The court said the drug firms should implement medicine prices within 15 days time and not sell unsold stocks at higher price
New Delhi December 11, 2013: In good news for consumers, the Supreme Court has held that an order reducing prices of particular medicines will come into force with immediate effect after its publication in the gazette and firms should implement it within 15 days time and not sell unsold stocks at higher price.
A bench of justices R M Lodha and Kurian Joseph dismissed the appeals preferred by medicines firms and the distributors seeking the order that the stocks cleared by the manufacturer before the 15th day can be allowed to sold to consumers at the higher unrevised price.
It allowed the plea of the Centre that once the Drugs Prices Control Order (DPCO) is gazetted, revised prices will be applicable to all unsold stocks of the medicines, covered under the order.
“The true import of paragraph 14(1) of DPCO is that once the price notification is gazetted, it takes effect immediately though its enforcement is postponed by fifteen days to enable the manufacturers and others to make suitable arrangements with regard to unsold stocks,” the bench said.
“The argument of the manufacturer or distributor, if accepted, that the stocks cleared by the manufacturer before the fifteenth day can be sold to the consumer at the higher unrevised price then, in our view, that may result in same formulation being offered for sale to a consumer at two different prices. This must be avoided …,” it said.
“Then, the interpretation to sub-paragraph (1) of paragraph 14 urged on behalf of the manufacturer/distributor may also result in misuse by the manufacturer in as much as the manufacturer may increase manufacture of the bulk drugs during fifteen-day period of notified price and clear that stock at the unrevised/higher price.
“We are afraid, this interpretation will also lead to frustrating the regulatory regime which is sought to be put in place by DPCO,” the court said.
It said, the “ultimate object of DPCO is that there is no deception to a consumer and he is sold the formulation at a price not exceeding the price specified in the current price list or price indicated on the label of the container or pack thereof, whichever is less”.
The court, in its verdict, upheld the view taken by the Karnataka high court on the issue and termed the judgement of the Delhi high court as “flawed”.
The court said the DPCO cannot be “construed” in a manner which is “derogatory” to the object of having the regulatory regime, meant to extend benefits to the consumers.
“Does it mean that during this period of 15 days, it is open to the manufacture and clear the bulk drug or formulation at prenotification prices? We do not think so,” it said.
“We agree with learned additional solicitor general that the period of 15 days is simply a grace period or cooling period allowed to manufacturers to adjust their business in a manner where appropriate arrangements are made with regard to the unsold stocks in the distribution chain,” the bench said.
It said that there cannot be two prices at the end point of the distribution chain depending on the batch number.
“A consumer approaching a chemist/retailer can hardly be offered two prices for the very same product based only on the difference in batch numbers. Consumer must get the benefit of the notified price. That is the ultimate objective of DPCO. The batch number cannot override the benefit to which a consumer is entitled on price reduction of a formulation,” it said.
The apex court’s decisions came on six appeals. Four appeals were filed by medicines firms against the Karnataka high court judgement, while two pleas were filed by the centre against the “diametrically” opposite views taken by the Delhi high court on identical issue.
