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10. The DPCO 1995 has been issued in exercise of powers under Section 3 of the Essential Commodities Act, 1995 and pursuant to the New Drug Policy 1994 issued on 15th September, 1954 by the Ministry of Chemicals and Fertilizers, Government of India. Previously, the following drugs price control orders had been issued :--

A. The Drug Price Control Order, 1970.

B. The DPCO 1979 published on 3Ist March, 1979 had repealed the earlier DPCO 1970 and DPCO 1979 was issued pursuant to the statement on Drug Policy 1978. The Drugs Policy 1978 was formulated based on the report of the Committee on Drugs and Pharmaceutical Industry made in April, 1975 (the Hathi Committee Report), C. The DPCO 1987 published on 26th August, 1987 repealed the earlier DPCO 1979. The DPCO 1987 was issued pursuant to the Drug Policy 1986 "Measures for Rationalization, Quality Control and Growth of Pharmaceutical Industry 1986-1987." Again DPCO 1987 was repealed by the DPCO 1995.

. 17. It is further submitted by the petitioners that the object and purpose of the Drugs Policy 1994 and the DPCO 1995 was to ensure cheap and ready availability of drugs in India by the use of transparent and objective criteria. As stated in para 9 of the Policy the high turnover of a drug is an index of its extent of usage and is considered to meet the requirement of objectivity justifiable on economic considerations. The object was not to restrict foreign exchange earnings of Indian Drug Companies whereby our Country was also benefitting. The intent and purpose of the word "turnover" as used in para 9 of the Drugs Policy 1994 i.e. "to determine the extent of the usage of a bulk drug in the country" has been emphasized in the Affidavit in Reply in para 3(v) at page 155. It is submitted that this would mean that the emphasis is on determining the usage of the bulk drug in the country that is to say the sales turnover, and in other words exports must necessarily be excluded. It appears that the expression "turnover" and "sales turnover" are used interchangeably in the Drug Policy 1994 and the DPCO 1995. It is further borne out by the fact that under para 20(1) of the DPCO 1995 every manufacturer and importer is required to maintain records relating to the "sales turnover of individual bulk drugs manufactured or imported by him as the case may be, and the sales turnover of formulations pack-wise at the premises of the manufacturer or importer and also such other records as may be directed from time to time by the Government and the Government shall have the power to call for such records or to inspect such records". Para 20(2) also requires such manufacturer or importer to submit to the Government within six months of the close of the accounting year information in respect of "turnover and allocation of sales and expenses for that year.....". Para 20(3) requires every dealer, manufacturer or importer to maintain the cash memo or credit memo, books of account and records of purchase and sale of drugs......". So far as para 25 of the DPCO 1995 is concerned it lays down the factors that are to be taken into account whilst granting exemption to any manufacturer from the operation of all or any of the provisions of the DPCO 1995. One of the factors is "sales turnover" to be taken into account whilst granting exemption. It is also submitted by the petitioners that it would be arbitrary and perverse to utilise "production and imports" for deciding inclusion whilst only "sales turnover" granting exemption. It appears that the Respondents in their affidavit in reply contend that whilst one standard is to be adopted for the term "turnover" in para 22.7.2 (i) (viz. the value of the total production of the bulk drugs in the country and the value of weighted landed cost of its total import into the country), a different standard is to be applied for the criteria mentioned at para 22.7.2(ii) and (iii) viz. retail sales data of formulations of bulk drugs as reported by the ORG. Therefore Mr. Chagla contended that this would be against all the canons of construction. The term "turnover" must necessarily be given the same meaning when used in the different sub-paragraphs of paragraph 22.7.2 of Drug Policy, 1994.

39. Mr. Kapadia further submitted that on behalf of the petitioners that all the anti-diabetic drugs are removed from the purview of the DPCO 95 with the exception of Insulin and Glipizide. Glibenclamide which initially was included in the DPCO 1987 was subsequently excluded under the DPCO 1987 itself and continued to remain excluded from the DPCO 1995. According to the petitioners the only other anti-diabetic drug included in the DPCO 1995 is Insulin. A chart shown at Exhibit G-I to the petition shows the list of anti-diabetic drugs which were originally included under price control but have now been excluded, to the arbitrary exception of the bulk drug Glipizide. According to the petitioners, as per the ORG data the annual turnover of Insulin as on 31st March, 1990 was Rs. 441 lakhs and consequently Insulin squarely came within the purview of price control under para 22.7 of the New Drug Policy and the only other bulk drug in the therapeutic group of anti-diabetic drugs included in the DPCO 1995 is Glipizide even though its annual turnover was only Rs. 82 lacs. According to the petitioners, thus, such an inclusion of Glipizide in the first Schedule to the DPCO 1995 to the exclusion of all other similar drugs amounts to a clear hostile and invidious discrimination and the same is ex facie ultra vires of Article 14 of the Constitution of India. It is further submitted on behalf of the petitioners that as far as anti-diabetic drugs having an annual turnover less than Rs. 100 lakhs are concerned, irrespective of market share, not a single drug, except Glipizide is included in the DPCO 1995. It is therefore, submitted on behalf of the petitioners that the inclusion of the above two bulk drugs is erroneous and accordingly the petitioners contend that their petitions should be made absolute with costs.

88. As far as Writ Petition No. 3449 of 1996 is concerned, Mr. Chagla, the learned Counsel for the petitioners has contended that the drug involved in the said petition viz. the Ciprofloxacin was never under the price control prior to DPCO 1995. Admittedly, there are 16 bulk drug producers and 23 formulators with no one having more than 40% market share in the retail trade as per the ORG figures, and as such, the said drug meets the criteria as per paragraph 22.7.2(iii) for being excluded from the price control and the data is based as on 31st March, 1990. We therefore, hold that the said drug Ciprofloxacin could not have been brought within the purview of price control. Apart from the above, Mr. Chagla has also contended that the Respondents have acted in an arbitrary and irrational manner and he has further pointed out that the two bulk drugs viz. Mefenamic Acid and Amikacin Sulphate were wrongly deleted from the DPCO 1995 whereas the said drug Ciprofloxacin was erroneously included in the DPCO 1995. He has pointed out that the sales turnover of Mefenamic Acid between the 1988-1992 was over Rs. 400 lakhs per year. Similarly, the import value of Amikacin Sulphate in the year 1989-1990 was Rs. 350 lakhs which rose to Rs. 475 lakhs in the year 1990-1991 and touched a level of Rs. 845 lakhs in the year 1992-1993. Mr. Chagla therefore pointed out that there are two formulators of these drugs in the market and a single formulator has a market share in excess of 40% of retail trade as per ORG figures. Apparently, the Respondents had originally included these two drugs in the DPCO 1995, whereas erroneously, arbitrarily and in an irrational manner excluded these two drugs from the DPCO, 1995. Mr. Chagla has contended that the Respondents have adopted a "pick and choose" method, which clearly discloses the hostile discrimination, subjectivity and a lack of transparency. Therefore, the learned counsel Mr. Chagla has contended that the Respondents action of including the bulk drug Ciprofloxacin within the DPCO 1995 would be violative of Article 14 of the Constitution of India. In this Writ Petition Respondents have filed an affidavit in reply but there are only bald denials, and no specific particulars and details are given to controvert the contentions of the petitioners. Hence we find substance in the contention of Mr. Chagla that the Respondents have acted arbitrarily and in an irrational manner in bringing the aforesaid drug Ciprofloxacin within the price control. Whereas, the Respondents have wrongly excluded the aforesaid Mefenamic Acid and Amikacin Sulphate from the price control.