@JUDGMENTTAG-ORDER
N.K. Jain, C.J.@mdashThis petition is filed by Lt. Col. (Retired) K.S. Gopinath and Dr. Bhaskar B.V. in public interest for withdrawal of the
Pharmaceutical Policy 2002-(''PP-2002'' in short) contending that it has been framed like a business policy and if allowed to be enforced, it would
take away lifesaving and essential drugs out of the ambit of the Drugs Price Control Order which is highly detrimental to the public interest.
2. It is averred that in 1975 the Hathi Committee was established to report on methods by which India could attain self-sufficiency in medicines
and abundance of availability of essential medicines at reasonable prices and thereafter Drug Policy of 1986 was evolved. The object of Drug
Policy is to benefit the population at large. It primarily aims at formulating a policy for controlling the prices of drugs in the country. It is a regulatory
system which is prevalent to ensure that the essential drugs considering their consumption and ability to curb, cure or eradicate certain diseases that
are recurring and are commonly prevalent, are available in abundance to the general population of the country. The ministry of Health, Government
of India has prepared a list of essential 173 drugs, which is referred as the National Essential Drug List. The drugs mentioned in the said list are to
be made available to the public at affordable and reasonable prices. The Drug Policy of 1986 was amended in 1995. However, the basic
objectives of the 19986 policy remained the same and Drugs (Prices Control) Order, 1995 (''DPCO-1995'' for short) was promulgated and the
first schedule to the same includes 74 items of drugs which appear in the List as per the endorsement (Annexure-F) produced in the petition. It is
averred that the Government of India has now taken the task of revising the Drug Policy and in January and February, 2002 a revised PP-2002
has been declared and published by the Government of India. It is also stated that the Policy is based upon the report of ORG-MARG
(Operational Research Group-Marketing and Research Group) and the data given therein is not comprehensive even if the recommendation made
by the Reviewing Committee and the policy fails to enforce the basic objectives by promulgating the Pharmaceutical Policy and Drug (Price
Control) Order and the basis for drug prices control which is mentioned in the PP-2002 is clearly arbitrary, unreasonable and fails to take into
account the relevant factors and takes into account the sales turnover of a particular drug and not the volume of sales. This lays an inappropriate
and incorrect emphasis on the wholly irrelevant consideration namely on the price of drug concerned. It is well known that some drugs are
expensive by their very nature. Even low volume of sales of such drugs would lead to a high turnover in terms of value whereas other drugs which
are very essential but whose sale price has been inherently and by their nature low would be left out of the reckoning. The Policy takes into
account the market shares of the largest formulator of the drugs in the market and fails to take into account the fact that there can easily be an
oligopolistic structure in which three or four entities share between themselves the bulk of the market and neither of them having 50% or more of
the market share particularly in case of drugs, the total value of sales whereof exceeds Rs. 25.00 crores. It is also stated that, though the policy
notes that there are several drugs which are primarily sold in multiple combinations and that taking the figures of sales of single ingredient
formulation, may not be an appropriate indicator of the user of the drugs. In fact, there are certain significant life-saving drugs, which are sold in a
combination form only, and there are insignificant sales of the drugs in a single ingredient formulation. It is also stated that large volume of sales of
essential drugs takes place to institutional outlets including Government controlled institutions and hospitals as bulk sales and to leave out of
consideration these sales is to take an irrational and arbitrary approach to the issue of listing of drugs for price control. If price control order is
promulgated on the basis of PP-2002 then the price control would be left to the whims and fancies of the Pharmaceutical manufacturers and
wherefore, the policy is violative of Articles 14, 19 and 21 of the Constitution of India and also Section 3 of the Essential Commodities Act and the
Policy would only benefit the manufacturers.
3. The Respondent has filed statement of objections denying the averments made in the petition. It is averred that this is not a public interest
litigation. The Petitioners have been instigated by the Pharmaceutical Manufacturers to make a false averment. It is also averred that basic
objectives of DPCO-1995 would remain the same, however, in view of the changes on account of liberalisation of our economy and on account of
new obligations undertaken by India under the WTO agreements, a change in the Policy is required and it is for the Respondent to formulate a
Policy which is beneficial to the public at large and it is not open to the Petitioners to contend that the said Policy has to be replaced or any
direction should be issued for reformulation of the Policy. It is stated that the Policy of the Government in promulgating PP-2002 is to change the
policy of control and the overall power of the Government to monitor the situation wherein there are abnormal difference in the price of the goods.
