Centre can fix drug prices to check profiteering: SC

NEW DELHI: In a major relief to patients, the Supreme Court upheld on Friday the Centre’s power to specify prices of essential medicines to curb profiteering by pharmaceutical companies.
A bench of Justices Madan B Lokur and R K Agrawal allowed the Centre’s appeal against many high court orders either staying the operation of Drug Price Control Order (DPCO) notifications enforced by National Pharmaceutical Pricing Authority or restraining coercive action against defaulting pharma firms.
As a result, 350 bulk drugs and more than 2,000 formulations, including Diosmin, Glipizide, Norfloxacine, Salbutamol, Theophylline and Ciprofloxacin, would come under the government’s price control regime.
Those who had got relief from the various HCs were Cipla, Martin and Harris Laboratories, Dr Reddy’s Laboratories, Ishaan Labs, Remidex Pharmaceuticals and Johnson & Smith Co. They had challenged the DPCO and resultant notifications on the ground that Centre was resorting to a mechanical process for fixing price of bulk drugs and medicines without fixing norms for conversion cost, packaging charges and its material cost .
The court, however, said it was wrong on the part of the pharmaceutical majors to allege that the Centre had arbitrarily fixed norms for determining the price of medicines and formulations. It said the task of fixing retail price and ceiling price of formulations was not only gargantuan but also extremely complex.
Writing the judgment for the bench, Justice Lokur said: “It is 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 question.”
Asking the HCs to go slow in interfering in matters relating to public interest and government’s economic policy, the bench said: “Not only is the drug industry in the country extremely large with heavy financial stakes, but there is a lot at stake in it not only for the industry, but also for the consumers.”
“For this reason, the courts have to be extremely cautious in interfering in any manner whatsoever with the working of the drug industry. Any interference by the courts would have wide ranging repercussions not only in commercial terms but also for the people of the country,” the SC said agreeing with the submissions of solicitor general Ranjit Kumar.