HC asks drug cos to reveal agreements with agents, retailers & distributors

Written by Kaushal shroff | New Delhi | Updated: Aug 29 2013, 14:00pm hrs
The Delhi High Court directed a slew of drug companies, which had challenged the pricing policy under the Drug Pricing Control Order (DPCO), 2013, to file statements submitting information on the agreements that they have entered into with clearing and forwarding (C&F) agents, stockists, distributors, wholesale dealers and retailers.

A bench of Chief Justice BD Ahmed and justice Vibhu Bakhru also ordered the companies to file information in respect of their stock in the market before and after the issuance of the DPCO.

The bench on Tuesday gave the order after considering additional solicitor general Rajeeve Mehras argument that the assertion by the drug companies that they cannot exercise any price control on products that have already been sold or have been cleared from manufacturing is incorrect.

Mehra further submitted that if the companies present individual affidavits showing the agreements they had entered into with their agents and distributors, it would be possible for the respondents (the National Pharmaceutical Pricing Authority (NPPA) and ministry of chemicals and fertilisers) to establish that the firms are capable of controlling the price of the products that have already been sold or have been cleared from the manufacturing process.

While a few of the companies have submitted the requisite information, many of them sought time for filing the same.

Meanwhile, the court also said that an earlier July 26 interim order granting immunity to the drug companies from revising their prices as per the ceiling price set under DPCO will continue to stay in effect.

As per the July 26 order only those companies that furnish a price list of the formulations under the DPCO to dealers, state drug controller and the government, will be able to claim immunity against any governmental action.

In a relief to the companies, which are yet to submit the price list, the bench directed them to comply with the interim order by August 31.

The ministry of chemicals and fertilizers through the NPPA had on May 15 issued the DPCO order and had granted a period of 45 days to Cipla and other pharma companies to revise downwards the prices of 348 drugs in the market as per the ceiling prices fixed by the government.

Cipla had contested the order saying that the provisions within the DPCO are completely arbitrary, unreasonable and wholly excessive, adding that they have been framed without any reference to the practices that are common knowledge in the pharmaceutical industry. It had submitted before the court that once a product is manufactured, it is cleared from the companys premises and the ownership of the product is transferred by sale transactions on a principal-to-principal basis to stockists and distributors across the country.

Cipla had also submitted that even if it took on the task diligently and try and ensure that each and every unit is recalled, the enormity of the task would make the same impossible.

The Delhi High Court is slated to take up the matter on September 23.