Usv Limited And Another vs Union Of India And Others
2008 Latest Caselaw 1262 Del

21.

*            IN THE HIGH COURT OF DELHI AT NEW DELHI.

+                         WP(C)No.3970/2008

USV LIMITED & ANR.                     ......           PETITIONER.
                          Through:     Mr. Rajiv Nayar, Sr. Advocate
                                       with Mr. Rishi Agarwal,
                                       Mr. Mahesh Agarwal and
                                       Mr. Akshey Ringe, Advocates.



                                 VERSUS

UNION OF INDIA & ORS.                  .....          RESPONDENTS.
                    Through:           Mr. P.P. Malhotra, ASG with
                                       Mr. Gaurav Duggal,
                                       Mr. Chetan Chawla, Mr. Gaurav
                                       Sharma and Mr. Shankar
                                       Chopra, Advocates for the
                                       respondent/UOI.


CORAM:
HON'BLE MR. JUSTICE G.S. SISTANI

      1.Whether reporters of local papers may be allowed to see
        the Judgment ? Yes

      2.To be referred to the Reporter or not?       Yes

      3.Whether the Judgment should be reported in the Digest? Yes


                               07.08.2008

G.S.SISTANI, J. (ORAL)

+ CM No.9792/2008 in WP(C)No.3970/2008.

*

1. The present petition appertains to price fixation of Glipizide, a drug

used in the treatment of Type II Diabetes. The petitioner no.1 is a

pharmaceutical company that claims to have been successful in

developing a unique complex of Glipizide and Beta Cyclodextrin. It

is claimed that the petitioner's Glipizide Beta Cyclodextrin

formulation is different, distinct and improved formulation from the

conventional formulation of plaint Glipizide. It is also contended

that the petitioner's scientists are recognized and the petitioner

has been granted a product patent for the Glipizide Beta

Cyclodexterin (hereinafter 'GBC') formulations in India as well as in

the USA.

2. The petitioner had made an application dated 2.1.2004 to the

second respondent for price approval for its patented formulations

of GBC under paragraph 8 of the Drugs (Price Control) Order, 1995

(hereinafter DPCO). On 4.3.2004 the Government is stated to have

recognized that the GBC formulations were formulations

independent and different from plaint Glipizde formulations and

accordingly fixed a ceiling price under paragraph 9 of the DPCO,

1995. On 19.3.2008, respondent issued a notification bearing SO.

No. 531 (E) dated 19.3.2008 published on 23.3.2008 whereby the

respondent had withdrawn the ceiling price which was fixed for the

patented formulations of GBC by its earlier notification No. SO No.

291 (E) dated 4.3.2004 and further directed that the ceiling price

fixed by the respondents vide notification dated 3.9.2003 for plain

Glipizide & Metformin formulations would henceforth apply to

Glipizide Cyclodextrin formulations and Glipizide Cyclodextrin &

Metformin formulations respectively. On 7.4.2008 the petitioner

made a representation to the respondents and pointed out that the

aforesaid action of the respondents of imposition of price of plain

Glipizide formulations on the petitioner's improved GBC

formulations was arbitrary and illegal and requested the second

respondent to withdraw the said imposition. They also sought

liberty of being heard which according to them was not granted .

3. Aggrieved by the aforesaid decision, the petitioner filed the

present petition. At the time of admission of the present writ

petition, this court vide order dated 23.5.2008 had directed the

respondents to dispose within four weeks of the representation of

the petitioner dated 7.4.2008 by treating it as a review application.

4. Pursuant to the order dated 23.5.2008, the petitioners have filed

an application CM No. 9792/08. Along with this application the

petitioners have also filed a copy of the order dated 23.6.2008

passed by the respondents on the review application dated

19.3.2008 filed by the petitioners, which application was directed

to be disposed of by the orders of this court.

5. Learned senior counsel appearing for the petitioners submits that

para 3 of the review order dated 23.6.2008, inter alia, mentions

that while fixing the price for the petitioner's GBC, the respondents

had failed to take into consideration the cost of Beta Cyclodextrin.

