Seven bulk drugs not under DPCO, rules Bombay HC

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Shot in the arm for Ranbaxy, Cipla, Unichem, USV

Seven bulk drugs not under DPCO, rules Bombay HC

Our Corporate Bureau: Indian Express, 01 September 2001.

Mumbai, Aug 31: A division bench of the Bombay High Court has, in a landmark

move, held that seven bulk drugs -- ciprofloxacin, norfloxacin, salbutamol,

theophylline, cloxacillin, doxycycline and glipizide - do not fall under the

purview of price control and that the current Drug Price Control Order

(DPCO) is not applicable to these drugs. Currently, roughly 74 drugs are

covered under the DPCO.

Industry experts say that the operative ruling, besides coming as a shot in

the arm for Ranbaxy Labs, Cipla, Unichem Labs, US Vitamins and Okasa Ltd

(the five companies contensting the case), may also have ripple effects

across the sector, given the string of similar cases being contested across

the country.

" Besides, this also comes at a time when the New Drug Policy is believed to

be round the corner, " an analyst tracking the sector said. It is, however,

yet unclear whether the Union government and the National Pharmaceutical

Pricing Authority (NPPA) would appeal against the Bombay High Court's

decision.

Indian Pharmaceutical Alliance secretary general DG Shah, reacting to this

verdict said, " This offers a window of opportunity for the government to

open a conciliatory mechanism between the administrative ministry and

industry, which have been at loggerheads. As a confidence building measure,

the government must accept that its present database has inaccuracies and

not appeal against the HC order. "

The HC ruling is also expected to indirectly imply that the alleged amounts

overcharged by these companies (for the seven drugs in question) - pegged at

a estimated cumulative figure of over Rs 300 crore - may not be payable,

though details of the final order are still awaited. The NPPA had earlier

issued a directive asking these companies to deposit the amounts allegedly

overcharged with the government.

Indications are that the companies had argued that ORG data should be

considered for calculation of turnover for inclusion/exclusion under the

DPCO. They further added that export turnover should not be included while

calculating the total turnover for the purpose of such inclusion/exclusion.

The five companies had also contested the allegedly arbitrary implementation

of the turnover criteria to include/exclude drugs under price control by the

NPPA.

Earlier, in a similar case, the Bulk Drug Manufacturers' Association (BDMA),

which represents over 300 domestic drug firms, had moved court alleging that

the eight drugs - cefadroxil, cloxacilin, theophylline, trimethoprim,

norfloxacin, salbutamol, ciprofloxacin and sulphamethazole - had been

" wrongfully " included under the DPCO.

The BDMA had in January 1998 taken the National Pharmaceutical Pricing

Authority (NPPA) and the Centre to court challenging the duo's allegedly

adhoc and arbitrary price-control policy. The BDMA had, in its petition,

made a detailed statement to prove ex-facie that the eight drugs had been

wrongfully included under price control.

While the latest position on this case could not be ascertained, the Delhi

High Court had earlier lifted a stay granted in 1999 to the BDMA, which

prevented the government from taking action with reference to these eight

bulk drugs.

© 2001: Indian Express Newspapers (Bombay) Ltd. All rights reserved

throughout the world.

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