DoP revises guidelines for PLI scheme for medical device to include investment into clinical trials in eligible criteria

New Delhi, March 1, 2023 :

The Department of Pharmaceuticals (DoP) has revised the guidelines of production linked incentive (PLI) scheme for promoting domestic manufacturing of medical devices (PLI MD) making the cost incurred by the applicants towards clinical trials of eligible products in India as an investment determining the eligibility to be selected under the scheme, though it would be capped at a maximum of 10 per cent of committed investment.

It has also changed the provisions related to investment required for determining the eligibility of the applicant for the scheme, mandating that for those who apply for incentives in the fourth round of invitations from the Department, eligibility would be based on the investment made on or after April 1, 2021, in comparison to the previous rounds where investments made on or after April 1, 2020 were considered. It has invited applications from eligible companies for the Category B of devices, implementing the revised guidelines and investment timelines.

“The cost incurred by the applicant, towards clinical trials of eligible products in India, shall be eligible towards investment. However, the investment on clinical trials (mentioned above) shall be capped at maximum of 10 per cent of Committed Investment for an approved applicant, irrespective of capitalised or not, in the books of accounts,” said the revised guideline.

In order to arrive at the correctness and reasonableness of such claims of expenditure, a two-member Committee nominated by the Drugs Controller General (India) shall examine such claims and recommend to the Project Management Agency (PMA) to arrive at a final amount admissible.

While computing the incentive applicable for the selected applicants, the revised guideline adds provisions related to in-house consumption of eligible products, which was not present in the previous guidelines. The incentive applicable is calculated by multiplying the net incremental sales of eligible products with the rate of incentive.

According to the revised guidelines, in case of in-house consumption of eligible product by the selected applicant, the net sales of eligible products shall mean the actual cost of production of the said product, as certified by a cost accountant, who is a member of the Institute of Cost Accountants of India. In case of in-house consumption of the eligible product, actual cost of production, as certified by a cost accountant, shall be considered as net sales of approved eligible product, it added.

The revised guideline also allows the applicant to submit claim in three months, six-months, nine months or full year period as against the clause in the previous guidelines where the applicants could only submit the claim on a half-yearly or annual basis, that is for the period of April to September and October to March, or April to March.

The revised guideline elaborates that an applicant may submit a claim for disbursement of incentive in which eligibility criteria for the year in consideration have been met., Incentive claims may be filed for the period of a quarter, six-months, nine months or the full year.

While it reiterates that the claims for any period shall be made only once, unless withdrawn and no subsequent part claim shall be allowed for the said period, it added that this clause mandates the applicant to make full claim for any period and the same cannot be revised. However, in case of any disallowance, which is subject to rectification subsequently, incentive claims are allowed in the period of rectification, added the revised guidelines.

Similarly, under the Category B of applications, the eligible products in the radiology and imaging medical devices - both ionising and non-ionising radiation products - and nuclear imaging devices, the revised guideline mentions cyclotrons, positron emission tomography (PET) systems, single photon emission tomography (SPECT), x-ray tube and other products, while in the previous guideline, the same was only listed as cyclotrons and other products.

The DoP has notified guidelines for the PLI MD scheme on July 18, 2020 and revised on October 29, 2020 and August 18, 2022. The fourth round of applications under the scheme were invited based on the guidelines issued on August 18, 2022.

However, based on the requirements the Empowered Committee, which is the competent authority, approved the revised guidelines on January 10, 2023. The DoP has also invited applications from eligible Category B applicants for medical devices for the eligible products, as per the guidelines revised now, stating that the investment for this round of applications shall be considered for determining eligibility under the Scheme, provided such investment is made on or after April 1, 2021. Pharmabiz