Essential drugs have always been retained by the Government and appropriate steps would be taken in exercise of the said power, It is stated that
in the year 1996, the Ministry of Health and Family Welfare prepared a list of 279 items, which are treated as essential drugs, the policy aims at
identifying those drugs for price regulation, which are of mass consumption nature and wherein there is absence of sufficient competition. The
present Policy is that the price control mechanism should only be applied where there is no sufficient competition and for this purpose, the new
Policy has been promulgated laying down the following three criteria:
1) The drugs should form part of the list of 279 items of essential drugs or 173 items, which are considered important by the Ministry.
2) The Moving Annual Total (MAT) value should be more than Rs. 25 crores, and the market share of the company should be 50% or more.
3) The MAT value is less than Rs. 25 crores, and more than Rs. 10 crores, then the percentage of market share should be 90% or more.
4. It is also stated that Drugs (Price Control) Order is based on the statistics collected by ORG-MARG. The PP-2002 is not based solely on the
basis of the statistics collected by ORG-MARG. The Central Government is yet to evolve a methodology which is coming out with a new price
control order and it is only thereafter the details will have to be worked out and wherefore the Petitioners challenge to PP-2002 cannot be
sustained and if they are ultimately aggrieved by the Drugs (Price Control) Order that may be passed on the basis of the Pharmaceutical Policy, it is
open to them to challenge the same. It is also stated that the application of ORG-MARG data was suggested by expert committee viz, Drug Price
Control Review Committee (in short ''DPCRC'') and that drugs to be kept under price control are presently under the process of identification in
accordance with the criteria laid down in the policy and no comments are sought to be offered on the contention of the Petitioners that some
essential drugs pointed out by them will escape the net of price control. It has already been stated that only some and not all the essential drugs
would be kept under price control in accordance with the policy and essential drugs satisfying the criteria of mass consumption and insufficient
competition would not go outside price control and moreover, mote new drugs would come under price control. The pharmaceutical policy does
not differentiate among the medicines based on the therapeutic use. A drug with such low volume of sales as suggested by the Petitioners, cannot
be said to be drug of mass consumption. However, the new Drugs (Price Control) Order is not yet finalised and issued and wherefore, the
Respondent has sought for dismissal of the writ petition.
5. The Petitioners have filed rejoinder denying the averments made in the objections statement and reiterating the averments made in the writ
petition. It is further averred that the contents of the statement of objections would clearly show that the Respondent intends to promulgate Drugs
(Price Control) Order by leaving out essential and life-saving drugs which do not satisfy the criteria of the PP-2002 which is not at all based upon
relevant material and is based upon irrelevant material and is arbitrary and in view of the averment made in the objections statement that the Drugs
(Price Control) Order has been issued as per the Policy, it is clear that the Respondent is bent upon issuing Drugs (Price Control) Order pursuant
to PP-2002 and only those drugs which satisfy the criteria mentioned in PP-2002 would come within the net of the Drugs (Price Control) Order
and most of the essential and life-saving drugs would be taken out of the basket of price control and it is also stated that certain new drugs which
are also life-saving and essential drugs would not come within the ambit of the Drugs (Price Control) Order. In view of the criteria regarding the
quantity of sales and other criteria and also the fact that single ingredient formulation drugs are taken into account for the purpose of finding out as
to whether conditions have been satisfied for bringing the drugs under the Drugs (Price Control) Order. The Petitioners have produced the drugs
list introduced but not present in 1996 list and are today essential and life-saving drugs and also letter dated 29.7.2002 written by the Ministry of
Chemicals and Fertilizers.
