Delhi High Court delivers setback to OPPI, refuses stay on drug pricing notification

Written by Kaushal shroff | Updated: Aug 2 2014, 05:51am hrs
The Delhi High Court on Friday turned down a plea of the Organisation of Pharma Producers of India (OPPI) to stay a recent notification of the National Pharmaceutical Pricing Authority (NPPA) bringing 108 drug formulations used to treat diabetes and cardio-vascular disorders under pricing control. Further, it also shot down OPPI's demand for a restraint on the NPPA from issuing any subsequent orders in this regard.

Recently, on July 10, the NPPA had capped the prices of these formulations which account for 6% of the the Indian pharmaceutical market, or R5,500 crore, according to the All-India Organisation of Chemists and Druggists-AWACS, the traders' outfit.

The regulator has invoked Para 19 of the Drug Pricing Control Order 2013, which giv-es it the authority to regulate the ceiling price of any drug under extraordinary circumstances in public interest.

The listed drugmakers whose revenues are expected to be hit due to the NPPAs latest decision to cap the prices of these drugs include Sanofi India, Abbott India, Ranbaxy Laboratories and AstraZeneca Pharma India.

Meanwhile, the high court has directed the NPPA to file its reply on OPPI's plea and has posted the matter for further hearing on September 29.

Before the new notification, the NPPA regulated prices of only 348 "essential medicines" whose ceiling prices are fixed as the simple average of all brands with a market share of at least 1%. (The previous DPCO had controlled prices of 74 bulk drugs and their formulations as per a more rigorous cost-plus formula; though the span of control has widened under the DPCO 2013, the reg-ime is a relatively liberal one).

During the proceedings, senior counsel Kapil Sibal, appearing on behalf of OPPI, argued that neither the agency nor government had disclosed any extra-ordinary circumstances that justify the invocation of paragraph 19. Sibal informed the court that NPPA only has the authority to monitor and control maximum retail prices of drugs, including non-scheduled drugs, in case the manufacturer increases the MRP of a drug to more than 10% within 12 months. Where the increase is beyond 10% of MRP, NPPA has the power to reduce the same to the level of 10% of MRP and that too only for a year. Pricing of non-essential drugs is meant to be determined by market forces and not controlled by the government, he said.