Karnataka High Court
M/S Wockhardt Limited vs National Pharmaceutical Pricing ... on 24 September, 2024
Author: M.G.S. Kamal
Bench: M.G.S. Kamal
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NC: 2024:KHC:39576
WP No. 33628 of 2011
C/W WP No. 33849 of 2011
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 24TH DAY OF SEPTEMBER, 2024
BEFORE
THE HON'BLE MR JUSTICE M.G.S. KAMAL
WRIT PETITION NO.33628 OF 2011 (GM-RES)
C/W
WRIT PETITION NO.33849 OF 2011 (GM-RES)
IN WP No.33628/2011
BETWEEN:
BIOCON BIOLOGICS INDIA LIMITED
(FORMERLY KNOW AS
BIOCON BIOLOGICS INDIA LIMITED)
A COMPANY REGISTERED UNDER
THE PROVISIONS OF THE COMPANIES ACT, 1956
AND HAVING ITS REGISTERED OFFICE
AT BIOCON HOUSE, GROUND FLOOR,
TOWER-3, SEMICON PARK,
ELECTRONIC CITY PHASE-II,
Digitally HOSUR ROAD, BENGALURU-560100
signed by
SUMA B N REPRESENTED BY ITS AUTHORIZED SINGATORY
Location: LEGAL MANAGER, MR. RITURAJ SHAHI
High Court
of Karnataka
...PETITIONER
(BY SRI. UDAYA HOLLA,SENIOR COUNSEL FOR
SRI. ASHISHVERMA, ADVOCATE AND
SRI. TEJAS S R, ADVOCATE)
AND:
1. NATIONAL PHARMACEUTICAL
PRICING AUTHORITY
DEPARTMENT OF CHEMICALS AND
PETROCHEMICALS
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NC: 2024:KHC:39576
WP No. 33628 of 2011
C/W WP No. 33849 of 2011
YMCA CULTURAL CENTER BUILDING
1, JAI SINGH ROAD,
NEW DELHI-110 001
REPRESENTED BY ITS DIRECTOR
2. UNION OF INDIA
MINISTRY OF CHEMICALS AND FERTILIZERS
(GOVERNMENT OF INDIA), SHASTRI BHAVAN,
DR.RAJENDRA PRASAD ROAD
NEW DELHI-110 001
REPRESENTED BY ITS SECRETARY
...RESPONDENTS
(BY SRI. SHIVAKUMAR, CGC)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 &
227 OF THE CONSTITUTION OF INDIA PRAYING TO DECLARE
THAT THE PETITIONER'S PRODUCT 'BASALOG' IS NOT A
SCHEDULE BULK DRUG AND/OR SCHEDULE FORMULATION
FALLING WITHIN THE AMBIT OF THE FIRST SCHEDULE OF THE
DPCO AND ETC.
IN WP NO.33849/2011
BETWEEN:
M/s.WOCKHARDT LIMITED
A COMPANY REGISTERED UNDER
THE PROVISIONS OF THE
COMPANIES ACT, 1956 AND
HAVING ITS REGISTERED OFFICE
AT WOCKHARDT TOWERS,
BANDRA KURLA COMPLEX
BANDRA (EAST), MUMBAI - 400 051
AND HAVING A CNF OFFICE AT
NO.14, FRONT WING, GROUND FLOOR,
DODDAKALLASANDRA, KANAKAPURA ROAD,
BANGALORE - 560 062.
REPRESENTED HEREIN BY ITS SENIOR EXECUTIVE LEGAL,
MS. ASMITA SHINDE
...PETITIONER
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NC: 2024:KHC:39576
WP No. 33628 of 2011
C/W WP No. 33849 of 2011
(BY SRI. GANAPATI HEGDE, SENIOR COUSNEL FOR
SRI. S.R.TEJAS, ADVOCATE)
AND:
1. NATIONAL PHARMACEUTICAL PRICING AUTHORITY
DEPARTMENT OF CHEMICALS AND
PETROCHEMICALS YMCA CULTURAL CENTER
BUIDLING, 1, JAI SINGH ROAD,
NEW DELHI- 110 001
REPRESENTED BY ITS DIRECTOR.
