Karnataka High Court: In the instant petition filed by Healthcare Global Enterprises, wherein the issue was that whether the policy of Government of India in imposition of cap on trade margin of 30% on the manufacturer of essential anti-cancer drugs, is arbitrary and unreasonable; the Bench of M. Nagappasanna, J., while dismissing the petition, held that the petitioners did not present any circumstance which could prove that the impugned Order violated the Constitution. It was further held that a retailer’s alleged loss due to a government policy is not a ground for judicial review. The Court poignantly stated that, “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 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”.
Facts of the Case: The petitioner claimed to be the largest provider of cancer care and is in the forefront of the battle against cancer and to have 20 comprehensive cancer care centres across the nation. The petitioner further claimed that it has been successfully providing innovative and cost-effective methods of treatment . It operates a hub and spoke model and has been acclaimed of both commitment and quality of health care.
The Ministry of Chemicals and Fertilizers (in the Department of Pharmaceuticals) invoking its power under the Drugs (Prices Control) Order, issued an Order dated 27-02-2019 and imposed a cap of 30% upon manufacturers for select anti-cancer drugs as being essential for the treatment of cancer and, directed manufacturers to fix their retail price
Contentions: The petitioner who runs cancer care- centres and deals with medicines which are used to combat cancer, approached the Court as the impugned Order was issued. The petitioner contended that being a stockist, the 30% cap laid on the manufacturer, would result in their business getting affected.
The petitioner further contended that National Pharmaceuticals Pricing Authority is not empowered under the Price Control Order to fix ceiling price or retail price of non-scheduled formulations as such formulations are to be determined by market force and cannot be subject to any regulation. It was submitted that there is no extraordinary circumstance for fixing of ceiling price or retail price of any drug and, therefore, the 30 % cap arbitrary and imposes an unreasonable restriction on the petitioner’s right under Art. 19(1)(g) of the Constitution.
Per contra, the respondent argued that under the Prices Control Order, the Government is empowered to put a cap on the price of either the manufacturer or the retailer. It is the manufacturer whose prices are now capped and not the retailer; therefore, the petitioner cannot claim to be an aggrieved person by the impugned order as it is not the manufacturer.
The respondent further argued that for the sake of public welfare, essential drugs can be placed under the Price Control Order, as the market forces are charging 900% over and above the manufacturing cost and the cap is on all the essential anti-cancer drugs. The impugned order was issued in in paramount public interest.
Court’s Assessment and Findings: The Court perused the facts and considered the contentions put forth by the parties. The Court, while deliberating, also referred to a plethora of cases and the National Pharmaceuticals Pricing Policy, 2012 and its objectives.
It was observed that objective of the policy was to put in place regulatory framework for pricing of drugs, to ensure availability of “essential medicines” at reasonable prices even while providing sufficient opportunity for innovation and competition to support the growth of pharmaceutical industry. Perusing the relevant clauses of Drugs (Prices Control) Order, 2013, the Court observed that the ceiling price, which is the price fixed by Government for the scheduled formulations can be Regulated and so is the retail price. The Court emphasised the non-obstante clause in Drugs (Prices Control) Order, 2013, Cl. 19, which gives the power for such regulation in extraordinary circumstances, if the Government considers necessary, to do so in public interest, fix the ceiling price or retail price of any drug for a particular period. Similarly, Drugs (Prices Control) Order, 2013, Cl. 20, empowers the Government to monitor maximum retail prices of all the drugs including non-scheduled formulations.
Delving further into background of the objective of rationalisation of prices, the Court observed that the impugned Order stressed on cancer as one of the leading causes of adult illness in India and then imposes a price cap on the trade margin of 30% to the manufacturer vis-a-vis 42 drugs, which are meant to be used for treating patients suffering from cancer. It was found that ‘essentiality’ was the key feature behind the promulgation of the impugned Order.
Regarding the judicial review of the impugned Order sought by the petitioners, the Court pointed out that policy is a system of decision making guided by interest than by principle. The interest in the instant case is public, as the regulated drugs are all anti- cancer drugs. “It cannot be forgotten that the policy is only a course of action to deal with a subject matter”. It was further pointed out that 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 Art. 14 of the Constitution. “By taking oath of office as a Judge, an ordinary man turns himself into a man with a magic wand and qualifies himself to be an unquestionable authority, to advice on such policies, is inconceivable (…) the Court would not sit in the arm- chair of those experts who have promulgated such policy and overrule them”.
The Court found that in the instant case, the petitioners have not highlighted any circumstance which can term the impugned Order as arbitrary and unreasonable. The Court noted that Art. 19(1)(g) which gives right to a citizen to practice any profession or to carry on any trade or business, cannot be construed to be so absolute.
The Court held in clear terms that the petitioner being a retailer and will accrue loss due to the impugned Order, cannot be a ground for judicial review of the impugned policy much less on the ground that it violates Article 19(1)(g) of the Constitution.
[Healthcare Global Enterprises Ltd. v. Union of India, 2022 SCC OnLine Kar 1595, decided on 30-11-2022]
Advocates who appeared in this case :
Petitioners- Deepak Bhaskar, Advocate;
Respondents- M.B. Nargund, Addl. Solicitor General for Gutham Dev C. Ullal, CGC.
*Sucheta Sarkar, Editorial Assistant has prepared this brief.