1. Notification under Section 26A, Drugs and Cosmetics Act, restricting domestic manufacture of an essential drug to public sector undertakings to prevent misuse in animals. (Para 1 , 2 , 3 , 6 )
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2019 Supreme(SC) 909
SUPREME COURT OF INDIA
ABHAY MANOHAR SAPRE, INDU MALHOTRA, JJ.
UNION OF INDIA & ANR. ETC – APPELLANTS
Versus
BGP PRODUCTS OPERATIONS GMBH AND HAGENE IMMERMATT WEG. & ANR. ETC. – RESPONDENTS
Civil Appeal Nos.6588-6591 of 2019 (Arising out of SLPs (Civil) Nos. 3296-3299 Of 2019)
Decided On : 22-08-2019
Advocates Appeared:
For Petitioner(s):Tushar Mehta, SG Vikramjeet Banerjee, ASG Kanu Agrawal, Kirtiman Singh, Rishikant Sharma, Seema Bengani, B. K. Satija, Swati Ghildiyal, Ayush Anand, Gurmeet Singh Makker, Advocates
For Respondent(s):Kapil Sibal, Gayatri Ray, Amit Panigrahi, Anuj Bhandari, Soumili Das, Pratyush Pandey, M. Anushka Sharma, Ashish Prasad, Mukta Dutta, Akshay Nagarajan, Rohan Roy, Mahfooz A Nazki, M. P. Devanath, Colin Gonsalves, Tanya Agarwal, Chubalemla Chang, Satya Mitra, Ravikesh K. Sinha, Abhijat P. Medh, Shashi Kant, Meenakshi Arora, Amit Karkhanis, Kapil Joshi, M/s KNC Abhishek Agarwal, Advocates
For Petitioner(s):Tushar Mehta, SG Vikramjeet Banerjee, ASG Kanu Agrawal, Kirtiman Singh, Rishikant Sharma, Seema Bengani, B. K. Satija, Swati Ghildiyal, Ayush Anand, Gurmeet Singh Makker, Advocates
For Respondent(s):Kapil Sibal, Gayatri Ray, Amit Panigrahi, Anuj Bhandari, Soumili Das, Pratyush Pandey, M. Anushka Sharma, Ashish Prasad, Mukta Dutta, Akshay Nagarajan, Rohan Roy, Mahfooz A Nazki, M. P. Devanath, Colin Gonsalves, Tanya Agarwal, Chubalemla Chang, Satya Mitra, Ravikesh K. Sinha, Abhijat P. Medh, Shashi Kant, Meenakshi Arora, Amit Karkhanis, Kapil Joshi, M/s KNC Abhishek Agarwal, Advocates
Important Points
The Court referred the validity of a notification restricting Oxytocin manufacture to public sector undertakings to a larger bench to resolve substantial questions regarding the nature of powers under Section 26A of the Drugs and Cosmetics Act, state monopolies, and conflicts with the Essential Commodities Act.
Subject
Constitutional Law - Administrative and Regulatory Law
Act Referred
Headnote
Drugs and Cosmetics Act, 1940 - Section 26A r/w 1st Schedule, Drugs (Prices) Control Order, 2013; section 3, Essential Commodities Act, 1955 and Order VI, Rule 2, Supreme Court Rules -
Notification dated 27.04.2018 issued under Section 26A of Drugs and Cosmetics Act, 1940 by Ministry of Health and Family Welfare restricting manufacture of Oxytocin formulations for domestic use, only by public sector undertakings or companies, to the complete exclusion of the private sector companies but allowing all companies to manufacture the same for export purposes - Oxytocin an essential drug used as first line drug for prevention and treatment of post-partum haemorrhage at the time of childbirth - Misused in milch animals to extract milk - Issue raised in instant appeals having far reaching implications - Decisions will not be mere inter partes but in rem laying down the law - Matter referred to larger Bench. (Para 12)
Facts of the case:
Notification dated 27.04.2018 was issued under Section 26A of the Drugs and Cosmetics Act, 1940 by the Ministry of Health and Family Welfare.
The impugned notification restricts the manufacture of Oxytocin formulations for domestic use, only by public sector undertakings or companies, to the complete exclusion of the private sector companies. However, the manufacture of the drug for export purposes is open to both public and private sector companies.
It was notified that the notification would come into force on 01.07.18.
By a subsequent notification dated 29.06.2018, the date was extended to 01.09.18.
The impugned Notification dated 27.04.2018 was challenged in a group of Writ Petitions by various private sector companies who are inter alia manufacturing the drug Oxytocin before the High Court on various grounds. The High Court has quashed the impugned notification. As a consequence, the impugned notification did not come into force at all.
Finding of the Court:
Issues required authoritative decision by a larger Bench.
Result: Matter referred to larger Bench.