6. This Court by Order dated 30.5.2002 stayed the operation of the PP-2002, if not already implemented, for a period of ten weeks. Thereafter,
considering the application for vacating the interim Order, this Court by a detailed Order modified the interim order and also observed as follows:
It is made clear that the interim order will not preclude the Respondents from declaring developmental measures with regard to quality of drug,
establishment of Central Drug standards, Central organisation and taking other steps in Pharma Education and Training so that developmental
activities in pharmaceutical sector is not stalled. It is also open to Respondent No. 3 to consider and identify essential drugs and life-saving drugs
and their value, but not to give effect to the policy before final decision is taken by the Government to implement the policy, which would naturally
be subject to further orders from this Court in the circumstances of the case. Interim Order is modified to the extent stated above.
Thereafter, at the request of the learned Counsel appearing for the parties, the matter was posted for hearing on 22.10.2002. Arguments of the
respective learned Counsel for the parties were heard and the matter was adjourned to 30.10.2002 for further arguments. On 30.10.2002 the
matter was reserved for orders.
7. Sri S.K. Kapoor, learned Senior Counsel with Smt. Rukmani Menon, Advocate for M/s. S.R. Associates, appearing for the Petitioners
submitted that PP-2202 is unreasonable, arbitrary, based on irrelevant considerations and formulated without taking into account relevant factors.
He submitted that right to health is a fundamental right encompassed within right to life and liberty granted under Article 21 of the Constitution of
India. He submits that though PP-2002 states in the introduction that basic objectives of Government''s policy relating to drugs and pharmaceutical
sector enumerated in 1986 Drug policy will still remain largely valid the contents of the policy and method formulated for span of control and
pricing of essential and life-saving drugs would clearly reveal that the basic objective of 1986 policy i.e. abundant availability on a continuous basis,
at reasonable of essential, life saving drugs is defeated as they would be outside the price control order and this would only enable the
pharmaceutical manufacturers to take advantage of decontrol of price which would steeply increase the prices of essential and life-saving drugs and
hence would defeat the basic objectives of drug policy. The learned Counsel has taken us through the contents of Drugs Policy 1986 and PP-2002
and recommendation of DPCRC to substantiate his contentions and submitted that PP-2002 is arbitrary and unreasonable in as much as it lays
down that the data supplied by the ORGMARG is not accurate and correct and it gives only an estimation and not correct picture of data in the
absence of any substantial material. The learned Counsel submitted that PP-2002 takes into consideration the sales turnover of a particular drug
and not the volume of sales and this lays an inappropriate and incorrect emphasis on the wholly irrelevant consideration namely on the price of drug
concerned, as drugs which are expensive by their very nature would lead to high turnover even if volume of sales is low. Whereas essential drugs
sales price of which is low would not lead to high turnover and would fall outside the ambit of price control and would be left out of reckoning. He
further submitted that the new policy takes into account the market shares of the largest formulator of the drugs in the market and the policy fails to
take into account the fact that there can easily be an oligopolistic structure in which three or four entities share among themselves the bulk of the
market and neither of them having 50% or more of the market shares particularly in case of drugs the total value of sales whereof exceeds Rs. 25-
00 Crores. The learned Counsel further submitted that there are several drugs which are primarily sold in multiple combinations and that taking the
figure of sales of single ingredient formulation drugs may not be an appropriate indicator of the user of the drugs and there are certain significant life
saving drugs which are only sold in a combination form and where there are insignificant sales of the drugs in a single formulation PP 2002
proceeds to take sales figure of single ingredient formulation drug as the indicator of volume of sales. The learned Counsel submitted that
suggestions made by DPCRC has been ignored while formulating PP-2002. Learned Counsel submits that as a matter of fact, the Respondents
have not taken into consideration the relevant factors as per the aims and objects of the policy in its implementation, and therefore, the PP-2002 is
liable to be struck down as unconstitutional.
