Gopal Jain: Not so fast

The government's proposed New Drug Policy is being justified by taking recourse to the recent interim decision by the Supreme Court. However, it is imperative that we understand the purpose and the reasoning of the Supreme Court before we go ahead and make a wide sweeping decision that will negatively affect an entire industry.

The pharmaceutical policy of 2002 attempted to reduce the span of price control substantially, and put in place a mechanism whereby the government could intervene in cases where prices behaved abnormally. The aim was to encourage the accelerated growth of the industry and introduction of new drugs, thus promoting investment on one hand, whilst ensuring availability of drugs at reasonable prices on the other.

This policy was first challenged in the Karnataka High Court. The High Court order effectively directed the government not to implement the policy of 2002. This was then challenged by the Government of India in the Supreme Court. The Supreme Court passed an interim order on March 10, 2003. The key direction to the government was to consider and formulate appropriate criteria to review drugs that were essential and life-saving in nature while providing an intervention mechanism to ensure availability of essential and lifesaving drugs.

However, the government now proposes to introduce a New Drug Policy, in which it will re-impose price control across the board on all lifesaving drugs (listed in the national list of essential medicines 2003), regardless of their availability at reasonable prices. Thus, the impact of price control on the market will move up from 74 drugs to 354 drugs. It is imperative to note that all 354 drugs are off patent and there exists significant competition to keep prices in check.

This move is officially stated to be in pursuance and compliance of the Supreme Court order of March 2003, but it seems that the government has not understood the purport of the order of the Supreme Court. The order of the Supreme Court clearly suspended the operation of the High Court order which directed that the policy of February 13, 2002, shall not be implemented. Thus, the Supreme Court, by suspending this High Court order, permitted implementation of the 2002 policy. In addition, if the Supreme Court wanted to direct the Union of India to continue blanket drug price control on all essential life-saving drugs, then it would have declined interim relief against the Karnataka High Court order.

The government cannot read the interim order as an observation that would constitute a direction to re-impose price control as it would be against the order of the Supreme Court.

A stringent drug price control policy across the board over the past two decades has not effectively addressed the need of providing greater health access to a wide population, nor has it succeeded in encouraging the introduction of new drugs, innovation, research and development. A more pro-active policy moving towards de-control of price would effectively lead to increased capacity, bring new drugs to the market, encourage greater investment, higher production, all of which would automatically ensure lower prices.

The author is an advocate in the Supreme Court