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59. The NPPA was eventually constituted on 29th August, 1997. We are not aware of the activities of the NPPA thereafter except that a meeting was held on 27th January, 1998 by the NPPA with representatives of IDMA and OPPI where there was a discussion for the need to revise the norms of conversion cost and packing charges. This was followed by a letter dated 27th April, 1998 sent by the industry indicating that the existing norms were based on the data available in 1988 which had become outdated and obsolete and since then there had been a significant increase in the cost of various items that go into the calculation of these norms.

60. Apparently as a result of the dialogue and correspondence between the NPPA and the industry, a Committee called the Jharwal Committee was set up on 8th October, 1998. It may be noted that Dr. Jharwal was the Member Secretary of the NPPA. In its Report submitted on 5th April, 1999 the Jharwal Committee noted that the packing material cost ceiling had been revised on 7th July, 1994 by the BICP and thereafter it was revised by the NPPA in February 1998 (again with no objection from the drug industry). Consequently, the only issue addressed by the Jharwal Committee was the fixing of norms for conversion cost, for packing charges and for process loss.

64. One important observation made by the Jharwal Committee in its Report relating to the non-cooperation of the industry and its suggestion to defer a detailed study is required to be quoted. This reads as follows:

“It would also be pertinent to mention that though the Industry Associations (OPPI and IDMA) were impressed upon the need to advise their member companies to furnish the required data to NPPA as early as in October, 1998, there has been a luke-warm response and indifference on their part in furnishing the data. They have even suggested NPPA to defer the detailed study, which is already in progress. NPPA is continuing its effort to complete the study and accordingly sent couple of reminders to the manufacturers, advising them to submit the data expeditiously. However, the response so far has been far from satisfactory.”

Exercise for subsequent years

69. Post the notification dated 13th July, 1999 the next stage for the Central Government was to notify the norms for 2000-2001. This exercise appears to have been initiated with reference to the norms for the cost of packing material through a letter dated 6th October, 1999 issued by the NPPA to IDMA and similar letters to other associations. What is on record before us is the reply by OPPI to the NPPA of 11th January, 2000 to the effect that a meaningful response could be given if the existing norms for packing material costs were made available and some clarity brought regarding the basis for the ceiling fixed. This letter was viewed by the NPPA as yet another delaying tactic in providing the requisite information. Apparently realizing this, OPPI addressed a letter to the NPPA on 9th March, 2000 to the effect that an “independent professional consultant” had been assigned the task “to facilitate expeditious compilation of the requisite data” to assist in the development of norms for cost for packing materials. Although it is not clear from the record, but it does appear that the data compiled (if any) by the independent professional consultant engaged by OPPI was not furnished to the NPPA.