8. The learned Addl. Solicitor General Sri Gopalan submitted that what is challenged in the garb of PIL is PP-2002 which only indicates
Government policy relating to the Drug and Pharmaceutical Sector and would fall within the policy making power of the Government and in view
of liberalisation of Indian Economy, globalisation of the World economy and on account of new obligations undertaken by India under the W.T.O.
agreements, events which have occurred subsequent to Drug Policy 1986 and modifications made therein in 1994, PP-2002 has been formulated
and the emphasis in the PP-2002 is to have effective monitoring and enforcement system and do move away from the ""Controlled Regime"" to a
Monitoring Regime"". He has taken us through the contents of PP-2002 and submitted that ultimate control over price fixation and monitoring
quality and price has been reserved by the Government of India, if there is abnormal behaviour in price of drugs and pharmaceuticals and sufficient
care has been taken to protect the interest of public by ensuring availability of essential and life saving drug to the needy public. He submitted that
Drugs Price Control Order is yet to be promulgated and apprehension of the Petitioners that essential drugs and life-saving drugs would be taken
away from the basket of price control order is baseless and premature and domain of the Government to formulate the policy cannot be interfered
with or eroded even if the Petitioners prove that there can be a better policy as it is not open to the Petitioners to contend that this Court should
substitute PP-2002 by a better policy. He has relied upon the following decisions of the Supreme Court and submits that the writ petition is liable
to be dismissed.
i) Krishnan Kakkanth Vs. Government of Kerala and ohters,
ii) Netai Bag and Others Vs. The State of West Bengal and Others,
iii) Punjab Communications Ltd. Vs. Union of India and Others,
iv) India Thermal Power Ltd. Vs. State of M.P. and Others,
v) M/s. Ugar Sugar Works Ltd. Vs. Delhi Administration and Others,
vi) BALCO Employees Union (Regd.) Vs. Union of India and Others,
vii) Mithilesh Garg, Vs. Union of India and others etc. etc.,
viii) Prakash Hiraman Hingane Vs. State of Maharashtra,
9. In rejoinder, while the learned Senior Counsel for the Petitioner does not dispute the principle enunciated in the cases cited above, he submits
that this Court can consider if the policy is arbitrary or capricious and in the instant case, that the Respondent is bent upon promulgating Drugs
(Price Control) Order which would admittedly take away essential and life-saving drugs from the purview of price control which would clearly
defeat the very object of the policy to provide for abundant availability on a continuous basis of the life-saving and essential drugs at reasonable
price. He further submits that despite the interim order passed by this Court on 30.5.2002, the Respondents have not produced before this Court
any material identifying essential and life-saving drugs which would be brought under Drug (Price Control) Order and their values to show that the
policy, which is in continuation of 1992 policy is justifiable and certainly this Court can interfere if the policy is arbitrary, irrational, and
unreasonable and thus it violates Articles 14, 16 and 21 of the Constitution, and therefore, this PIL is maintainable and policy is liable to be struck
down as unconstitutional. Mr. Kapoor, learned Counsel submits that the decision in Mitilesh Garg''s case is not helpful to the facts of the present
case as in that case operators challenged the liberalisation of the policy under the new Act where the grant of permit is a rule and rejection is
exception.
10. We have carefully and assiduously examined the contentions of the learned Counsel appearing for the parties both on legal and factual aspects
and scrupulously scrutinised the material placed on record and the case law cited.
11. No doubt in an appropriate case, this Court can issue directions if there is gross violation of fundamental rights or if the issue touches the
conscience of the Court but not for personal gain or publicity or political gain. However, PIL is not a pill or a panacea for all wrongs. it is
essentially meant to protect basic human rights of the weak and the disadvantaged and the Court cannot allow its process to be abused by anyone.
12. It is not necessary to narrate the case law cited individually as the law is well settled and the principles enunciated are also not disputed by the
learned Counsel for the parties. However, each case depends on the facts and circumstances of its own.
13. It is well settled that it is within the domain of the Executive to take policy decisions and it is for the Government to make a choice in balancing
the pros and cons relevant to the change in the Policy and choice of policy is for the decision maker and not for the Court. The Court would not
normally exercise the power of judicial review to interfere with policy decisions of the Executive unless policy could be faulted on grounds of
malafides, unreasonableness, arbitrariness or unfairness. It is also well settled that to ascertain unreasonableness and arbitrariness in the context of
Article 14 of the Constitution, it is not necessary to enter upon any exercise for finding out the wisdom of the policy decision of the Government. It
is immaterial whether a better or a more comprehensive policy decision could have been taken. It is equally immaterial if it can be demonstrated
that the policy decision is unwise and likely to defeat the purpose for which such decision has been taken. Unless the policy decision is
demonstrably capricious or arbitrary and not informed by any reason whatsoever or it suffers from the vice of discrimination or infringes any statute
or provisions of the Constitution, the policy decision cannot be struck down. It should be borne in mind that except for the limited purpose of
testing a public policy in the contest of illegality and unconstitutionality, Courts should avoid ""embarking on unchartered ocean of public policy.
