Reproduced below is the letter addressed by IORD President and CEO Prof. Ramaiah Muthyala to the Government of India, advocating affordable access to orphan drugs for rare disease patients through a public-interest, Section 8 non-profit pharmaceutical model supported by CSR funding.
India is often described as the “pharmacy of the world,” yet patients living with rare diseases continue to face minimal access to treatment. More than 90 million Indians are affected by over 7,000 rare diseases, but only around 5 per cent have any approved therapy. Even when treatments are available, they are often prohibitively expensive, leaving families with few realistic options for long-term care.
Policy measures have begun to emerge. Following a writ petition in the Delhi High Court, the government established the National Fund for Rare Diseases, allocating ₹974 crore for 2024–26. The National Policy for Rare Diseases (NPRD), introduced in 2021, categorises 63 rare diseases into three groups based on prevalence and treatment availability. Yet, despite these frameworks, patients continue to encounter limited availability in hospitals, long procurement delays, and sharply uneven access across states.
A major constraint lies in the economics of orphan drugs. Most rare diseases affect tiny groups of patients—89 per cent occur at frequencies below one per 100,000 people—making drug development and manufacturing commercially unattractive. Meanwhile, India already manufactures and exports the active pharmaceutical ingredients (APIs) for many orphan drugs whose patents have expired. Nearly 600 U.S. FDA–approved orphan drugs are now eligible for generic production. Yet, Indian patients often cannot access these medicines because the finished formulations are not produced for the domestic market. The problem is not a lack of capacity; it is the absence of a viable business model.
One solution is to create a public-interest pharmaceutical entity under Section 8 of the Companies Act, 2013, supported by Corporate Social Responsibility (CSR) funding under Section 135 of the Act. Section 8 provides the legal structure for non-profit companies established for charitable objectives, including the advancement of healthcare. Such an entity could operate on a not-for-profit basis, reinvesting any surplus into expanding access, reducing prices and supply orphan drugs.
Section 135 of the Companies Act complements this structure by mandating CSR spending for companies that meet specified financial thresholds—namely, a net worth of more than ₹500 crore, a turnover of more than ₹1,000 crore, or a net profit of more than ₹5 crore in the preceding financial year. Companies covered by these provisions are required to spend at least 2 per cent of their average net profits from the previous three years on CSR activities, including projects relating to healthcare as listed in Schedule VII of the Act. Importantly, this obligation applies to all qualifying companies, including Section 8 companies if they cross the prescribed thresholds.
Together, Sections 8 and 135 create a complementary framework: Section 8 defines the purpose of a non-profit, public-interest entity, while Section 135 determines which companies must contribute CSR funds and how such funds may be deployed. Under CSR rules, companies are permitted to channel their CSR spending through registered Section 8 companies that comply with the statutory requirements for receiving CSR funds.
In practical terms, this allows for structured collaboration between the government and the private sector. The government can establish or support a Section 8 non-profit pharmaceutical company focused on orphan drugs and enable it to pool CSR contributions from large private companies under Section 135. This model provides a predictable, legally grounded funding stream for manufacturing and distribution while ensuring transparency, accountability, and alignment with public health goals.
This approach mirrors successful international efforts: Civica Rx in the United States stabilises the supply of essential generics. At the same time, DNDi has developed affordable treatments for neglected tropical diseases through collaborative, mission-driven models.
Such an entity could partner with government agencies, academic institutions, patient organisations, and philanthropic groups. It would enable transparent pricing, coordinate manufacturing, and ensure consistent availability of treatments for small patient populations. Given the limited scale required for most orphan drugs, cost structures are more manageable than commonly assumed—particularly for Group 2 diseases under the NPRD, which have treatment costs in the range of a few lakh rupees annually when manufactured generically.
India’s pharmaceutical ecosystem is well-suited to this approach. The country has nearly 8,500 Micro, Small, and Medium Enterprises (MSMEs) engaged in drug manufacturing. These firms already supply a significant share of generic medicines and are equipped to produce small-volume batches. With targeted incentives—such as limited market exclusivity, tax rebates, or grants modelled on the U.S. Orphan Drug Act—MSMEs could play a central role in supplying orphan drugs under the coordination of a Section 8 public-interest entity.
Distribution is another critical challenge. Because demand for orphan drugs is low and unpredictable, retail pharmacies rarely stock them. As a result, patients must depend on lengthy procurement processes. A practical alternative lies in India’s existing public infrastructure. The Jan Aushadhi network, with more than 14,000 stores across the country, could serve as a reliable distribution channel. Centralised procurement by government agencies or large healthcare providers would further reduce costs and ensure that tertiary care centres have predictable supplies.
This model also aligns with broader trends in corporate governance. Indian companies are increasingly guided by Environmental, Social, and Governance (ESG) frameworks and statutory CSR obligations. Supporting a Section 8 pharmaceutical entity through CSR spending under Section 135 allows companies to meet their legal responsibilities while contributing directly to a high-impact public health objective.
India has the scientific capacity, manufacturing strength, and legal frameworks needed to address the orphan drug challenge. What is missing is an institutional mechanism that links these capabilities to sustained funding and patient access.
A Section 8 non-profit pharmaceutical company, supported by CSR contributions under Section 135 and integrated with public distribution channels, offers a viable, sustainable, and equitable path forward.
For the millions of Indians living with rare diseases, timely access to treatment is not merely a medical issue but a question of justice. India now has the opportunity to create a system that reflects this urgency and ensures that no patient is denied care because the market does not find them profitable.
