smaller companies have more six months. Also consider that the CDSCO now audits not just pharma and medical device facilities, but also testing labs and more recently, has started with clinical research organisations.
Hopefully CDSCO has done the groundwork and is better positioned this year to fully utilise the allocated funds. In addition to medicines and medical devices, the CDSCO might soon be monitoring the quality of nutraceuticals as well.
So far, nutraceuticals flew under the radar until increased consumption and misleading advertisements during the COVID pandemic alerted authorities to the possible consequences.
The lure of nutra has caught the eye of quite a few pure play major pharma companies too, with a recent report from Avendus Capital, titled ‘Navigating Domestic Formulations’ sector, naming nutraceuticals as one of the chosen portfolio expansion strategies of pharma companies. As nutra purchases do not require a doctor’s prescription, there are concerns that long term unmonitored consumption, especially of improperly manufactured products, could have adverse reactions.
The increased pharma play in nutra has highlighted concerns that using the same manufacturing units for medicines and nutraceuticals could increase chances of contamination. Given the export revenues from pharma and nutra products, the safety concerns of such so-called ‘mixed manufacturing’ is clearly a recipe for disaster.
Thus in February 2024, the government formed a panel to review if nutra products need to be regulated by the CDSCO. Reports indicate that the panel members are expected to discuss the feasibility and safety implications of co-production, considering factors like potential contamination risks and adherence to stringent drug manufacturing protocols.
There has been a fair amount of advocacy on the part of the industry to protest this move. In a recent interview, I discussed this issue in more detail, with Adv Narendra Ahooja Vivek, currently Professor of Practice at Haryana’s MVN University and an advocate with the Punjab and Haryana High Court. As he retired as State Drugs Controller Haryana at Food and Drugs Administration Haryana and has also been associated with FSSAI, he is uniquely placed to give both perspectives.
In the interview, Adv Ahooja explains why he believes that regulatory bodies and regulations should complement each other, and concludes that self regulation is the best form of regulation. He also discusses the implications of the shift of the nutra sector from FSSAI to CDSCO, explaining why such a shift would not be viable for the growth of the sector, especially MSME pharma and nutra companies. ( )
Sanjaya Mariwala, Executive Chairman and Managing Director of OmniActive Health Technologies and President of the Association of Herbal and Nutraceutical Manufacturers of India, concedes that segregating production lines to meet stricter quality standards is a welcome thought, but he cautions that it will be expensive and can cause supply chain disruptions and reduced exports. He reasons that a high-standard pharma plant should be allowed to make nutra products, but perhaps the opposite may not be acceptable, i.e. a nutra plant manufacturing pharma products.
He calls for a more collaborative approach between regulators and manufacturers, as understanding industry hurdles and offering incentives are crucial steps. “Both sides should strive for rigorous quality control, premarket reviews with clinical trials and accurate labelling to guarantee product integrity. Non-compliance must be met with penalties,” suggests Mariwala.
In addition, Mariwala advocates for a unified regulatory body that would streamline processes and inject much-needed order into unethical and flawed practices. He believes that “this comprehensive strategy would foster a competitive, compliant industry primed for sustainable growth and global leadership.”
Industry associations like Federation of Pharma Entrepreneurs (FOPE), a body representing MSMEs, has also reportedly lobbied hard to allow nutraceuticals to be manufactured in pharma manufacturing facilities. In a letter to the regulators, FOPE raises concerns about the new ScheduleM amendment, pointing out that it states that manufacturing premises must be exclusively used for the production of drugs, barring any other manufacturing activities. The letter points out that internationally, regulatory bodies such as the USFDA, EU, MHRA, MCC, and TGA allow facilities to manufacture both pharma products and dietary supplements, as long as they comply with pharma standards. ( )
Outlining the impact on the Indian market, the FOPE letter informs that existing facilities, with approvals for both drugs and dietary supplements, may face significant disruption, affecting supply to the Indian market. Establishing new facilities could take up to four years, during which consumers may be deprived of their regularly consumed products. The industry association, through its letter, says that existing facilities, which adhere to high drug manufacturing standards, are equipped with high-quality infrastructure and protocols to prevent cross-contamination, should be allowed to continue with production of both drug and dietary supplements.
If nutra products do come under CDSCO, it follows that they will also come under price control. While this is good for consumers, it reduces the incentive for industry. This is just one of the many balancing acts that tangles that await Union Minister Shri JP Nadda as he juggles multiple roles as BJP National President, leader of the Rajya Sabha and Minister of Health and Family Welfare, Chemicals and Fertilisers. Hopefully the limelight will throw light on the many grey areas in health regulations.
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