14. Applying the facts and the respective arguments advanced having regard to the settled position of law, we consider the matter.
15. Health is a fundamental human right. The Constitution of India directs the State to regard the improvement of public health as among its primary
duties. The five-year plans have been providing the framework within which State and Central Governments have developed their health services,
infrastructure and programmes. The National Health Policy of 1983 marked a significant step in the national endeavour to improve public health.
The attainment of ""Health for all"" as conceived in the policy required an accelerated development of all inputs to the Health Care System, including
essential and life saving drugs and Vaccines of proven quality. Drugs alone are not sufficient to provide Health Care. However, if rationally used
they do play an important role in protecting, maintaining and restoring the health of the ''people and in controlling population''. The report of Hathi
Committee (1975) was an important landmark in the development of the Indian Pharmaceutical Industry. The said Committee emphasized the
achievement of self-sufficiency in medicines and abundant availability at reasonable prices of essential medicines and it is heartening to note that
pharmaceutical industry in India has grown to be most diversified and vertically integrated Pharmaceutical Industry in the entire third world and has
achieved self-sufficiency in formulations and also in a large number of bulk drugs. Thereafter, 1986 Drugs Policy was promulgated and modified in
1994 and PP-2002 has been formulated.
16. Abundant availability on a continuous basis, at reasonable prices, of essential, life-saving and prophylactic medicines of good quality is the
cornerstone of any Pharmaceutical policy. The Drug (Price Control) Order, 1995 was promulgated on 6.1.1995 and the same is in force as on
today. As stated, the scope of enquiry in this writ petition is limited to the question as to whether the PP-2002 is demonstrably arbitrary,
capricious, irrational, discriminatory and violative of Articles 14, 16 and 21 of the Constitution.
17. Considering the main contention of the Petitioners that the PP-2002 is arbitrary and capricious as it is not based on relevant material and is
based on irrelevant material and Drug (Price Control) Order formulated on the basis of PP-2002 would take out of the basket most of the
essential and live saving drugs and pharmaceuticals and would defeat the very object of Pharmaceutical policy. As already stated, it is within the
competence of the Government to change the policy and as per the policy the same was changed maintaining the basic needs and contents of the
policy of 1986. The Government itself admitted it has not yet evolved a methodology. But the fact remains that it has not taken any new medicine
which has been developed during the last 20 years and also as per the WTO agreements. In the counter, it is stated that the drugs to be kept under
price control are under the process of identification in accordance with the criteria laid down in the policy and further it is stated that no comments
are required. On consideration, we find that prima facie, it cannot be said that the Government has made any efforts to achieve the object of
making available the essential and life-saving drugs at low prices. it is seen that they have reiterated the basic objectives of the policy of 1986,
which still remained largely valid, and have stated that more and more new drugs would come under the price control, but as stated the fact
remains that no new drugs have been taken into consideration or have been identified as essential and life-saving drugs and their value, despite the
specific order made reserving liberty while modifying the interim order on 9.8.2002. Hence, it is clear that the Respondent does not dispute that
essential and life saving drug would go out of Price Control Order and only those drugs which satisfy the criterion laid down in the PP-2002 would
be brought under Drug (Price Control) Order. It is also seen that PP-2002 recognises that only the drugs fulfilling the criteria of mass consumption
and absence of sufficient competition in accordance with laid down criteria would be brought under price control. It will be appropriate to extract
the following relevant provisions of PP-2002 dealing with pricing:
VI (a). Span of Price Control: The guiding principle for identification of specific bulk drugs for price regulation should continue, as per DPCRC''S
recommendation, to be: (a) mass consumption nature of the drug and (b) absence of sufficient competition in such drugs. However, the DPCRC''S
recommendation regarding the new criteria for ascertaining the mass consumption nature of a bulk drug on the basis of the top selling brand is not
acceptable as it gives rise to anomalies.
