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2018 Supreme(Del) 2655
IN THE HIGH COURT OF DELHI AT NEW DELHI
VIBHU BAKHRU, J.
Indoco Remedies Limited - Petitioner
Versus
Union of India And Anr. - Respondents
W.P.(C) 7597 of 2018 & CM No. 29055 of 2018
Decided On : 26-07-2018
For the Petitioners:Mr. Vivek Chib, Ms. Pracheta Kar, Mr. Asif Ahmed, Ms Ruchira Goel, Mr. Kushal Gupta, Mr. Rajeev M. Roy, Mr. Rajeev K. Pandey and Mr. Shambhu Thakur, Advocates.
For the Respondents:Ms. Maninder Acharya, ASG, Mr. Kirtiman Singh, CGSC, Mr. Vikram Aditya Singh, Mr. Waize Ali Noor, Mr. Sahil Sood, Mr. Harshul Choudhary, Mr. Viplav Acharya and Mr. Prateek Danda, Advocates.
Headnote:
DPCO-2013 - Pharmaceutical Pricing - 8(1), 2(1)(zb), 2(1)(v) - The court discussed the definition of 'scheduled formulation' and 'non-scheduled formulation' under DPCO-2013, and the interpretation of dosage and strengths in relation to the inclusion of medicines in Schedule I. The court emphasized the need to interpret the provisions of DPCO-2013 purposively to ensure the availability of essential medicines at affordable prices. The judgment clarified that mere quantitative differences in dosage and strength would be insufficient to exclude a formulation from Schedule I, and only variations resulting in a qualitative difference to the formulation would qualify as non-scheduled formulations. The court also highlighted the amendments to the definitions and the inclusion of explanations in Schedule I, emphasizing the encouragement of innovation in medicine. The judgment concluded that the formulation in question was included in Schedule I and fully covered within the scope of DPCO-2013.
Fact of the Case:
The National Pharmaceutical Pricing Authority issued a notice to a pharmaceutical company demanding a sum for overcharging on a formulation. The company contended that the formulation was outside the purview of DPCO-2013 and not subject to price ceiling under any Price Notification Orders. The court was tasked with determining whether the formulation was a 'scheduled formulation' under DPCO-2013 and covered within the Price Notification Orders.
Finding of the Court:
The court found that the formulation in question was included in Schedule I and fully covered within the scope of DPCO-2013. It dismissed the petition as unmerited.
Issues: The main issue was whether the formulation was a 'scheduled formulation' under DPCO-2013 and covered within the Price Notification Orders.
Ratio Decidendi: The court clarified the interpretation of 'scheduled formulation' and 'non-scheduled formulation' under DPCO-2013, emphasizing the need to interpret the provisions purposively to ensure the availability of essential medicines at affordable prices. It highlighted the amendments to the definitions and the inclusion of explanations in Schedule I, emphasizing the encouragement of innovation in medicine.
Final Decision: The court dismissed the petition as unmerited and disposed of the pending application.
VIBHU BAKHRU, J.
1. The petitioner (hereafter ‘IRL’) has filed the present petition impugning the notice dated 20.11.2017 (hereafter ‘the impugned notice’) issued by the National Pharmaceutical Pricing Authority (hereafter ‘NPPA’) demanding a sum of Rs. 2,93,57,006/- (Rs. 2,00,95,630/- towards the overcharged amount plus Rs. 92,61,376/- towards interest at the rate of 15% p.a) for the amount overcharged by the petitioner and not complying with the ceiling price fixed under the Drugs (Price Control) Order, 2013 (hereafter ‘DPCO-2013’).
2. The impugned notice had been issued on the basis that the petitioner had overcharged for the formulation TRIZ Syrup 60 ml containing CETIRIZINE 5mg/5ml at the rate of Rs. 42.25/- per injection against the ceiling price of Rs. 0.55/- per ml (that is, Rs. 33/- for 60 ml).
Factual Background
3. IRL is a Pharmaceutical Company and is engaged in the business of manufacturing and marketing of drugs and pharmaceuticals. This includes TRIZ Syrup 60ml which contains CETIRIZINE of the strength 5mg/5ml (hereafter also referred to as ‘the Formulation’).
4. In the year 2011, the National List of Essential Medicines (hereafter ‘NLEM – 2011’) was revised to include CETIRIZINE with the following strengths:-
CETIRIZINE Tablets 10 mg and
CETIRIZINE Syrup 5 mg/5 ml
5. The DPCO-2013 was issued on 15.05.2013 with NLEM-2011 included as Schedule-I thereto. As noticed above, at the material time NLEM-2011 included CETIRIZINE Tablets of the strength 10 mg and CETIRIZINE Syrup of the strength 5 mg/ml.
6. On 28.06.2013, NPPA issued a Price Notification Order fixing the ceiling price of CETIRIZINE syrup with strength 5mg/ml as Rs. 0.54/-. Subsequently, on 28.04.2014, NPPA issued another Price Notification Order fixing the ceiling price of CETIRIZINE tablets with strength 10 mg as Rs. 1.92/- per tablet and the ceiling price of CETIRIZINE Syrup-5mg/ml was revised to Rs. 0.57/-.
7. On 26.02.2015, NPPA issued another Price Notification Order revising the ceiling price of CETIRIZINE Syrup-5 mg/ml to Rs. 0.59/- and for CETIRIZINE tablet-10 mg to Rs. 1.94/-. Thereafter, on 02.03.2016, NPPA issued another Price Notification Order revising the ceiling price of CETIRIZINE Syrup-5mg/ml to Rs. 0.57/- and ceiling price of CETIRIZINE tablets-10mg to Rs. 1.94/- for 1 tablet.
8. On 16.04.2015, NPPA sent a notice to IRL, inter alia, stating that IRL had increased the Maximum Retail Price (MRP) of the formulation from Rs. 36.80 in December, 2013 to Rs. 40 in December 2014, which translated to an increase of 8.70% in the MRP of the Formulation. IRL was called upon to explain the reasons for such increase in the MRP and also furnish a consolidated price list of products manufactured or marketed by it.
9. IRL responded to the aforesaid notice dated 16.04.2015, by a letter dated 07.05.2015, inter alia, claiming that the NLEM-2011 did not include CETIRIZINE with the strength of 5mg/5ml and, therefore, the Formulation, which contains CETIRIZINE of the strength 5mg/5ml, was not included as a ‘scheduled formulation’ under the DPCO-2013.
10. Thereafter, on 09.05.2016, NPPA issued a Price Notification Order which included CETIRIZINE Oral liquid strength 5mg/5ml. The ceiling price of the same was fixed at Rs. 0.55/-.
11. IRL states that after the Price Notification Order dated 09.05.2016 was issued, it revised the price of the Formulation in accordance therewith.
12. On 16.08.2016, NPPA issued a letter stating that it had observed that IRL had not applied the price fixed in respect of TRIZ–CETRIZINE 5 mg batch no.TAXIJ54 with manufacturing date 01.10.2015 and called upon IRL to explain the reasons for non compliance of the price fixed and to further furnish the consolidated price list for all the products manufactured by it along with certificate from the Chartered/Cost Accountant with batch wise production and sale details. IRL responded to the said le
