Ceiling prices under DPCO 2013 apply only to formulations expressly listed in First Schedule or added by specific orders; unspecified variants like sustained release not covered, barring pricing authority from imposing ceilings or recovering overcharges.

Judgment :

Manish Pitale, J.

The petitioner No.1 in Writ Petition No.2216 of 2015 is an entity engaged in the manufacture, marketing and distribution of pharmaceutical formulations and petitioner in Writ Petition No. 885 of 2015 is the Indian Drug Manufacturers Association (IDMA), which is a registered association of manufacturers of drugs and pharmaceuticals in India. Both the petitions raise issues pertaining to the interpretation and implementation of the Drugs (Price Control) Order 2013 (hereinafter referred to as ‘DPCO 2013’ for short). The petitioners contend that the respondent No.3 i.e. the National Pharmaceutical Pricing Authority (NPPA) is wrongly interpreting DPCO 2013 to insist on price ceiling for formulations that do not form part of the first schedule appended to DPCO 2013 and that such insistence is not only arbitrary, but it is in the teeth of various clauses of the DPCO 2013 itself. The petitioner-IDMA in Writ Petition No.885 of 2015 has also challenged communication dated 20.06.2014 issued by respondent No.3-NPPA to the Department of Pharmaceutical, which purports to interpret DPCO 2013, contrary to the interpretation of the respondent No.1 through Ministry of Chemicals and Fertilizers (Department of Pharmaceutical).

2. Since the respondent No.3-NPPA proceeded on the basis that formulations, not specifically mentioned in the first schedule to DPCO 2013, were also amenable to price ceiling, certain claims were being made against manufacturers of pharmaceuticals, drugs and formulations for recovery of allegedly overcharged amounts. In that light, the petitioners in both the petitions pressed for interim relief. In both the petitions, interim relief was granted to the effect that no coercive steps would be taken by the respondents in pursuance of demand notices issued against such manufacturers of drugs and formulations. The interim relief continued to operate in favour of the petitioners. Upon completion of pleadings, the writ petitions were taken up for final hearing.

3. The respondent-Union of India had been issuing drug price control orders from time to time. On 07.12.2012, the respondent- Union of India through Ministry of Chemicals and Fertilizers, issued a notification, specifying the National Pharmaceutical Pricing Policy 2012. In the said policy, after taking into consideration orders passed by the Supreme Court and considering the recommendations submitted by a committee established by the respondent-Union of India, certain principles for regulation of prices of drugs and formulations were laid down. The key principles were identified as essentiality of drugs, control of prices of formulations only instead of specific bulk drugs and market based pricing. It was specifically laid down that the criteria of essentiality for drugs would be met by considering the list of medicines specified in the National List of Essential Medicines (NLEM), as revised from time to time by the Ministry of Health and Family Welfare of the respondent-Union of India. In this regard, reliance was placed on NLEM of the year 2011, as regards price regulation of formulations only instead of bulk drugs and span of price control was specified on the basis of dosages and strengths as listed in NLEM 2011. It was further specified that formulations only would be priced by fixing a ceiling price and that manufacturers would be free to fix any price equal to or below the ceiling price.

4. It is in the backdrop of the said policy of 2012