Delhi High Court
Lupin Limited vs Union Of India & Ors on 10 May, 2019
$~35
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 3912/2018 and CM APPL. 15431-15433/2018 &
28990/2018
LUPIN LIMITED ..... Petitioner
Through: Mr Amit Sibal, Senior Advocate with
Ms Archana Sahadeva, Ms Namita
Kochhar, Ms Surbhi Singh and Mr
Luv Virmani, Advocates.
versus
UNION OF INDIA & ORS ..... Respondents
Through: Mr Ripu Daman Bhardwaj, CGSC
with Mr Mohit Bhardwaj, GP and Ms
Sabhya Jain, Advocates for R-1 to 3.
CORAM:
HON'BLE MR. JUSTICE VIBHU BAKHRU
ORDER
% 10.05.2019
VIBHU BAKHRU, J
1. The petitioner has filed the present petition, inter alia, impugning the
notifications SO No. 1039 (E) dated April 01, 2017; SO No. 2058 ( E ) dated
June 30, 2017 and; SO no. 1461 (E) dated April 02, 2018, issued by
respondent no. 3 (National Pharmaceutical Pricing Authority - hereafter
„NPPA‟), to the extent that they fix the ceiling prices of the formulations
Budesonide (A) + Formoterol (B) and Tiotropium in Dry Powdered
Inhalation (hereafter „DPI‟) dosage forms. The said notifications are
hereafter referred to as the impugned notifications.
2. The controversy involved in the present petition relates to the manner
in which the prices have been fixed for the subject formulations in DPI
dosage form. There is no dispute that the subject formulations are included
in Schedule 1 of the Drugs (Prices Control) Order, 2013 (hereafter „the
DPCO‟) and, therefore, are scheduled formulations within the meaning of
Clause (zb) of Section 2(1) of the DPCO. Thus, concededly, NPPA is
empowered to fix the ceiling prices for the subject formulations under the
DPCO. The petitioner claims that that the ceiling process of the DPI dosage
forms, as notified under the impugned notifications, have not been computed
in accordance with the provisions of the DPCO.
Factual Context
3. The petitioner is a pharmaceutical company and is, inter alia,
engaged in the manufacture and sale of the subject formulations, namely,
Budesonide (A) + Formoterol (B) Inhalation in the Dry Powdered Inhalation
(DPI) Dosage Form and Tiotropium Inhalation in the Dry Powered
Inhalation (DPI) Dosage form. The subject formulations are life saving
drugs and are used for treating Chronic Obstructive Pulmonary Disease
(COPD) and Asthma. The subject formulations are manufactured in four
dosage forms. The dosage forms relevant to the controversy in this petition
are Metered Dosage Inhalation (MDI) and Dry Powder Inhalation (DPI).
4. Indisputably, the two dosage forms - MDI and DPI - are materially
different. The medicine in MDI dosage form is delivered by a handheld
device (Metered Dosage Inhalers) which delivers a specific amount of
medication in aerosol form. The Metered Dosage Inhaler consists of a
pressurized canister inside a plastic case with an attached mouthpiece. The
medication is delivered by pressing on the device which releases the
medication from the pressurized canister. The user is required to correspond
the inhalation of his breath with the release of the medicine for the
medication to be delivered directly into the lungs of the user. MDI uses a
chemical propellant for pushing the medication out of the device (inhaler).
5. The subject formulations in DPI dosage form are delivered through a
separate kind of device (a dry powder inhaler). There are several models of
this device. The user is required to inhale through the said device for
administration of the medicine. The medication does not use any chemical
propellant. The device is not pressurized. The DPI dosage is in a form of
powder consisting of micronized drug blended with large carrier particles
which enhance the flow, reduce aggregation and aid in dispersion.
6. Apart from the MDI and DPI forms there are two other delivery
systems, namely, Breath Actuated Inhalers (BAI) and Nebulizers. However,
the said forms are not relevant for the controversy raised in this petition.
7. It is not disputed that the technology involved in the two delivery
systems, namely MPI and DPI, are different and the two forms of the subject
formulations are available at different price points.
8. In terms of the DPCO, NPPA notified the ceiling price of the
formulation Budesonide (A) + Formoterol (B) inhalation in MDI form by
including the same in SO 1560 ( E ) dated April 27, 2016. Thereafter, NPPA
notified the ceiling price of Tiotropium Inhalation in DPI Dosage form by
SO 1687 (E ) dated May 09, 2016. The NPPA also published working sheets
on April 20, 2016 and May 09, 2016, indicating the computation of the
ceiling price for the formulations of Budesonide + Formoterol and
Tiotropium respectively. The relevant entries in the tabular statement
included in the price notification dated April 27, 2016, are set out below:-
Sl. Name of the Scheduled Strength Unit Ceiling
No. Formulation Price
(Rs)
xxxx xxxx xxxx xxxx xxxx
32 Budesonide Respirator Solution Budesonide- 1ml 9.93
for use in Nebulizer 0.5mg/ml
33 Budesonide Respirator Solution Budesonide- 1ml 11.98
for use in Nebulizer 1mg/ml
xxxx xxxx xxxx xxxx xxxx
xxxx xxxx xxxx xxxx xxxx
46 Budesonide Inhalation Budesonide-100 Each Metered 1.22
mcg/Dose Dose
47. Budesonide Inhalation Budesonlde- Each Metered 1.50
200mcg/Dose Dose
48. Budesonide + Formoterol Budesonide-400 Each/Metered 2.74
Inhalation mcg+Formoterol Dose
-6 mcg/Dose
49 Budesonide + Formoterol Budesonide-200 Each Metered 2.19
Inhalation mcg + Dose
Formoterol-6
mcg/Dose
50. Budesonide + Formoterol Budesonide-100 Each Metered 1.74
Inhalation mcg + Dose
Formoterol-6
mcg/Dose
9. The relevant entries in the tabular statement included in the price
notification dated May 9, 2016 are set out below:-
Sl.No. Name of the Scheduled Strength Unit Ceiling
Formulation Price
(Rs.)