In this context, it may be noted that there is no tailor made data available for the purpose of ascertaining the mass consumption nature and absence
of sufficient competition with reference to a particular bulk drug. There is only one source namely, ""Retail Store Audit for Pharmaceutical Market in
India"" published by ORG-MARG, which lists out all major brands and their sale estimates on All India basis. This publication contains data for
single ingredient as well as multi-ingredient formulations. However, it does not give complete description of all the ingredients of the pharmaceutical
product listed therein.
(i) The 279 items appearing in the alphabetical list of Essential Drugs in the National Essential Drug List (1996) of the Ministry of Health and
Family Welfare and the 173 items, which are considered important by that Ministry from the point of view of their use in various Health
programmes, in emergency care etc., with the exclusion, as in the past, therefrom of sera and vaccines, blood products, combinations, etc. should
form the total basket out of which selection of bulk drugs be made for price regulation.
(ii) The ORG-MARG data would form the basis for determining the span of price control as suggested by DPCRC.
(iii) The Moving Annual Total (MAT) value for any formulator in respect of any bulk drug will be arrived at by adding the MAT values of all his
single-ingredient formulations of that bulk drug, its salts, esters, stereoisomers and derivatives, covering all the strengths, dosages forms and pack
sizes listed against that formulator in all groups/categories of the ORG-MARG (March 2001).
(iv) The MAT value for all the formulators, as defined in sub-para (iii) above, in respect of a particular bulk drug will be added to arrive at the total
MAT value in the retail trade.
(v) The MAT value for an individual formulator, in respect of any bulk drug, as arrived at in sub-para (iii) above, will be the basis for calculating the
percentage share of that formulator in the total MAT value arrived at as in sub-para (iv) above, in respect of that bulk drug.
(vi) Bulk drugs will be kept under price regulation if:
(a) The total MAT value, arrived at as in sub-para (iv) above, in respect of any particular bulk drug is more than Rs. 2,500 lakhs (Rs. 25 Crore)
and the percentage share, as defined in sub-para (v) above, of any of the formulators is 50% or more.
(b) The total MAT value, arrived at as in sub-para (iv) above, in respect of any particular bulk drug is less than Rs. 2,500 lakhs (Rs. 25 crore) but
more than Rs. 1,000 lakhs (Rs. 10 Crore) and the percentage share, as defined in sub-para (v) above, of any of the formulators is 90% or more.
(vii) All formulations containing a bulk drug as identified above, either individually or in combination with other bulk drugs, including those not
identified for price control as bulk drug, will be under price control. The Government shall, however, retain the following over-riding power:
In cases of drugs/formulations listed by the Ministry of Health and Family Welfare, mentioned in sub-para (i) above and those presently under
price control, having significant MAT value as per ORG-MARG but not covered under the criteria in sub-para (vi) above, as a result of this
proposal, the NPPA would specifically monitor intensively their price movement and consumption pattern. If any unusual movement of prices is
observed or brought to the notice of the NPPA, the Authority would work out the price in accordance with the relevant provisions of the price
control Order.
(iii) The present provision of limiting profitability of pharmaceutical companies, as per the Third Schedule of the present Drugs (Price Control)
Order, 1995, would be done away with. However, if necessary so to do in public interest, price of any formulation including a non-scheduled
formulation would be fixed or revised by the Government.
18. Though this Court will not go to find out whether a better or more appropriate decision could have been taken, it is clear from the above
provisions of PP 2002 that only those essential and life saving drugs which satisfy the criterion and minimum annual turnover would attract price
regulation in respect of Bulk drugs if MAT value is more than Rs. 2,500 lakhs (Rupees 25 crores) and the percentage share, as defined in sub-
para (v) of any formulator would be 50% or above and if the MAT value arrived at as per sub-para (iv) is less than Rs. 2,500 lakhs (Rs. 25
crores) but more than Rs. 1,000 lakhs (Rs. 10 crores) and percentage share as defined in sub-para (v) above of any formulator is 90% or more.