2. UNION OF INDIA
MINISTRY OF CHEMICALS AND FERTILIZERS
(GOVENRMENT OF INDIA) SHASTRI BHAVAN
DR. RAJENDRA PRASAD ROAD,
NEW DELHI - 110 001
REPRESENTED BY ITS SECRETARY.
...RESPONDENTS
(BY SRI. SHIVAKUMAR,CGC)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO
DECLARE THAT THE PETITIONER'S PRODUCT 'GLARITUS'
IS NOT A SCHEDULE BULK DRUG AND/OR SCHEDULE
FORMULATION FALLING WITHIN THE AMBIT OF THE FIRST
SCHEDULE OF THE DPCO AND ETC.
THESE PETITIONS COMING ON FOR PRELIMINARY
HEARING IN 'B' GROUP THIS DAY, ORDER WAS MADE THEREIN
AS UNDER:
CORAM: HON'BLE MR JUSTICE M.G.S. KAMAL
ORAL ORDER
Petitioners in these two writ petitions are before this Court raising common concern that the drugs produced by them namely, "Basalog" and "Glaritus" respectively are the -4- NC: 2024:KHC:39576 WP No. 33628 of 2011 C/W WP No. 33849 of 2011 analogue of drug by name "Glargine" which is not a Bulk Drug or the Schedule Formulation falling within the ambit of the First Schedule of The Drug (Prices Control) Order, 1995 (DPCO).
2. The respondent No.1 by its communication produced at Annexure-A to the writ petitions has called upon the petitioners to apply for price fixation of the aforesaid drugs and related formulations before the National Pharmaceutical Pricing Authority-respondent No.1 and to comply with the price notification issued thereon. The impugned communication at Annexure-A proceeded on the premise that National Institute of Pharmaceuticals Education and Research(NIPER) in its letter dated 05.07.2011 had opined that the "Glargine/Lantus" is an insulin analogue being derivative of Bulk Drug insulin listed in the First Schedule (Price Control) Order, 1995. By a subsequent communication dated 26.07.2011 produced at Annexure-B to the aforesaid writ petitions, the petitioners have been called upon to furnish the information/data for the cost price study of Bulk Drug Glargine/Lantus Insulin analogue within 21 days from the date of issue of letter and similar letters are issued to the petitioners which are enclosed along with the writ petitions.
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3. The case of the petitioners is that their pharmaceutical product is referred to by its scientific and technical name "Glargine" which is though a recombinant human insulin is clinically different from the Insulin which is a `Bulk Drug' notified under First Schedule of DPCO and it is a separate and distinct drug in itself. It is their further contention that "Glargine" is an insulin analogue. In other words it is an altered form of Insulin with differences in amino acid sequences of the protein compared to Insulin. Thus, it is contended that the impugned communications issued by the respondent calling upon the petitioners to apply for the price fixation was unwarranted as the said subject drug did not form part of schedule drugs.
4. By an affidavit dated 31.01.2019 filed in W.P.No.33628/2011 the petitioners had sought to refute the contents of Annexure-A and the reasons assigned thereunder. In that it is deposed that the purported expert opinion which is the basis for issuance of Annexure-A is erroneous and is contrary to the contents of Annexure-A. Elaborating the same, it is submitted that the NIPER on earlier occasion had sought the expert opinion on the very same drug by its communication -6- NC: 2024:KHC:39576 WP No. 33628 of 2011 C/W WP No. 33849 of 2011 dated 20.01.2011, in response to which the Professor of Head of Department of Pharmaceuticals by his reply dated 18.01.2011 had opined that as per clarification issued by him earlier, he had clarified that according to definition of protein drugs, insulin and Glargine/Lantus both may be treated as different drugs although mode of action and ultimate effect to the patient was the same. Thus referring to the said communication the petitioners vehemently contended that the impugned communications issued by the respondent authorities to treat the drugs manufactured and produced by the petitioners to be derivative of insulin which is listed in the schedule drugs of the DPCO.
