Dozing DoP Wakes Up: Consults Ministries on Price Regulation of Patented Drugs

DoP wakes up and plays along
DoP was in a deep slumber till now

Vasundhara had recently alerted us about the Parliamentary Committee on Government Assurances pulling up the Department of Pharmaceuticals (‘DoP’) for their inaction on the control of patented drug prices. As reported by Live Mint, the chastising seems to have worked for the time being as DoP has now sought the views of different ministries on price regulation of patented drugs.

Apparently, the Department of Industrial Promotion and Policy (‘DIPP’) is simultaneously examining if there needs to be a change in the Patent Act (‘Act’) provisions on compulsory licences, which too can be used as a tool to set off the effect of high prices under certain limited circumstances. This is an important exercise as regulation of drug process through any other means, including the Drug (Prices Control) (‘DPCO’) will have a direct bearing on the ability of government to issue compulsory licences. While Paragraph 19 of the DPCO, 2013 has empowered the National Pharmaceutical Pricing Authority (‘NPPA’) to impose price caps on any drug, patented drugs have largely remained untouched, possibly due to the apprehension that such a move might undermine  the argument that the drug was not “reasonably affordable”; a threshold needed to be fulfilled for issue of compulsory licences under S.84 (1) (b). I feel that this apprehension might be misplaced as “regulation” of drug prices cannot necessarily equate to making them “affordable”. In case such regulation leads to the drugs becoming affordable, the question of issuing compulsory licence does not arise in the first place. Thus, whether compulsory licence provisions merits a re-examination in light of drug price regulation is to be contemplated further.

SC upholds DPCO norms

Also, in a related development, the Supreme Court has upheld the validity of various notifications issued by the Central Government under DPCO, 1995. The appeal was filed by the Union of India against the stay granted by various high courts in relation to the enforcement of certain notifications under DPCO.  The appeal scrutinised the notifications issued under Paragraph 7 of DPCO, which prescribed the norms for, inter alia, conversion cost, packing charges and process loss of raw materials used in determining the retail prices of formulations under Paragraph 8 of DPCO. The main contention of the Respondents, comprising of pharmaceutical manufacturers, was that these notifications were issued and then re-issued without application of mind. The Court dismissed this contention, after a thorough examination of the history of the various committees, whose reports formed the basis for the fixing of these norms. While it based its finding primarily on the narrow scope of judicial intervention in matters concluded on the basis of an expert report, the Court was heavily critical of the reluctance of the pharma industry to place before these committees, data, which could have helped them in fixing the norms and was requested for multiple times by the committees. The Court also cautioned the High Courts against allowing, as a matter of routine, injunctions in cases that have a bearing on the welfare of the public.

Light at the end of the tunnel?

As our readers will know, the history of drug price regulation in India is littered with instances of too many committees with very little results (as may be evidenced from here and here). Thus, a rap on the knuckles for DoP was rather unsurprising, if not long overdue. While DoP’s new found enthusiasm and the favourable Supreme Court order may be good news for drug price regulation in India, one need to be wary of losing the momentum too fast too soon, as has been the case in the past.

(Image from here)

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