'Rich & Poor Should Be Able To Afford Cancer Treatment Alike': Karnataka HC Upholds 30% Cap On Trade Margin Of 42 Anti-Cancer Drugs

A single judge bench of Justice M Nagaprasanna dismissed the petition filed by Healthcare Global Enterprises Ltd. and 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 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 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.

Then it 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 notifid the Drugs (Prices Control) Order 2013. Referring to the various clauses under it the 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."

Further it said, "Pharmaceuticals Pricing Authority and the scheduled formulations are under the price cap of 16-17 per cent in the Pharma industry. The only control on the remaining non-scheduled drugs is by ensuring that the annual price increase is not more than 10%. Seeking to rationalise prices in that segment in a graded manner, the order is promulgated as high drug prices in India were unreasonable. The trade margin was the difference between the price on which the manufacturer sells drugs to stockists and the final price when it reaches the patients."

The Court said that policy is a system of decision making guided by interest than by principle, the interest in the case at hand is public, as they are all anti cancer drugs which are now sought to be regulated. "It cannot be forgotten that the policy is only a course of action to deal with a subject matter. An Authority, statutory or otherwise, is entitled to choose a course of action that it thinks necessary or expedient in public interest. The Courts have always exercised judicial restraint and circumspection over the wisdom of the policies of the Government or statutory authorities, save in circumstances where such policy demonstrates caprice, arbitrariness, unreasonableness or is whimsical, so as to offend the tenets of Article 14 of the Constitution of India."

The Court said no circumstance was brought to its notice for the policy to be termed as arbitrary. "All that the petitioner contends is that its right under Article 19(1)(g) of the Constitution of India is taken away. Article 19(1)(g) of the Constitution which gives the right to a citizen to practise any profession or to carry on any trade or business cannot be construed to be so absolute, as even the fundamental rights are couched with reasonable restrictions."

Rejecting the ground raised by the petitioner in challenge to the Order, that its profit would come down as he is only a retailer, the bench said, "The cap is on the manufacturer but the effect is on the retailer. This cannot be a ground for a judicial review of the impugned policy much less, on the ground that it violates Article 19(1)(g) of the Constitution of India."

Thus it dismissed the petition, stating that challenge by a retailer whose motive is profit, cannot be countenanced.

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

Case No: WRIT PETITION No.11057 OF 2019

Citation: 2022 LiveLaw (Kar) 496

Date of Order: 30TH DAY OF NOVEMBER, 2022

Appearance: DEEPAK BHASKAR, ADVOCATE for petitioner; M.B.NARGUND, ADDL. SOLICITOR GENERAL FOR GUTHAM DEV C. ULLAL, CGC for respondents.