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The Supreme Court ruled on Monday that manufacturers and importers of pharmaceutical products must implement the Drugs (Prices Control) Order within 15 days from the date of notification or receipt of the order.
During these 15 days, they cannot manufacture or clear the bulk drug or formulation at the pre-notification price.
“The provisions of the DPC Order are clear, that prices should be revised within 15 days even in regard to formulations manufactured prior to the date of notification or those manufactured within 15 days from the date of notification,” went the verdict by a bench headed by R M Lodha. The court thus dismissed the appeals of the manufacturers, upholding the government stand.
The rule, said the court, required the manufacturer to print the retail price of the formulation on the label of the container of the formulation. Therefore, the contention cannot be accepted that up to to the expiry of the 15th day from the date of notification of the price fixation order, they were at liberty to manufacture the formulation and print on these the pre-notification price. The 15 days was simply a grace period allowed for adjusting their business for arranging the unsold stock in the distribution chain, said the judges. The court, thus, resolved contrary views of the high courts at Bangalore and here. The Karnataka HC, on a batch of writ petitions led by GlaxoSmithKline Pharmaceuticals, had declared the price fixation order must be carried out within 15 days.
However, the Delhi HC, on another set of pharma companies’ petitions, had a contrary view, favouring the manufacturers; it allowed them to clear the batches ready for sale earlier than 15 days. The SC stated the Delhi HC was wrong and the Karnataka view was correct. BS REPORTER n New Delhi
In September, the National Pharmaceutical Pricing Authority had said drug companies would get 15 days to respond after a price revision notification. Manufacturers made many representations, seeking clarifications and corrections. Prices of the 348 drugs in the National List of Essential Medicines were fixed under the new drug policy that came into force last year. According to this, prices of medicines are being capped by taking a simple average of all brands with more than one per cent market share.
Earlier, a public interest suit was filed by an All India Drug Action Network, challenging the formula. It contended that market-based pricing never helped reduce prices and the simple average of ceiling prices were in many cases higher than the market leader’s price under the new policy. The SC is yet to rule on this suit.
Paragraph 14 (1) of DPCO,1995 and other years provides that every manufacturer or importer shall carry into effect the price of a bulk drug or formulation, as fixed by the Government, within 15 days from the date of notification in the gazette or receipt of the order of the Government by such manufacturer or importer.
“The provisions of the DPC Order are clear that prices should be revised within 15 days even in regard to the formulations which were manufactured prior to the date of notification or those manufactured within 15 days from the date of notification,” the judgment delivered by a bench headed by Justice R M Lodha said. The court thus dismissed the appeals of the manufacturers and allowed the appeals of the government.
The court stated that it was important to bear in mind that under the rule, the manufacturer is required to print the retail price of the formulation on the label of the container of the formulation. Therefore, the contention of the manufacturer/distributors cannot be accepted that upto to the expiry of the fifteenth day from the date of notification of the price fixation order in the gazette they are at liberty to manufacture the formulationand print on them the pre-notification prices.
The period of 15 days is simply a grace period or cooling period allowed to manufacturers to adjust their business in a manner where appropriate arrangements are made with regard to the unsold stocks in the distribution chain, the court noted.
