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    Defending inclusion of life saving anti-diabetic and cardiovascular drugs under non-scheduled products to ensure they are available at low cost

    medicines
    Date : 26/09/2016

    Indian Pharmaceutical Alliance & Anr. V/S. Union of India & Ors. (Writ Petition No. 2700 of 2014)

     

    Synopsis:

     

    This Writ Petition was filed by the association of pharmaceutical companies challenging the inclusion of anti-diabetic and cardiovascular drugs under non-scheduled products which placed a fixed MRP (Maximum Retail Price), including excise duty and local taxes on such life saving drugs. We appeared for Low Cost Standard Therapeutics (Respondent No.4), which is a Trust working for welfare of citizens by providing low cost drugs in Gujarat.

     

    Description:

    ISSUE:

    Issuance of 33 Notifications/orders dated 10th July, 2014 bringing anti-diabetic and cardiovascular drugs under the non-scheduled drugs of Drug (Price Control) Orders, 2013 for fixing an MRP (Maximum Retail Price). The said notifications came to be challenged by the Association of Pharmaceutical Companies.

    FACTS:

    On 10th July, 2014, 33 notifications issued under DPCO-2013 on price control of drugs, namely, those enlisted in the National List of Essential Medicines, 2011 (NLEM-2011) have been extended to anti-diabetic and cardiovascular drugs to fix an MRP (Maximum Retail Price) as the same are life-saving drugs. These notifications were impugned by the association of pharmaceutical companies called Indian Pharmaceutical Alliance in the present Writ Petition.

     

    • Schedule I to the DPCO-2013 specifies the formulations, which are brought under price control but also the dosage, strength and delivery mechanism of the said formulations. Thus, a formulation will be a scheduled formulation if it only contains the exact strength and dosage of the drugs as mentioned in the NLEM-2011.  Accordingly, it is only the scheduled formulations as per the dosage, strength and delivery mechanism which are to be price controlled. However, under para 19 of the DPCO-2013 that deals with Fixation of ceiling price of a drug under certain circumstances, the State is given a power, in extra ordinary circumstances, to fix a price for a non-scheduled formulation for a specified period.
    • The petitioners were aggrieved and dissatisfied with the exercise of power by Respondent Nos. 1 to 3 (being Ministry of Chemicals and Fertilizers, Department of Pharmaceuticals and National Pharmaceutical Pricing Authority) under para 19 of this DPCO-2013.

     

    Arguments of the Petitioners:

    1. Para 19 empowers the Government to act only in “extraordinary circumstances” and if it considers it necessary in public interest, it can fix the ceiling price or retail price of any drug for such period as it may deem fit. The extraordinary circumstances must be shown to be existing and they must be clearly reflected in the orders passed by taking recourse to para 19. In the impugned order, no where the extraordinary circumstances giving rise to the issuance of the same are indicated.
    1. The extraordinary circumstances cannot be the alleged huge inter-brand differences in branded generics/ off patent drugs, which are indicative of a severe market failure. Even different brands of the same drug formulation are identical to each other in terms of active ingredient, strength, dosage, route of administration, quality product characteristics and intended use, but vary disproportionately in terms of price.

     

    1. Guidelines that empower the Government under Para 19 for price fixation is withdrawn but the withdrawal is prospective in nature. By withdrawal of these guidelines, it is conceded that the exercise of power in terms of para 19 is unguided, unbridled, unregulated and uncontrolled. There are no guidelines in the field. In these circumstances, the court must proceed to quash and set aside the impugned orders/notifications,

     

    Arguments of the Respondents

    1. DPCO-2013 was promulgated by the Government of India in exercise of powers under section 3 of the Essential Commodities Act, 1955. The power to frame the order and to issue it is thus not challenged and particularly when it is traceable to essential commodities such as drugs and formulations.
    1. A large population, whether young or old is suffering from such diseases like diabetes and heart ailments because the current life pattern is complex. Some diseases require regular, continual treatment. After diagnosis, the treatment in the form of preventive and maintenance dose of drugs goes on for long period, in some cases covers the life of the patient. The price of such drugs if not controlled and regulated, that would result in these patients being deprived of the essential drugs and medicines.

     

    1. The treatment is of consumption of drugs, which may be in tablet form or injectibles. Once the treatment is prolonged and sometimes extends to whole life, then, the availability of essential drugs is the duty of the Government. It is not that the constitutional mandate is served by merely bringing the drugs in market. The drugs and medicines must reach all those who can afford and to those who do not afford.

     

    Status (In court): Writ Petition dismissed.

     

    HOLDING:

     

    • It is to serve larger public interest that the Essential Commodities Act, 1955 empowers issuance of the price control order. That is to control production, supply, distribution, price etc. of essential commodities. Medicines/ formulations are essential commodities and that is how DPCO is framed.
    • Under Para 19, Government exercises the discretionary power in cases of extraordinary circumstances. If it considers necessary so to do in public interest, fix the ceiling price or retail price of any drug for such period, as it may deem fit and where the ceiling price or retail price of the drug is already fixed and notified, the Government may allow an increase or decrease in the ceiling price or the retail price, as the case may be, irrespective of annual wholesale price index for that year.

     

    • The impugned orders do not suffer from arbitrariness or total non application of mind.

     

    • The impugned orders indicate though the preamble as to how the exercise of power is guided by the above regime.

     

    • Market failure in respect of the pharmaceutical companies in the context of India can be attributed to several factors, but the main reason is that the demand of medicines is largely prescription driven and a patient has very little choice in this regard.

     

    • market failure alone may not constitute sufficient grounds for Government’s intervention, but when such failure is considered in the context of role the pharmaceuticals play in the area of public health, which is a social right, such intervention becomes necessary, especially when exploitative pricing makes medicines un-affordable and beyond the reach of most and also puts huge financial burden in terms of out of pocket expenditure on health care.

     

    • The notifications indicate as to how there is very high incidence of cardiovascular diseases in the country, which is estimated to affect around 10% of the population and is responsible for 25% of the deaths in the age group of 25 to 69.

     

    • Even if the guidelines stand withdrawn, there are internal checks and balances. They would guide the Government in exercising the discretionary powers in terms of para 19. It is not as if in individual cases, these powers cannot be questioned.

     

    • Under the judicial review, the Court should not interfere with the exercise of power by the Central Government. It is not for the Court to then probe as to whether the circumstances indicated are extraordinary or not.

     

    • Even otherwise, the circumstancers were indeed extraordinary. Given the increasing number of patients and suffering from diabetes and cardiovascular diseases, the Court did not think that the Government has exceeded its power or was not justified in exercising it.

     

     

    Order dated 26.09.2016
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