5. Sri.Udaya Holla, learned Senior counsel along with Sri.Ganapathi Hegde, appearing for learned counsel for petitioners vehemently submitted the very premise on which the impugned communications are issued being erroneous the same cannot stand legal scrutiny. However, it is fairly submitted that by notification issued on 15.05.2013 analogue of Glargine has been included in the definition of `Bulk Drug' and listing of the same has been given effect to in the notification of National List of Essential Medicines (NLEM, 2022) -7- NC: 2024:KHC:39576 WP No. 33628 of 2011 C/W WP No. 33849 of 2011 and pricing was given effect to by list of essential medicines vide order dated 31.03.2023. Thus, it is contended even if said drug being produced by the petitioners is to be considered as Scheduled Drug, it can only be after the same having been included in the definition of `Bulk Drug' effective from 15.05.2013 and any pricing provided under the notification can be given effect to only on and after 31.03.2023. Hence, seek for allowing of the petitions.
6. Per contra, learned counsel appearing for the respondent authorities though submits that the opinion which were obtained from NIPER have confirmed the drug being produced by the petitioners is a derivative of insulin which is a schedule drug, he however fairly submits that there is an anomaly in the opinion given by NIPER as found at communication dated 04.04.2011 produced by the petitioner in W.P.No.33628/2011 along with affidavit dated 31.01.2019. However, he hasten to add that since the said drug has been included in the definition of `Bulk Drug' in the notification dated 15.05.2013 the `ceiling price' of the said drug has to be reckoned and determined on and from the date when the same drug was included thereunder as per the provisions provided -8- NC: 2024:KHC:39576 WP No. 33628 of 2011 C/W WP No. 33849 of 2011 for the determination of the ceiling price and not from the date of the order dated 31.03.2023 as contended by the petitioners.
7. Heard and perused the records.
8. There is no dispute of the fact that by communication dated 04.04.2011 the Professor and Head of the Department of Pharmaceutical Technology, National Institute of Pharmaceutical Education and Research, Sector 67, SAS Nagar (Mohali) Punjab, has given his clarification regarding the `Bulk Drug' under DPCO pertaining to Glargine/Lantus which reads as under:
"I have already clarified in my earlier report dated 18.01.2011 that according to definition of protein drugs, insulin and Glargine/Lantus both may be treated as different drugs although mode of action and ultimate effect to the patient is the same. From the chemical, biochemical and genetic composition of insulin and Glargine and Lantus, it is clear that they are different in amino acid composition, molecular weight, isoelectric pH, etc. Both of them are showing different pharmacokinetic profile inside the human body, which leads to somewhat superior therapeutic effect than conventional insulin."
9. It is necessary to note that the said clarification has been obtained by none other than the respondent No.1.
10. The aforesaid clarification makes it clear that the drugs being produced by the petitioners and the drugs which -9- NC: 2024:KHC:39576 WP No. 33628 of 2011 C/W WP No. 33849 of 2011 are listed in the DPCO are different and distinct. Therefore, at the outset the very premise on which the impugned communications are issued being contrary to the very opinion obtained by the respondent No.1, cannot be sustained.
11. Coming to the definition of the term `Bulk Drug', as provided under the notification dated 06.01.1995 produced at Annexure-X which reads as under:
"bulk drugs" means any pharmaceutical, chemical, biological or plant product including its salts, esters, stereo-isomers and derivatives, conforming to pharmacopocial or other standards specified in the Second Schedule to the Drugs and Cosmetics Act, 1940 (23 of 1940), and which is used as such or as an ingredient in any formulation."
12. The notification that was issued on 15.05.2013 which is produced at Annexure-Z issued by the Ministry of Commerce, Department of Pharmaceuticals provides the definition of "Active Pharmaceuticals ingredients or bulk drug" which is as under:
"Active Pharmaceuticals ingredients or bulk drug" means any pharmaceutical, chemical, biological or plant product including its salts, esters, isomers, analogues and derivatives, conforming to stands specified in the Drugs and Cosmetics Act, 1940 (23 of 1940) and which is used as such or as an ingredient in any formulation."
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13. Thus it can be seen the term "Analogue" has been inserted in the notification for the first time on 15.05.2013 which was not found in the notification dated 06.01.1995 produced at Annexure-X.
