The health Ministry’s concerted push to designate public sector undertaking Karnataka Antibiotics and Pharmaceuticals Ltd (KAPL) as the sole manufacturer of vital pregnancy drug Oxytocin was backed by the argument that restricting the manufacture of the formulations to only the public sector is key to preventing its misuse. Months earlier, though, another arm of the NDA government — the Department of Investment and Public Asset Management under the Finance Ministry — had already readied plans to sell KAPL under the government’s strategic sale process.
The Health Ministry, in April 2018, first announced it was banning the import of Oxytocin and preventing private firms from manufacturing it for domestic use. Oxytocin is a crucial drug used to prevent women from excessively bleeding during child birth.
The ministry said it “has restricted the manufacture of Oxytocin formulations for domestic use to public sector only”, a decision that followed observations by the Himachal High Court that there was a “grave misuse” of Oxytocin due to “large clandestine manufacture and sale” of the drug, the ministry had added. In June, the ministry announced that KAPL, a company under the Department of Pharmaceuticals (DoP), would be the only manufacturer of the drug for domestic use and would be directly supplying it to registered hospitals and clinics in the country.
“Looking at past experiences (of misuse of Oxytocin), it was felt that a PSU would be better (as the sole supplier of the drug for domestic use),” a senior government official directly aware of the development told The Indian Express on condition of anonymity.
According to this official, some of the Oxytocin manufactured by the private sector was “unaccounted for”, leading to “misuse” of the drug. Authorities settled on KAPL because it was “already in the business of manufacturing formulations” and because it had the equipment and capacity to cater to the country’s Oxytocin needs, the official added. However, the Cabinet Committee on Economic Affairs (CCEA) in its meeting held on November 1, 2017, accorded “in principle” approval for a strategic disinvestment of the PSU, according to a December 2017 year-end review of the Ministry of Chemicals and Fertilizers. A report submitted to Parliament as recent as December 2018 shows this plan had not changed.
When a Parliamentary committee on public undertakings asked DoP how many Central Public Sector Undertakings (CPSUs) are slated for closure, revival or restructuring, the department stated in its response that KAPL would be up for sale.
“Cabinet/ CCEA has already decided for closure of IDPL & RDPL and strategic sale of BCPL, HAL and KAPL,” the Parliamentary committee cited DoP as stating in its review of loss-making CPSUs report tabled at the Lok Sabha.
Emailed queries sent on Monday to the Health Ministry and drug regulatory body Central Drugs Standard Control Organisation about why they decided on KAPL to be the sole manufacturer and supplier of Oxytocin despite the ongoing disinvestment plans remained unanswered by press time.
However, court documents dated March 2019 show the Health Ministry still plans to use KAPL to cater to the country’s national requirement of Oxytocin. In a submission to the Supreme Court this month, a copy of which The Indian Express has viewed, the ministry has said KAPL will have the capacity to supply 96 lakh ampoules of Oxytocin every month starting April 2019, where the requirement is 50 lakh ampoules. Additionally, it plans to bring in HLL Biotech, another government owned entity, to ensure supply is maintained.
“It will be seen from the above that KAPL alone will, from April 2019, be producing almost double the quantity required for the legitimate use of Oxytocin … The Central Government in the Ministry of Health and Family Welfare undertakes to direct KAPL and/or its distributors to keep double the quantity required in stores with distributors at any given point of time to take care of contingency apprehended by the Hon’ble High Court,” stated the affidavit.
An “empowered committee” of the government has “already taken a decision that HLL Biotech shall set up a facility” for “simultaneous” manufacturing of Oxytocin, using the same distribution network as KAPL, it stated. “The said additional production facility would become functional soon,” it added. Drug makers like Mylan and Neon Labs as well as patient activist group All India Drug Action Network (AIDAN) last year moved the Delhi High Court against the government’s decision to restrict manufacturing of Oxytocin to a PSU. While the government had argued its decision was to prevent “misuse” of the drug in fields like veterinary services, where cows would be given the drug to produce more milk, the high court in December ruled against its ban. This prompted the Health Ministry to appeal the decision at the Supreme Court, which is expected to hear the matter on March 26.
“It is submitted that the original writ petitioners [and some supporting respondents] are creating a false picture that the impugned decision would result into a huge adverse impact on number of industries manufacturing Oxytocin,” stated the ministry’s March affidavit, which suggested the move was to “protect” the commercial interest of specific drug makers. During the year ended March 31, 2018, KAPL had a turnover of Rs 357.03 crore and a net profit of Rs 14.55 crore.
Pharmaceutical market research firm AIOCD Awacs PharmaTrac data shows the size of the Oxytocin market shrunk to Rs 31.7 crore in the 12 months ended February 2019 from Rs 51 crore for the same period ended February 2017.