SC upholds Centre’s mechanism to control medicine prices

R Sedhuraman

Legal Correspondent

New Delhi, October 21

The Supreme Court on Friday upheld the validity of four orders and notifications issued by the Centre since July 1999 capping the retail prices of essential medicines in the interest of the general public.

A bench comprising Justices Madan B Lokur and RK Agrawal dismissed the appeals of pharma majors Cipla and Dr Reddy’s Laboratories and allowed the Centre’s appeals in cases involving several other companies, including Ishaan Labs, Remidex Pharmaceuticals and Johnson and Smith, which had obtained rulings from various high courts in their favour.

Based on the Drugs (Prices Control) Order 1995, the notifications had prescribed the norms for conversion cost, packing charges and process loss of raw materials for arriving at the retail prices.

The apex court rejected the companies’ contention that the government had issued the orders mechanically and without any application of mind.

The bench said it was of the clear view that in matters where public interest was involved, the judiciary ought to be circumspect in granting any interim relief.

“The consequence of an interim order might be quite serious to society and consumers and might cause damage to public interest and have a long term impact... the time has come when it is necessary to be somewhat more circumspect while granting an interim order in matters having financial or economic implications,” it explained.

Pointing out that the drug industry in the country was extremely large, it said a lot was at stake not only for the industry but also for the consumers. For this reason, the courts should be extremely cautious in interfering in any manner whatsoever with the working of the drug industry.

Any interference by the courts would have wide-ranging repercussions not only in commercial terms but also for the people of the country, it said.