14. The aforesaid change in the definition of the term `Bulk Drug' with the insertion of the term `analogue' would only support the contention of the petitioners that the impugned communications are contrary to the opinion dated 04.04.2011 produced along with affidavit.
15. As regards the contention of respondent with regard to calculation of the `ceiling price', relevant at this juncture to refer to definition of `ceiling price' provided in the notification dated 15.05.2013 and Section 4 of the said notification under the heading `Calculation of Ceiling Price of a scheduled formulation' which reads as under:
"Ceiling Price" means a price fixed by the Government for Scheduled formulations in accordance with the provisions of this Order.
4. Calculation of ceiling price of a scheduled formulation.- "(1) The ceiling price of a scheduled formulation of specified strengths and dosages as specified under the first schedule shall be calculated as under:
Step 1 - First the Average Price to Retailer of the scheduled formulation i.e., P(s) shall be calculated as below:
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NC: 2024:KHC:39576 WP No. 33628 of 2011 C/W WP No. 33849 of 2011 Average Price to Retailer, P(s) = (Sum of prices to retailer of all the brands and generic versions of the medicine having market share more than or equal to one percent of the total market turnover on the basis of moving annual turnover of that medicine)/(Total number of such brands and generic versions of the medicine having market share more than or equal to one percent of total market turnover on the basis of moving annual turnover for that medicine.) Step 2. Thereafter, the ceiling price of the scheduled formulation i.e., P(c) shall be calculated as below:
P(c) =P(s).(1+M/100), where P(s) = Average Price to Retailer for the same strength and dosage of the medicine as calculated in step 1 above.
M=% Margin to retailer and its value =16 (2) The ceiling price calculated as per sub-paragraph (1) and notified by the Government shall be applicable to scheduled imported formulations also.
16. Learned counsel appearing for the petitioner sought to justify that the subjecting the drug being produced by the petitioner to the `ceiling price' in terms of the notification dated 15.05.2013 has to be by taking into consideration the schedule annexed to the said notification under paragraph 8.5.1 under the heading "Medicines used in Diabetes Mentis". It is contended that unless and until the drug being produced by the petitioners meet the specifications, dosage as prescribed under the schedule, the same cannot be subjected to pricing as contemplated under the said notification. It is further contended that by subsequent notification dated 13.09.2022
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NC: 2024:KHC:39576 WP No. 33628 of 2011 C/W WP No. 33849 of 2011 produced at Annexure-AC the drug insulin Glargine specifically finds place in the list of essential medicine at item 18.3.1.4.
17. Thus, from the aforesaid undisputed material produced and made available for consideration of this Court what emanates is even for the purpose of pricing of the drug being produced by the petitioners, though it was included in the definition of `Bulk Drug' after 2013, respondent authority may have to seek information with regard to its specifications, composition and dosage and others details of the drug as required and defined under the definition `ceiling price' found in the notification dated 15.05.2013 and to the schedule annexed thereto. Only thereafter can the respondent authority can insist the petitioners to apply for price fixation.
18. In the aforesaid undisputed fact situation of the matter namely inclusion of the term `analogue' into the definition of `Bulk Drug' only in the notification dated 15.05.2013, which even according to the clarification/opinion obtained by the NIPER indicated that the drugs being produced by the petitioners was different and distinct as noted above, and in view of requirement of detailed clarification and
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NC: 2024:KHC:39576 WP No. 33628 of 2011 C/W WP No. 33849 of 2011 information to be obtained by the respondent authorities with regard to the specification, composition and dosage of the drug being produced by the petitioner to bring within the requirement of `ceiling price', this Court is of the considered view that the impugned communications at Annexures-A, B and C in both the writ petitions are required to be set aside, accordingly same are set aside.
19. Needless to state that notwithstanding set aside of the impugned communications, respondent authorities are at liberty to call for such information from the petitioners for the purpose of complying with the requirement of listing of the drugs being produced by the petitioners in the list of `Essential Drugs' as found in Annexure-Z. Writ petitions are disposed of.
Respondent authorities are at liberty to seek such information as may be required in accordance with law for the purpose of further implementation of Notification of 2013.
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(M.G.S. KAMAL) JUDGE SBN List No.: 1 Sl No.: 33