Legal Category Hierarchy
Table of Contents
2. Validity of restricting domestic manufacture to public sector — nature of power under Section 26A — creation of state monopoly — violation of Article 14 and 19(1)(g). (Para 10 , 11 )
3. The case involves competing interests between preventing drug misuse in animals and ensuring the supply of a lifesaving essential drug for maternal health. (Para 12 , 13 , 3 , 4 , 5 , 6 , 7 , 8 , 9 )
4. The complexity and far-reaching implications of the legal questions regarding state monopoly and statutory powers necessitate a reference to a larger Bench. (Para 12 , 13 )
5. Matter referred to a larger Bench of three Judges for authoritative pronouncement on the formulated substantial questions of law. (Para 13 , 11 )
6. Is the power exercised by the Central Government under Section 26A of the Drugs and Cosmetics Act legislative or executive in nature?
The Court noted that there is no prior decision on this issue and that the nature of the power—whether legislative or executive—determines the parameters for examining the legality of the notification. (Para 12 , 3 , 7 )
7. Can a notification under Section 26A create a state monopoly in the manufacture of a drug?
The Court identified the need to determine whether restricting manufacture to public sector companies to the exclusion of private companies creates a monopoly and if such a measure is protected under Article 19(6)(ii) and Article 14. (Para 12 , 5 )
8. Does Section 26A of the Drugs and Cosmetics Act apply to drugs listed in the National List of Essential Medicines (NLEM)?
The Court raised the question of whether a drug included in the NLEM, notified under the Essential Commodities Act, remains subject to the restrictive provisions of Section 26A. (Para 12 , 4 )
9. How should the court balance the prevention of drug misuse in animals against the availability of lifesaving drugs for humans?
The Court observed a conflict between curbing unregulated clandestine manufacture for animal misuse and ensuring the continued supply of essential lifesaving drugs used for treating post-partum haemorrhage. (Para 12 , 8 )
JUDGMENT
INDU MALHOTRA, J.
Leave granted.
1. The issue which arises for consideration in the present appeals is the validity of the Notification dated 27.04.2018 issued under Section 26A of the Drugs and Cosmetics Act, 1940 (hereinafter referred to as the “Act”) by the Ministry of Health and Family Welfare.
The impugned notification restricts the manufacture of Oxytocin formulations for domestic use, only by public sector undertakings or companies, to the complete exclusion of the private sector companies. However, the manufacture of the drug for export purposes is open to both public and private sector companies.
It was notified that the notification would come into force on 01.07.18.
By a subsequent notification dated 29.06.2018, the date was extended to 01.09.18.
2. Till the issuance of the impugned notification, Oxytocin was being manufactured by private sector companies to meet the entire need in the country.
After the issuance of the impugned notification, Karnataka Antibiotics & Pharmaceuticals Ltd. (“KAPL”), a public sector company has commenced the manufacture of Oxytocin in May 2018.
3. The Active Pharmaceutical Ingredient (“API”) or the bulk drug is manufactured in India only by one private sector company in India, viz. Hemmo Pharmaceuticals Pvt Ltd. (“Hemmo Pharma”).
4. The impugned Notification dated 27.04.2018 was challenged in a group of Writ Petitions by various private sector companies who are inter alia manufacturing the drug Oxytocin in W.P.(C) No. 6084/2018, W.P.(C) No. 8555/2018, W.P.(C) No. 8666/2018 and W.P.(C) No. 9601/2018 before the Delhi High Court on various grounds. The Delhi High Court granted stay of the operation of the impugned notification vide Interim Order dated 31.08.2018. The order of stay was extended by subsequent Orders, which remained in force till 15.12.2018. The Delhi High Court vide a detailed Judgment and Order dated 14.12.2018 has quashed the impugned notification. As a consequence, the impugned notification did not come into force at all.
5. The Appellant-Union of India has filed the present Special Leave Petitions before this Court, to challenge the judgment passed by the Delhi High Court.
6. The subject matter of the present appeals is the drug Oxytocin, which is notified as an essential drug by the World Health Organization (WHO) Model List of Essential Medicines since 2002. The concept of “Essential Medicines” was first introduced by the WHO in 1977, and has now been adopted by many countries, NGOs and international nonprofit supply agencies. Oxytocin continues to be notified in the 21st edition of the WHO Model List of Essential Medicines published in 2019. It is listed under the head “Medicines For Reproductive Health And Perinatal Care” and the recommended form of dosage is “Injection: 10 IU in 1 mL”.
6.1. Oxytocin is an essential lifesaving drug, which is included in the National List of Essential Medicines, 2011 (“NLEM”). It continues to be listed at S.No. 26.1.5 in the latest notification published in 2015. The NLEM is published under the 1st Schedule to the Drugs (Prices) Control Order, 2013 (“DPCO”) under Section 3 of the Essential Commodities Act, 1955 (“EC Act”).
The NLEM specifies the recommended dosage and strength of Oxytocin injection as 5IU per 1 ml and 10IU per 1 ml. Oxytocin injection in the form of “5 IU per ml in 1ml ampoule pack” is included in the “Essential Drug List for the year 2016-2018” at Serial No. 228 published by the National Health Mission, Department of Health and Family Welfare, Government of Himachal Pradesh.
6.2. The objective of the National List of Essential Medicines (NLEM) is that the drugs included in it are adequate to meet the contemporary health needs of the general population of the country [Press Release on “Essential Drugs” dated 15.03.2013 by the Press Information Bureau, Government of India, Ministry of Health and Family Welfare. ]. It is one of the key instruments in balanced healthcare delivery system of a country. The first NL
