SC backs government on fixing drug prices outside of essential list


MUMBAI: In a veritable setback to the Indian pharmaceutical industry, the Supreme Court has dismissed a special leave petition filed by the Indian Pharmaceutical Alliance to block a government order notified two years ago to control prices of over a hundred drugs that were not part of the National List of Essential Medicines (NLEM).

The Indian Pharmaceutical Alliance is a grouping of top Indian drug makers. A July 2014 notification by the National Pharmaceutical Pricing Authority (NPPA) had invoked Paragraph 19 of the Drug Price Control Order, citing extraordinary circumstances for a band of anti-diabetes and heart disease drugs and fixed their price caps in the ‘public interest’.

Industry bodies had challenged the order in the Bombay and Delhi high courts. The Bombay High Court had backed the government categorizing the drugs as essential and the need to make them affordable to a growing swathe of diabetes and heart patients in India.

DG Shah, secretary general of Indian Pharmaceutical Alliance, confirmed the latest court decision. “The issue has arisen due to poorly drafted legislations related to the industry. Unless the legislations are drafted properly and then monitored by the government, the industry will continue to face such challenges,” he said.

Under directions from the department of pharmaceuticals, the NPPA had in September 2014 withdrawn its set of guidelines that had enabled it to control the prices of drugs outside of the NLEM. But the decision did not reverse the price caps, leading drug makers to seek a legal recourse.

Last week, in yet another crucial decision, the top court backed the government pricing watchdog in a case involving Cipla and Dr. Reddy’s, where the regulator had clamped price controls without first enlisting the required parameters for such a move.