Reducing the leeway for drug firms to sell older stocks of price-regulated medicines in the market at previously notified ? rather than new ? prices, the Supreme Court on Monday held that the firms are liable to replace these stocks within the grace period provided by the National Pharmaceuticals Pricing Authority (NPPA).
While the ruling was in respect to a dispute involving the now repealed Drug Price Control Orders (DPCOs) 1995 and 1987, which gave 15 days for the old stocks to be replaced, it will have major implications for the pharma industry that has been opposing the 45-days time period given to them for replacing existing stocks under the new DPCO 2013.
For the consumer, this means that once the regulator reduces the price of a drug, it will soon be made available at that price, rather than the old (higher) price. The pharma industry, including multinationals like Abbott and Novartis India, have challenged the new drug price fixing orders that were to be implemented from July 29. Even two major industry bodies ? the Indian Drug Manufacturers Association and the Confederation of Indian Pharmaceutical Industry ? have approached the Delhi High Court, challenging the DPCO 2013 that had asked them to replace stocks in the market with those carrying reduced prices within 45 days of new price notification.
The companies have been arguing that recalling the existing stocks from the retail level and ensuring that the Maximum Retail Price (MRP) of scheduled formulation does not exceed the ceiling price is practically impossible, and therefore the government should allow companies to sell the existing stocks at the previous price.
A bench comprising justices RM Lodha and Kurian Joseph upheld the Karnataka High Court order that held that the prices fixed under the Drugs (Prices Control) Order in respect of drugs/formulations would be operative in respect of all sales subsequent to 15 days from the date of the notification by the government in the official gazette/receipt of the price fixation order by the manufacturer.
?The price fixation by the Central government under DPCO is in the nature of legislative measure and the dominant object and purpose of such price fixation is the equitable distribution and availability of commodities at fair price. The whole idea behind such price fixation is to control hoarding, cornering or artificial short supply and give benefit to the consumer. The regulation of drug price being ultimately for the benefit of the consumer…,? it said.
Welcoming the judgment, CP Singh, chairman, National Pharmaceutical Pricing Authority said, ?It is a positive move. Companies will have to adhere to the 15-day deadline to replace stocks in the market as per DPCO 1995. This may have a bearing on the 45-day deadline as per the new DPCO, which is also being contested by pharma companies. However, these cases are not being pursued vociferously.?
An executive from a leading pharma company contesting the 45-day rule said that it will continue to appeal that existing stocks that have been manufactured and are supplied in the market should be allowed to continue sales, while new lots supplied by companies can follow the new price caps.