Regretting that “the overall attitude of the drug industry appears to be one of profit making or preserving commercial interests”, the Supreme Court Friday approved the Central government’s notifications and drug pricing orders that put a ceiling on maximum retail price of more than 2,000 formulations.
A bench of Justices Madan B Lokur and R K Agrawal ratified a clutch of notification issued by the government since July 1999 prescribing the norms for conversion cost, packing charges and process loss of raw materials, thereby fixing the maximum retail prices of drug formulations.
Allowing a batch of appeals filed by the Central government against orders by some high courts which had quashed
these notifications, the bench said that the Drug Pricing Authority based its decisions of retail prices of formulations based on studies and recommendations by committees specifically set up to examine the issues of drug pricing.
It also found nothing wrong with re-issuing the notifications without re-determining the norms every year after noting that the drug manufacturers desisted from rendering any assistance to either the committees or any other authority in revisiting the norms for ceiling prices.
“By not furnishing the information required, the drug industry pushed the Central Government into a corner leaving it with no option but to prescribe the norms on the basis of available material and later re-notify the norms…the overall attitude of the drug industry appears to be one of profit making or preserving commercial interests, while the concern should really be of promoting consumer interest,” noted the court.
It said that the government, faced with these competing interests, sided with the consumers and this could not be
faulted with. “The Central Government did not act in a routine or mechanical manner in re-notifying the norms every year from 2000 onward…While there may not be a statutory obligation on each manufacturer/formulator to furnish information for prescribing the norms, there is certainly a moral and social obligation on them to furnish information so that appropriate norms could be notified not only for their benefit but also for the benefit of the consumers. The preamble to the Essential Commodities Act, 1955 cannot be forgotten,” the court added.
The bench held that given the circumstances that the two committees received a virtual non-cooperative attitude of the drug industry, the Central government prescribed the norms and Cipla, one of the petitioners in the case, and the drug industry were obliged to accept them as notified without much ado.
“It cannot be that the drug industry does not supply necessary information and data to the expert Committees appointed by the Central government and then blames the Central government for taking a decision without necessary information and data,” it said.
The court, while upholding the validity of various notifications issued in 1999 and in subsequent years, pointed out that not only is the drug industry in the country extremely large with heavy financial stakes but there was also lot at stake in it also for the consumers.
“It is also important to remember that the purpose of fixing the retail price and ceiling price of formulations is to make them affordable and ultimately benefit the consumer of medicines. Profits earned by manufacturers/formulators are secondary and ‘profiteering’ is certainly out of the question,” said the bench while approving the norms of drug pricing issued in the years 1999, 2000, 2001, 2002 and 2003.