Markets: Eerie calm

Markets: Eerie calm

it is not clear when market sentiment can change; as in the past, it can be quite sudden.
At a turn and yet not

At a turn and yet not

RBI could be tempted to cut policy rate to support growth at its bi-monthly review.

Pharma giant in HC against govt move to cap condom prices

Dec 07 2013, 10:38 IST
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SummaryThe DPCO, which fixes the price of condoms, including taxes at Rs 6.56 per condom, will come into effect from December 20.

The manufacturer of two popular condom brands has approached the Delhi High Court seeking a stay on a government order to fix the maximum price of the contraceptive under the Essential Commodities Act (ESA).

Pharmaceutical giant Reckitt Benckiser argued that the low ceiling price will force bigger companies to stop production, which in turn will have a negative effect on population control measures.

The government had in May included condoms in the list of essential medicine and fixed its ceiling price in the Drug Pricing Control Order (DPCO) issued in November.

Claiming that condoms came under the category of ‘devices’ and not ‘medicine’, Reckitt Benckiser opposed the inclusion of condoms within the scope of DPCO.

The counsel for the pharmaceutical company, advocates Sandeep Sethi and Arvind Nigam, told the court of Chief Justice N V Ramana and Justice Manmohan that the decision was “contrary to the purpose for which the DPCO was passed”.

“The government had in May 2010 notified the product as a ‘device’ within the definition of ‘drugs’ under the ESA,” the counsel said.

Reckitt Benckiser said a base price could not have been calculated for the commodity because there is no “generic” formulation for a condom, which can be used to determine the base price.

The company has also argued that the method to arrive at a price was also incorrect because the National Pharmaceutical Pricing Authority (NPPA) did not take into account the prices of the two brands manufactured by it, which collectively have over 19 percent of the market share.

However, Additional Solicitor General Rajeeve Mehra and government standing counsel Sumit Pushkarna said since condoms help in the prevention of diseases, they came under the classification of ‘medicines’, and, hence, can be controlled by the government.

The DPCO, which fixes the price of condoms, including taxes at Rs 6.56 per condom, will come into effect from December 20.

The court issued notices to the government and the NPPA to submit its reply.

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