Customs duty on drugs irrational; patients will suffer: Biocon

A day after the World Cancer Day, the government withdrew customs duty exemptions for specified drugs and life-saving drugs, including cancer. In a country with almost 100 million living cancer patients and rising by a million every year, the decision is 'ironic', says Ranjana Smetacek of the Organisation of Pharmaceutical Producers of India (OPPI).Speaking to CNBC-TV18, Smetacek says OPPI was never consulted by the government in what can be severely damaging for cancer patients. Not just this, some of the medicines on the list of custom duty hike are part of essential drugs, which is extremely unfair, she addds.Backing the same, Kiran Mazumdar Shaw, CMD, Biocon, calls this to be an irrational commentary from the government’s side, as it will only the end-user — the patient — who will have to pay the increased cost.Below is the verbatim transcript of Kiran Mazumdar-Shaw and Ranjana Smetacek’s interview with Shereen Bhan on CNBC-TV18.Q: The government seems to believe that this is going to boost domestic manufacturing; it should actually be good news for companies like yours, is it really?Shaw: That is not true because if you look at the notification from the Revenue Secretary, it clearly basically points to customs duty and excise. So, there will be an impact on both domestic and imported drugs. Imported drugs will probably cost on an average 20 percent higher and the excise impact on indigenous drugs will also be around 10 percent. So, this is something which I can’t understand because first and foremost there should not be any levy on life saving and cancer drugs to begin with. I think these are expensive drugs whether they are imported or indigenously made. However, this will certainly impact patients because after all it is the end user who has to pay this difference. I think it is very unbecoming of the government to do this. Secondly, many of us are making some of these products in SEZs. SEZs will also have the same impact as imported drugs so what is this Make In India strategy all about. The Department of Pharmaceuticals (DoP), on what basis have they chosen these drugs because they have left some out, some in.Q: You have preempted my question because we are given to understand that this list was drawn up and this decision was taken in consultation by the DoP. I am looking at the list of drugs, list three has a whole host of drugs from growth hormones drugs to drugs to treat arthritis, list four is mainly cancer drugs and drugs for heart ailments and blood thinners, etc. Was industry at all involved in this consultation process?Shaw: Certainly not me as one of the main manufactures of some of these very important life saving and cancer drugs. So, I don’t know who was consulted, I don’t know on what basis these lists are being drawn up. However, all I can say is that patients are going to really be the ones impacted because companies will just pass on these duties to the patients and it is extremely unfair. First and foremost, I don’t think any life saving drug or cancer drug should be brought under any tax ambit. Q: What do you make of this decision on the government's part to impose customs duty on some life saving drugs and Cancer drugs as well. Were you involved in the consultation process?Smetacek: Most certainly not. We were not consulted at all and I find this particularly ironic that two days after World's Cancer Day and citing a Times of India report the report talks about how there are 10 million Indian patients that are living with cancer and it quotes Lancet saying that there will be a million patients diagnosed each year.So, to me it is really a sad commentary that at this juncture this additional duty be flagged on these drugs and it is important to mention that as Ms Mazumdar Shaw said most definitely this is to the detriment of the patient. After all Cancer is like 200 diseases which are all caused by different causes and all treats it differently. So, just sticking to Cancer certainly some of these drugs are even listed on the National List of Essential Medicines and if these are indeed essential medicines why would we put these additional duties on them.I do want to comment on one thing that was spoken about, sort of Indian version which are currently available etc. The jury is out on whether the version so far are identical or even similar and this is a matter that is being decided by the court in fact and so at this juncture short answer is that it is a sad commentary that the revenue department has chosen to do this and it is going to be damaging to the Indian patients.Q: As you are saying that because of the patent battles and the IP infringement issues that are currently being litigated in court this business of Make In India is not going to be a reality anytime soon so the person at the suffering end or who is going to bear the brunt of this is going to be the Indian consumer?Smetacek: Exactly.Q: Do you have clarity on the list of the drugs that now have been brought under the customs duty because we are looking at the notification and there is a bunch of drugs there. I understand that list three has growth hormones and arthritis related drugs, list four is mainly cancer drugs so are we clear on what is now been included under the customs duty ambit? Smetacek: List three which had zero duties have now been revised upwards to 10 percent and list four which had a 5 percent custom duty will also be moved upwards to 10 percent. Of course there is several life saving drug, including cancer drugs and I think given where we are as a nation in battling this deadly disease or like I is said these 200 diseases which could in a way comprise cancer, I think it is a very sad commentary and a poor decision.More to follow..