It is submitted that as per the notification dated 19.3.2008, initially

10 tablets were to be sold at a price of Rs.2.80 paise per tablets

and as per the revised price the tablets are to be sold at Rs.3.10

paise per tablets depending on different strengths of the products,

and thus, the difference of price per tablet is Rs.0.3 paise.

Counsel for the respondent has strongly urged that in view of the

review order passed on 23.6.2008 the petitioner has been directed

to file a revision in Form III to NPPA indicating the details of various

costs to enable the respondents to re-fix the price after taking into

consideration the cost of the active ingredients which are used.

The operative portion of the order dated 23.6.2008 is reproduced

below:-

"The issues raised by the petitioner in the review applications dated 7.4.2008, Additional submissions vide letter dated 3.6.2008, the comments given by NPPA in the matter and also the direction of the Hon'ble Delhi High

Court given on 23.5.2008 have been considered. It is observed that as per para 7 of the DPCO 1995, the retail price is to be fixed after taking into account various costs like, MC, CC, PC, PMC. MC i.e. Material cost is an important one which includes cost of the active bulk drug used as well as the cost of pharmaceutical aids or excipient. NPPA has earlier in March 2004 fixed the price of Glipizide Betacyclodextrin complex formulations that continued for a period of 4 years. While fixing the price of Glipizide Betacyclodextrin complex formulations in March 2004, the cost of Glipizide Betacyclodextrin was considered by NPPA. It is also observed that while fixing the price of Glipizide formulations vide SO 1019 (E) dated 3.9.2003, the cost of Betacyclodextrin was not taken into account. It is also observed that the price of the active bulk drug Glipizide and also that of the pharmaceutical aids/excipient like Betacyclodextrin have gone down. The petitioner is, therefore, requsted to file a revision application in Form III to NPPA at the earliest indicating the details of various costs. NPPA would therefore refix the fprice of the formulation within a period of 60 days considering the cost of the active ingredients viz Glipizide and Metformin etc and also that of Betacyclodextrin used as a pharmaceutical aid/excipient."

(Emphasis supplied)

6. I have heard learned counsel for the parties and perused the

documents on record.

7. Perusal of the review order dated 23.6.2008 reveals that while

fixing the price by notification dated 19.3.2008 the respondents

had not taken into consideration the cost of Beta Cyclodextrin.

Further, due to fall in the price of the active drug Glipixde and also

of the Beta Cyclodextrin, it was considered necessary that the

petitioners file a revision application in Form III to the NPPA giving

various details of costs.

8. At this stage, learned ASG submits that the cost of Beta

Cyclodextrin was not taken into consideration by the respondent

for the reason that Beta Cyclodextrin is only an excipient, that is, it

is not an active drug in the GBC formulation. It is further submitted

that the respondent was justified in not taking into consideration

the cost of Beta Cyclodextrin so as to ensure fair and reasonable

price to the consumers. I cannot, am afraid, accept this contention

of the learned ASG inasmuch as the review order dated 23.6.2008

unequivocally mentions that the retail price of a drug, as per the

DPCO 1995, is to be fixed after taking into consideration various

costs, including the material cost which comprises both the cost of

the active drug used as well as the cost of the excipients used in

the formulation.

9. It is agreed between the parties that the aforesaid revision

application will be filed by the petitioner within a period of two

weeks and the respondents would dispose of the said application

within two weeks thereafter. Till such time the revision application

is decided, the petitioners are directed to maintain accounts with

respect to sale of their products, copy whereof will be filed with the

respondents on a day to day basis. The petitioner will also deposit

a sum of Rs.10,00,000/- within a period of two weeks in the name

of Registrar General of this Court, which shall be released subject

to final adjudication of the matter between the parties. Further, till

such period the revision is decided, the petitioners are entitled to

sell their product as per the price fixation notified on 4.3.2004. I

am inclined to grant such liberty to the petitioner for the simple

reason that the review order dated 23.6.2008 unambiguously

states that the respondent while fixing the price of the petitioner's

GBC formulation, did not take into consideration the cost of Beta

Cyclodextrin.

10. In view of the above directions, the present writ petition stands

disposed of.

11. However, this arrangement will continue for two weeks or till such

period the revision petition is decided.

12. Order Dasti to both the sides.

G.S. SISTANI, J.

August 07, 2008 pkv