Bangalore HC throws out new pharma policy

NEW DELHI: The Bangalore high court has ruled that the price control mechanism proposed in pharmaceutical policy 2002 was arbitrary, unreasonable and unconstitutional.
It has directed the government not to implement the policy unless it adopted appropriate criteria which would keep essential and life-saving drugs within the ambit of price control. A list of essential drugs shall be prepared by regulator National Pharmaceutical Pricing Authority with the help of the health ministry.
As per the order passed on November 12 by a two-member bench comprising chief justice N K Jain, the policy is detrimental to public interest as it would result in freeing of many essential drugs from price controls.
The order, which upheld a public interest litigation, could have serious implications for the drug industry. The industry has long been awaiting the promised reduction in the span of price controls to meet the challenges of globalisation and WTO-compliant patent regime.
Adoption of the new criteria would have brought down the number of drugs under price control listed in Schedule 1 of the Drugs Prices Control Order from 74 at present to around 30, while the span of control on the domestic pharmaceutical market was to shrink to nearly 20% from the current level of about 38%.
The government had announced the new policy in February, but could not issue new the DPCO because of the Bangalore High Court''s stay on the implementation of the drugs policy in May.
The government has filed a special leave petition in the Supreme Court against the stay order and the apex court is yet to admit it. "We will now modify the petition, before seeking its admission by the apex court as the plea now would be to quash the HC order," an official from ministry of chemicals & fertilisers said.
On November 11, the SC adjourned the case to November 25, as the respondents wanted more time to make the affidavit.
Regarding the charges raised by the PIL, the government contention has been that intervention of the judiciary in the policy - an executive prerogative duly validated by the legislature by Cabinet assent - upsets the system of governance.
Notable is the fact that criteria made void by the court are essentially not very different from that in the existing DPCO under the 1994 drug policy. Market share and mass consumption continue to be the yardsticks for clamping price control on a drug in the new policy.
As per the new criteria, bulk drugs (and their formulations) will be under price control if the total moving annual total value of a bulk drug as on March 31 2001 is more than Rs. 25 crore and the market share of any single formulator is 50% or more.
In the case of bulk drugs with MAT values between Rs 10 crore and Rs 25 crore, price control will be applied if a single formulator commands a market share of 90% or more. And the government had arrived at the new criteria after a long exercise including an appraisal of the issue of price control by a high-level Drugs Prices Control Review Committee.
Jittery over the HC ruling, the drug industry circles have said that the government has not been aggressive enough to contest the PIL.
In the PIL, the petitioners Dr Bhaskar and K S Gopinath had argued that the government had relied on imperfect data.