Karnataka High Court Dismisses Appeal Against 30% Cap On Trade Margin Of 42 Anti-Cancer Drugs

A division bench of Chief Justice Prasanna B Varale and Justice M G S Kamal dismissed the appeal filed by Healthcare Global Enterprises Ltd.

“For reasons to be recorded separately, appeal is dismissed,” said the court.

A single judge bench of Justice M Nagaprasanna last year while dismissing the petition had said: "Cancer patients in India incur heavy expenditure and cancer drugs need to become somewhat affordable so that whenever a treatment is required, it can be treated at the earliest, to the rich and the poor alike. If such policy is not promulgated, the poor or the middle class which forms a majority of the population of this country, can be seen to be succumbing to the disease due to high prices that the manufacturers project resulting in its unaffordability."

The petitioner claimed to be the largest provider of cancer care with 20 comprehensive care centres across the nation. It had argued that the National Pharmaceuticals Pricing Authority, which issued the notification, is not empowered under the Price Control Order to fix ceiling price or retail price of non-scheduled formulations (anti-Cancer Drugs).

"The non-scheduled formulations are to be determined only by the market force and cannot be subject to any regulation," it submitted.

The company further argued that there is no extraordinary circumstance for fixing of ceiling price or retail price of any drug and, therefore, the cap that is laid at 30% is arbitrary and imposes an unreasonable restriction on the petitioner's right to trade under Article 19(1)(g) of the Constitution.

The Court had however referred to the objectives of the National Pharmaceuticals Pricing Policy, 2012 and found that its key principle is regulation of price of drugs on the basis of essentiality of such drugs which would be different from the economic criteria/market share principle hitherto adopted in the drug policies. It had noted that exercising its powers conferred under the Essential Commodities Act, 1955 and in supersession of the Drugs (Prices Control) Order, 1995, the Government of India notified the Drugs (Prices Control) Order 2013.

Referring to the various clauses under it, the single bench said, "The fixation of ceiling price of a drug is a power available notwithstanding anything contained in the Prices Control Order. Clause 20 also permits monitoring of non-scheduled formulations by the Government. Non-scheduled formulations form the subject matter of the present petition. Clause 20 empowers the Government to monitor maximum retail prices of all the drugs including non scheduled formulations to ensure that no manufacturer increases the maximum retail price of a drug more than what is found in clause 20. Schedule-I to the said order enlists what drugs that would come within the ambit of such control."

Case Title: HEALTHCARE GLOBAL ENTERPRISES LIMITED v. UNION OF INDIA & Others

Case No: WRIT Appeal No: 83/2023

Citation: 2023 LiveLaw (Kar) 123

Date of Order: 27-03-2023

Appearance: Advocate Deepak Bhaskar for appellant.

CGC Kumar M N for respondents