In view of the averment in the statement of objections that only those essential and life saving drugs which satisfy the above criterion would come
within the umbrella of price regulation, is not in dispute and in the process those essential and life saving drugs also which fail to satisfy the criterion
in PP 2002 would be decontrolled as they do not qualify for price regulation. It is the apprehension of the Petitioners that in the process the most
essential and life saving drugs would not be under price regulation and this would defeat the very object of pharmaceutical policy of ensuring
abundant availability at reasonable prices within country of good quality essential pharmaceuticals of mass consumption. The argument that there is
a overriding power, if necessary so to do in public interest, price of any formulation including a non-scheduled formulation would be fixed or
revised by the Government as per provisions (iii) of PP-2002 is not helpful and never was exercised during the period, and therefore, the
apprehension of the Petitioner that though power is there, it will not be implemented or were implemented at a later stage when the PP-2002 came
into existence and thereafter nobody can challenge on the ground on the basis of arbitrariness or irrationality. We find substance in the argument of
the Petitioners. It is also seen that the consideration of sales turnover of a particular drug and not volume of sales, is arbitrary as it is based on
irrelevant consideration namely, on the price of the drug concerned, as price of essential and lifesaving drugs would be low and hence left out of
reckoning for price regulation. Another important aspect that the entire process has been made on the basis of the ORG-MARG data is
incomplete and unreliable and to our mind, cannot be the basis for the price regulation. It is further clear from the summary and recommendations
of DRPC that despite efforts it was not possible to update the data and there is no tailor made data available for the purpose of ascertaining the
mass consumption with reference to a particular drug and only ''ORG-MARG'' does not give complete descriptions of all the ingredients of the
pharmaceutical product. We take note of the report and a perusal of the report of DPCRC at Annexure-IV, referred to by learned Counsel for the
Petitioners, which has some substance, wherein Department of Health has observed as follows:
The Ministry of Health strongly feels that ORGMARG data neither gives the real picture of the Market nor is it available for more than a third of
the drugs falling under the essential drug list as many of such drugs are primarily used directly in the Hospital based health care. Cheap drug need
to be available not only at the retail level but in the hospital care system too. Therefore, it is essential to have a data base especially in respect of all
the essential drugs to get the complete picture of their production and sale in the country. Only then would it be possible to take a more rational
decision on price control. Ministry of Health supports the proposal to collect the information from the Department of Revenue in order to get the
real market data about the production and sale of these drugs. This information can be collected in the next one year and the list of drugs kept
under price control be revised at that time. Meanwhile, immediate exercise, which may be carried out, may be done on the basis of ORG available
as of March 2002 rather than that of 1999.
19. The learned Solicitor General has not been able to repel the contention of the Petitioners that the Model list of Essential Drugs published by
W.H.O. has also not been considered while formulating PP 2002 and that figures of retail sales, that too of single ingredient formulation drugs may
not be an appropriate indicator of the user of the drugs and in fact, there are certain significant life saving drugs which are only sold in a
combination form and hence, if volume of sales of drugs of single ingredient formulations only is taken into account a highly misleading picture
would emerge and essential and life saving drug would escape price regulation. Under the circumstances, though this Court cannot go into the
correctness of the policy, but the fact remains whether they would render the PP 2002 demonstrably arbitrary, capricious, irrational or
discriminatory. It is also clear from the perusal of the PP 2002 that though the criteria required to be satisfied under the policy would admittedly
keep out several life saving and essential drugs, the policy has also reserved monitoring authority with the Central Government and provisions of
PP 2002 clearly retain the following overriding power:
In cases of drugs/formations listed by the Ministry of Health and Family Welfare, mentioned in sub-para (I) above, and those presently under price
control, having significant MAT value as per ORGMARG but not covered under criteria in sub-para (vi) above, as a result of this proposal, the
NPPA would essentially monitor intensively their price movement and consumption pattern. If any unusual movement of prices is observed or
brought to the notice of NPPA, the authority would work out the price in accordance with the relevant provisions of the Price Control Order.
