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LawMin go-ahead on pharma pricing

Sushmi Dey/New Delhi 06 Nov 12 | 12:28 AM

There is no legal hurdle in the Cabinet taking up the recommendations of the group of ministers (GoM) on a proposed drug policy, the additional solicitor general (ASG) has said, despite the Supreme Court also considering the issue.

Siddharth Luthra, the ASG, has said framing of policy is a government prerogative. Even if this did not conform with observations made by the SC in a previous order, it should not lead to any adverse consequence.

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“It is a settled law… that the courts would not direct the framing of legislation. Since an order made under Section 3 of the EC (Essential Commodities) Act is not an executive act but a legislative act, the court ought not to curtail or restrain the issuance of delegated legislation under the EC Act," the ASG said in a letter, reviewed by Business Standard.

  • The SC asked the govt not to alter the existing pricing mechanism
  • Law ministry referred the matter to the ASG, on being asked for a legal opinion by the Department of Pharmaceuticals (DoP)
  • DoP was asked to seek additional opinion from the ministries of law and finance on the implications of a govt decision
  • DoP is now awaiting the finance ministry’s opinion

The law ministry had referred the matter to the ASG, on being asked for a legal opinion by the department of pharmaceuticals (DoP). This was after the SC asked the government not to alter the existing pricing mechanism. DoP, which had given a note on the proposed policy to the Cabinet secretariat around the middle of October, was asked to seek additional opinion from the ministries of law and finance on the implications of a government decision. And, if it could lead to any legal complications, said a senior government official in the know.

DoP has got a go-ahead from the law ministry on the proposal and is awaiting the finance ministry’s opinion. It will then send a supplementary note for the proposed policy to be considered by the Cabinet.

The GoM, headed by Agriculture Minister Sharad Pawar, has suggested capping the prices of 348 essential medicines at the weighted average of all drugs in a particular segment with more than one per cent market share.

However, earlier, during a hearing on October 3, the SC had said, “The government should not alter the price structure of the drugs". DoP then filed an affidavit on October 9, saying the existing pricing mechanism needed changing.

It said formulation of a pricing mechanism for essential medicines would take place according to the policy making process followed in the past and the government would issue a new Drugs (Prices Control) Order to launch the proposed policy after it was decided by the Cabinet.

After this, the case was heard by the SC on October 11. The government then told the SC it was likely to notify the new National Pharmaceutical Pricing Policy by November 25, provided it got a nod from the Cabinet. The ASG has noted that on October 11, the SC had not reiterated its earlier direction.

“In my considered view, since the issuance of an order under Section 3 of the EC (Essential Commodities) Act is pursuant to policy and constitutes delegated legislation, the observations of the Hon’ble Court (in orders dated October 10 and October 3) ought not to restrict the manner in which policy may be framed," the ASG’s letter said.

The SC had asked the Centre to expedite the policy. It is now scheduled to meet on November 27 in the matter.

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