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2015 (7) TMI 1421 - HC - Indian LawsFfixation of ceiling price under the provisions of the Drugs (Prices Control) Order, 2013 - male contraceptives (condoms) - the fixation of price is in conformity with the powers vested under the Essential Commodities Act, 1955 read with the Drugs and Cosmetics Act, 1940 or not - HELD THAT - A product would not cease to be a medicine merely on the ground that its dosage and strength have not been specified. However, it is not clear as to how Paragraph 4 of DPCO-2013 can be made applicable to those formulations for which the dosage and strength have not been specified. A perusal of Paragraph 4 of DPCO-2013 shows that the same provides for fixation of ceiling price of only a scheduled formulation of specified strength and dosage as specified under the First Schedule. Para 2(1)(d) defines ceiling price‟ as a price fixed by the Government for scheduled formulations‟ in accordance with the provisions of DPCO-2013 - It is evident from the First Schedule that it contains the formulations of which strength and dosage have been specified as well as the formulations of which strength and dosage have not been specified. Para 2(1)(zb) defines scheduled formulations as formulation included in the First Schedule whether referred to by generic versions or brand name. Thus, it is clear that all formulations that are included in the First Schedule, irrespective of specification of strength and dosages, are scheduled formulations‟. In other words, scheduled formulations include non-scheduled formulations. On a combined reading of Para 4, Para 2(1)(d) and Para 2(1)(zb), it appears that the specification of dosage and strength in the First Schedule has a specific bearing with regard to fixation of ceiling price under DPCO-2013. The words in the definition of ceiling price‟ under Para 2(1)(d) i.e. in accordance with the provisions of this order‟ make the intention of the Legislature abundantly clear and that the same shall be given due weight while implementing the provisions of DPCO-2013 - It is pertinent to note that DPCO-2013 contains a different method of regulation so far as non-scheduled formulations‟ are concerned. Para 20 of DPCO-2013 provides for monitoring the maximum retail prices‟ of the non-scheduled formulation and Para 25 mandates display of prices of non-scheduled formulation and price list thereof. The question that arises for consideration is whether ceiling price can be fixed by the NPPA for all the formulations/medicines included in the First Schedule to DPCO-2013 ignoring the legislative intention that the said power be not extended to some of the formulations. Considering an identical issue, the Supreme Court in SECRETARY, MINISTRY OF CHEMICALS AND FERTILIZERS, GOVT. OF INDIA VERSUS M/S. CIPLA LTD. AND OTHERS 2003 (8) TMI 541 - SUPREME COURT held that the contents of the policy documents cannot be read and interpreted as statutory provisions and that too much of legalism cannot be imported in understanding the scope and meaning of the clauses contained in policy formulations. It was also added that the Government exercising its delegated legislative power should make a real and earnest attempt to apply the criteria laid down by itself as a policy maker and that the delegated legislation that follows the policy formulation should be broadly and substantially in conformity with that policy, otherwise it would be vulnerable to attack on the ground of arbitrariness resulting in violation of Article 14. The NPPA exceeded the powers conferred by Paras 4, 6 14 of DPCO-2013 while fixing the ceiling price for condoms. The language of Para 4 is unambiguous and makes clear the legislative intent that the ceiling price can be fixed only for scheduled formulations of specified strengths and dosages as specified under the First Schedule. Therefore, according to us, the provisions of Para 4 cannot be made applicable to condoms‟ the dosage and strength of which have admittedly not been specified under the First Schedule. Since the impugned action of fixation of ceiling price is held to be bad on the ground that the NPPA exceeded the powers conferred by Para 4, 6 and 14 of DPCO-2013 and the policy decision under NPPP-2012 has not been interfered in any manner, it is also not necessary to refer to the various decisions cited by the learned counsel for both the parties with regard to the scope of judicial review vis- -vis policy decision. The Orders of NPPA dated 05.11.2013 and 10.07.2014 are illegal and unsustainable - Petition disposed off.
Issues Involved:
1. Whether fixation of ceiling price for male contraceptives (condoms) under the Drugs (Prices Control) Order, 2013 is in conformity with the Essential Commodities Act, 1955 and the Drugs and Cosmetics Act, 1940. 2. Whether the inclusion of condoms in the First Schedule to DPCO, 2013 is ultra vires the Essential Commodities Act, 1955. 3. Whether the issuance of a Control Order for price fixation of condoms is permissible under law and whether the ceiling price fixed by NPPA is sustainable. Issue-wise Detailed Analysis: 1. Conformity of Ceiling Price Fixation with the Essential Commodities Act, 1955 and the Drugs and Cosmetics Act, 1940: The court examined whether the inclusion of condoms within the purview of the Drugs (Prices Control) Order, 2013 (DPCO, 2013) is beyond the powers conferred under the Essential Commodities Act, 1955 (EC Act, 1955) and the Drugs and Cosmetics Act, 1940. The petitioners contended that condoms, being physical barriers without active pharmaceutical ingredients, should not be considered as "formulations" under DPCO, 2013. The court noted that the definition of "drug" under Section 3(b) of the Drugs and Cosmetics Act, 1940 includes devices intended for prevention of disease. Since condoms are used for preventing sexually transmitted infections and unwanted pregnancies, they fall within this definition. Thus, the court held that condoms are drugs within the meaning of the Drugs and Cosmetics Act, 1940 and the Essential Commodities Act, 1955, and their inclusion in DPCO, 2013 is valid. 2. Inclusion of Condoms in the First Schedule to DPCO, 2013: The petitioners argued that the inclusion of condoms in the First Schedule to DPCO, 2013 is ultra vires the provisions of the Essential Commodities Act, 1955. The court observed that condoms have been included in the National List of Essential Medicines (NLEM) since 2003, treating them as essential medicines. The court noted that the objective of NPPP, 2012 is to ensure the availability of essential medicines at reasonable prices, and condoms, being included in NLEM, 2011, are essential medicines. Therefore, the inclusion of condoms in the First Schedule to DPCO, 2013 is not ultra vires the Essential Commodities Act, 1955. 3. Issuance of Control Order and Ceiling Price Fixation by NPPA: The petitioners contended that the issuance of a Control Order for price fixation of condoms is not warranted as 55% of condoms are distributed free or at highly subsidized prices by the government. The court noted that the Essential Commodities Act, 1955 empowers the Central Government to issue orders for controlling prices of essential commodities to ensure their equitable distribution and availability at fair prices. The court held that the policy decision to control the price of condoms, which are essential commodities, is within the Central Government's powers and is not amenable to judicial review. However, the court found that the NPPA exceeded its powers under Paragraphs 4, 6, and 14 of DPCO, 2013 by fixing the ceiling price for condoms, as these provisions apply only to scheduled formulations of specified strengths and dosages, which were not specified for condoms. Therefore, the court declared the NPPA orders dated 05.11.2013 and 10.07.2014 fixing the ceiling price for condoms as illegal and unsustainable, and set them aside. Conclusion: The court held that the inclusion of condoms in the First Schedule to DPCO, 2013 is valid and not ultra vires the Essential Commodities Act, 1955. However, the NPPA orders fixing the ceiling price for condoms were set aside as they exceeded the powers conferred by DPCO, 2013.
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