Karnataka health authorities are weighing a sweeping overhaul of institutional drug procurement following a major counterfeit medicine investigation, potentially eliminating intermediaries to require direct sourcing from manufacturers. State Health Minister U.T. Khader announced the regulatory review after an ongoing probe into a spurious drug racket uncovered vulnerabilities in the traditional pharmaceutical distribution chain.
The state Food and Drug Administration has cancelled the licenses of 16 retail and wholesale firms and suspended eight others in connection with the investigation, including a Pfizer carrying and forwarding depot in Nelamangala. Investigators are examining how surplus prescription drugs entered private markets outside designated institutional channels.
Restructuring Institutional Drug Procurement to Eliminate Intermediaries
The proposed changes aim to streamline the drug supply chain by removing carrying and forwarding agents and stockists for institutional buyers. Khader stated that while the established distribution network creates employment, multiple stops between manufacturers and end-users make it difficult to fix accountability and increase costs through intermediary commissions.
“There is an established chain aimed at making drug distribution easier and creating more employment opportunities,” Khader explained regarding the current distribution model. “But having so many stops between the company and the final user might create unforeseen obstacles and make it difficult to fix accountability. This is why we are trying to streamline these channels, similar to what is being done in Uttar Pradesh. This might even help in reducing cost of drugs as a lot of commission will be cut.”
State officials are examining procurement patterns across multiple facilities, including an incident identified in Belagavi. According to Khader, a pharmacy at KLE Medical College and Hospital in Belagavi procured 15,300 vials from a Pfizer C&F at a discounted price for hospital use. While the hospital issued an acknowledgement for the entire stock, investigators report that the facility required only 140 vials, while the remaining inventory was allegedly sold externally by a pharmacist at a higher price.
Investigators suspect that counterfeit medicines linked to Krupa Health Care—a wholesale center operated by a key suspect in the Bidadi case—may have mixed with this surplus consignment. These allegations remain part of an ongoing investigation and have not been independently established.
Traceability Mandates and National Regulatory Scrutiny
The proposed reforms in Karnataka draw inspiration from recent directives implemented by the Uttar Pradesh drug regulator. Under the Uttar Pradesh framework, institutional supplies distributed at special discounts must feature strict traceability measures. Such medications must be billed directly to the intended institution, delivered to the specific destination, and clearly labeled as “institutional supply” on the packaging.
To address vulnerabilities among middle-tier distributors, the Karnataka health department plans to establish mandatory technical qualifications for carrying and forwarding agents. “We need to ensure these people have at least some technical knowledge and expertise,” Khader said. “We will design some fixed rules.”
Further policy decisions regarding the procurement restructuring will be finalized following a national conclave of Food and Drug Administration officials scheduled to be held in Bengaluru in October.
Manufacturer Response and Patient Safety Measures
In response to the counterfeit drug investigation, pharmaceutical manufacturer Pfizer issued a public statement emphasizing patient safety protocols. “Patient safety and product quality are our highest priority,” the company stated. “We have been working with the authorities over the past month when the matter of counterfeit medicines was brought to our attention.”
Pfizer confirmed that it has taken active steps to support the state probe, including removing specific company batches from the market where batch numbers were duplicated by counterfeiters. The manufacturer is also assisting regulatory bodies in differentiating between authentic and counterfeit products while providing technical data regarding the affected batches.
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