Delhi HC Issues Notice On Plea Challenging Exemption Of New-Patented Drugs From Price Control

The writ petition sought quashing of Paragraph 2(ii) (A) and Paragraph (ii) (B) of the Drug Prices Control Amendment Order 2019 dated 3^rd January 2019 and Paragraph 32 of the Drug (Prices Control) Order 2013 dated 15^th May 2013 (collectively referred as Paragraph 32 of the DPCO 2013 & 2019 Amendment), issued under section 3 of the Essential Commodities Act, 1955.

It averred,

"The paragraph 32 of the DPCO 2013 and 2019 Amendment thereto arbitrarily link the price control exemption of five years from the date of commercial marketing/production to drugs, processes and new delivery systems in relation to new drugs as defined under Rule 122E of the Drugs and Cosmetics Rules, which status only attaches for four years from the date of marketing approval, thus creating a prima facie conflict between the two schemes"

In view of the above, it contended that the 2013 Amendment supplied an "automatic exemption in favour of patented new drugs, new drugs developed by patented processes and new drugs involving a new delivery system. This automatic exemption was provided by Paragraph 32, which is set out below:

32. Non–application of the provisions of this order in certain cases.- The provisions of this order shall not apply to, -

(i) a manufacturer producing a new drug patented under the Indian Patent Act, 1970 (39 of 1970) (product patent) 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.

(ii) a manufacturer 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) (process patent) for a period of five years from the date of the commencement of its commercial production in the country.

(iii) 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.

Explanation.- Notwithstanding anything contained in this Order, for the purpose of this paragraph "new drug" shall have the same meaning as is assigned to under rule 122E of the Drugs and Cosmetics Rules, 1945"

Furthermore, it was claimed that by the 2019 amendment, the scope of the above paragraph was further widened to include "drugs for treating orphan diseases", the requirements for indigenous research and development were removed from paragraph 32(ii) and (iii) and "product patent" was altered to extend in omnibus to the words "new drug patented". Further, the exemption clause had been altered to extend to the date of commencement of its commercial marketing by the manufacturer in the country from the date of the commencement of its commercial production.

The Petition while contending the irreversible and irreparable consequences of the amendment orders averred glaring irregularities such as:

1) Unreasonable & arbitrary link between the Patents Act & the Essential Commodities Act;

It is contended that the amendment order is antithetical and ultra vires to the statutory principles laid down in the Essential Commodities Act, 1955 as the Government did not have the power to exclude patented drugs or process, drugs involving a new delivery system, or drugs for treatement of rare/orphan diseases as a category from the purview of price control. It averred,

"That paragraph 32 of the DPCO of the 2013 and 2019 Amendment have been seen to create a perverse incentive for manufacturers to seek insubstantial or frivolous patents and to evergreen existing patents for the express purpose of claiming price control exemptions, which is completely contrary to the core purposes of the Essential Commodities Act and the Drug (Prices control) orders thereunder."

2) Antithetical to the schemes and objectives of legal regimes such as National List of Essential Medicines and National Pharmaceuticals Pricing Policy, India's adoption to the TRIPS Agreement and earlier iterations of providing encouragement for indigenous research and development of drugs

The Petition contends that that the amendment order is wholly contrary to several policy initiatives, statements and directions made by the Government agencies as it allows exemptions from price control legislations on drugs created for treating "orphan" or "rare" diseases from the provisions of the DPCO. By overriding the exemption of price control, the objective of industrial growth as envisaged by the early iterations of the DPCO is defeated.

3) Operation of orders likely to disproportionately affect the availability and affordability of essential, 'life-saving drugs

Averring that the amendment order does not specify a time limit on the exemption granted and neither does it enforce a provision for cancellation/recall of such exemption, the Petitioners claimed that the consequences of this would affect the right of life as envisaged under Article 21 of the Constitution of India.

4) The Manufacturer may engage in dilatory tactics to invoke profits

The Petition claims that delay the commercial marketing or commercial production of the new drug and hold it until the very end o the 4-year period for which the classification holds and then commence commercial activity and then avail the 5 year exemption.

The Petitioner in the matter is the All India Drug Action Network. It has been filed by Advocate Eashan Ghosh.