20. The argument of the Petitioners, in reply to the submission of the Additional Solicitor General, is that the power under (iii) is available with the
Government from the beginning but the same has never been exercised. The argument of Mr. Kapoor, learned Counsel for the Petitioners, though
the Government has the over-riding power, the point raised and the price control mechanism adopted in the policy to determine drugs under price
control should be considered and determined before declaring and implementing the policy, otherwise considering it at a later stage will be futile,
has some substance. In view of this, to our mind, this power should now be exercised in consultation with the Ministry of Health and Family
Welfare, before implementing the policy and not reserving the right for invoking the overriding power at a later stage as suggested by learned
Additional Solicitor General.
21. This Court has no expert knowledge on the subject nor can appreciate in detail but as stated above and in view of the material placed on
record, it is not disputed that the essential and life saving drugs and pharmaceuticals would be taken out of the sphere of price regulation and the
same may have prejudicial effect on public interest as the price of essential and life saving drugs would not be under control for not complying the
criterion for control under the PP 2002. No doubt, this is a matter which has to be considered by the Government which is the decision taking
body to formulate the Policy and having regard to the contentions of the learned Counsel appearing for the Petitioners, and as discussed, this Court
has not only the power but also has the duty, in public interest, to direct the Respondent-Central Government to consider the contentions of the
Petitioners before completing the process of listing the essential and life saving drugs and formulating the Drugs (Price Control) Order and other
relevant factors.
22. We have already given direction while disposing of the application for vacating the interim stay that Respondents are free to declare
developmental measures with regard to quality of drug, establishment of Central Drug standards, Central organisation and taking other steps in
pharma education and training so that developmental activities in pharmaceutical sector are not stalled, and in the meanwhile direct Respondent
No. 3 to consider and identify essential drugs and life-saving drugs and their value, and not to give effect to the policy before final decision is taken
by the Government to implement the policy, which would naturally be subject to further Orders from this Court in the circumstances of the case.
The learned Additional Solicitor General of India submitted that the Government has not taken any step after the Order dated 30.5.2002.
However, he fairly submitted that, any representation made would be considered by the Central Government before promulgating the Drugs (Price
Control) Order, so as to safeguard the public interest and to achieve the object of Pharmaceutical Policy to ensure abundant availability at
reasonable prices within the country of good quality essential pharmaceuticals of mass consumption including the essential and life saving drugs and
pharmaceuticals.
23. As already stated, Section 3 of the Essential Commodities Act, 1955 empowers the Central Government for controlling the price at which
essential commodities may be bought or sold and for securing their equitable distribution and availability at fair prices. However, the impugned PP
2002 adopts wholly irrelevant criteria of sales turnover/market share single formula or of a drug, treating the same as the yardstick of determining
drugs under price control and thereby allowing various essential drugs to fall out of price control. Hence, the PP 2002 is irrational and violation of
the Essential Commodities Act, 1955 in as much as it defeats the very object and purpose of the Act, under which the drug price control Order is
issued.
24. Further, as per the impugned policy, 279 drugs, as listed in the National Essential Drugs List of 1996 and 173 drugs, as per National health
programmes from the basket of drugs upon which the criteria of sales turnover shall be applied to determine the drugs, shall fall under price
control. However, since then many new essential drugs have been formulated, which the Respondents have failed to include in the basket of drugs
under price control.
25. In view of the above, we find that the impugned PP 2002 is arbitrary and unreasonable and is violative of relevant provisions of Essential
Commodities Act, 1955 and Articles 14 and 21 of the Constitution only to the extent of the price control mechanism adopted in the policy to
determine drugs under price control as it defeats the entire purpose of equitable distribution and availability of essential drugs at a fair price by
bringing essential drugs in basket of drugs under the impugned policy.
26. Accordingly, the Respondents are directed to consider and formulate appropriate criteria so as to ensure that essential and life saving drugs do
not fall out of price control and are further directed to review drugs which are essential and life saving in nature in consultation with the Ministry of
Health and Family Welfare. Until a list of essential and life-saving drugs is prepared and such essential drugs are brought into the basket of essential
drugs under price control taking into account other relevant factors as discussed above. Till such exercise is taken by the authorities concerned as
stated above, the Respondents are directed not to implement the impugned PP 2002 dated 15.2.2002 (Annexure-G), in so far as it relates to
formulation of price control mechanism.
The writ petition is disposed of accordingly. No Order as t
