New patented drugs exempted from the Price Cap: Delhi HC issues notice

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The Price Cap is fixed on medicines to balance between interests of economy and also the welfare of public. But the latest amendment (2019) on Drug Price Control Order, 2013 exempts the newly patented indigenous drugs either involving indigenous process or delivery system is exempted from the price cap. But the alarm is there is huge chance of misuse of this essential commodity which will affect the public. The Petition was filed before the Hon’ble Delhi Court and the Court issued notice to deal with the petition.

The intent behind implementing price controls can stem from the desire to maintain affordability of goods even during shortages and to slow inflation. Drug price control is all about striking the right balance between consumer and producer interests. The petitioner i.e. All India Drug Action Network has after observing the dire consequences of the Amendment (2019) made to the Drug Control Price Order, 2013 filed the petition before the Honourable Court.

The Amendment in question is the Amendment to Drug Price Control Order, 2013 provided for the Non application of the provisions of this order in certain cases. The provisions of this order shall not apply to-

  • A manufacturer producing a new drug patented under the Indian Patent Act,1970(39 of 1970) and not produced elsewhere, if developed through indigenous Research and Development for a period of five years from the date of commencement of its commercial production in the country.
  • A manufacture producing a new drug in the country by a new process developed through indigenous Research and Development and patented under the Indian Patent Act, 1970 (39 of 1970) for a period of five years from the date of the commencement of its commercial production in the country.
  • A manufacturer producing a new drug involving a new delivery system developed through indigenous Research and Development for a period of five years from the date of its market approval in India.

Provided that the provision of this paragraph shall apply only when a document showing approval of such new drugs from Drugs Controller General (India) is produced before the Government.

The DPCO (Drugs Prices Control Order) fixes the prices of scheduled drug formulations and also monitors the maximum retail prices of all drugs, including the non-scheduled formulations. According to this provision, the drug maker who has brought in an innovative patented drug will be exempted from the price control regulations for 5 years from the date of marketing. Further drugs for treating rare or “orphan” diseases too will be exempt from price control, with a view to encouraging their production.  As we all know the ultimate objective of DPCO is to maintain equilibrium between consumer and producer interest, this provision intends to fail this objective because of its arbitrariness sloping towards the producer interest which is affecting the consumer at large. Some of the irregularities as observed by the petitioner include-

  • It is contended that the order is antithetical and ultra vires to the statutory principles laid down in the Essential Commodity Act, 1955 and an unreasonable and arbitrary link between the Patents Act and the Essential Commodities Act is been created.
  • The DPCO has failed to fulfill its objective of industrial growth as the amendment order lies contrary to the policies, initiatives and government directions because this provision in question provides exemption from the glass ceiling legislation on drugs.
  • Since this provision of amendment order does not specify a time limit on the exemption granted nor does it talk about the cancellation or recall of such exemption, this directly affects the Right to life as envisaged under Article 21 of the Constitution of India.
  • Dilatory tactics to invoke profits may be used by the manufacturers.

Considering the seriousness of the consequences due lack of price control which has  a detrimental effect on affordability and further significantly impacts patients and specially the poor people who cannot afford and avail the medical facility, Honourable High Court of Delhi has passed the notice considering the prayer made in the petition and given the necessary directions.

Edited by Pragash Boopal

Approved & Published – Sakshi Raje

Shraddha Yadav
I am Shraddha a third year undergraduate student at S.R.M. University, Delhi NCR persuing B.A.LL.B (Hons.). As someone who is interested in research work, I am more into reading and exploring the unexplored part and law being an endless ocean of knowledge attracts me the most specially certain legal fields such as criminal law, family law, human rights laws, international law interests me the most. Being a passionate reader, I enjoy reading philosophical and motivational books and also autobiographies at times (comics and fairy tales as well). Apart from this Mandela art and travelling are also one of my hobbies.