xxxx xxxx xxxx xxxx xxxx
36. Tiotropium Inhalation Tiotropium- Each Metered 2.29
18mcg/Dose Dose
37. Tiotropium Inhalation Tiotroplum- Each Metered 2.16
9mcg/Dose Dose
xxxx xxxx xxxx xxxx xxxx
10. As is apparent from the above, the subject formulations in the DPI
dosage form were not specifically mentioned in the price notifications dated
April 27, 2016 and May 09, 2016.
11. On April 01, 2017, NPPA issued the impugned price notification
revising the ceiling prices of various formulations on the basis of the annual
Wholesale Price Index (WPI) in terms of Section 16 of the DPCO. In terms
of the said impugned notification, the ceiling prices of the subject
formulations, as fixed in the earlier notifications, were also revised.
However, in a material departure from the earlier notifications, the
impugned notification also mentioned the DPI dosage form against the
subject formulations. The relevant entries in the tabular statement included
in the impugned price notification dated April 01, 2017, are set out below:-
"Table: Price Revision as per Annual Wholesale Price Index (WPI) @ 1.97186%
increase.
S. No. Medicines Dosage form and Unit Ceiling Existing S.O. No. &
Strength price (wef Existing Date
01.04.2017
with WPI @
1.97186%
83. Budesonide Inhalation 1 Dose 1.24 1560(E) 27.04.2016
(MDI/DPI)100
mcg/dose
84. Budesonide Inhalation 1 Dose 1.53 1560(E) 27.04.2016
(MDI/DPI)200
mcg/dose
85. Budesonide Respiratory 1 ML 10.13 1560(E) 27.4.2016
Solution for use in
Nebulizer
0.5mg/ML
86 Budesonide Respiratory 1ML 12.22 1560(E) 27.4.2016
Solution for use in
Nebulizer 1mg/ML
87 Budesonide Inhalation 1 Dose 2.79 1560( E ) 27.4.2016
(A) (MDI/DPI) 400 mcg
+Formoterol (A) + 6 mcg (B)
(B)
88. Budesonide Inhalation 1 Dose 2.23 1560( E ) 27.4.2016
(A) + (MDI/DPI) 200 mcg
Formoterol (A) + 6 mcg (B)
(B)
89. Budesonide Inhalation 1 Dose 1.77 1560( E ) 27.4.2016
(A) + (MDI/DPI) 100 mcg
Formoterol (A) + 6 mcg (B)
(B)
xxxx xxxx xxxx xxxx xxxx xxxx xxxx
629 Tiotropium Inhalation (DPI) 18 1 Dose 2.34 1687 (E ) 9.5.2016
mcg/dose
630 Tiotropium Inhalation (MDI) 9 1 Dose 2.20 1687 (E ) 9.5.2016
mcg/dose
12. The impugned notification dated April 01, 2017, was subsequently
superseded by the impugned notification dated June 30, 2017, which was
issued to revise the prices consequent to implementation of the Goods and
Services Tax (GST) with effect from July 01, 2017. The said impugned
notification was, thereafter, superseded by the impugned notification dated
April 02, 2018, whereby the ceiling prices were revised as per the annual
WPI in terms of Section 16 of the DPCO.
Discussions and Conclusion
13. It is contended on behalf of the petitioner that only the MDI dosage
form of the subject formulations was included in the notifications dated
April 27, 2016 and May 09, 2016, therefore, the ceiling prices of the said
formulations fixed therein were wholly inapplicable to the to the DPI dosage
forms of the subject formulations. It is further contended that since the
notifications dated April 27, 2016 and May 09, 2016, did not include the
DPI dosage forms, the subsequent notifications revising the ceiling price in
terms of Section 16 of the DPCO (being impugned notifications April 01,
2017 and April 02, 2018) and on account of implementation of GST
(impugned notification dated June 30, 2017) are also inapplicable to the DPI
dosage forms of the subject formulations.
14. NPPA contests the above and claims that different dosage forms have
no bearing on the ceiling price fixed for the subject formulation and,
therefore, the ceiling prices as notified under the notifications dated April
27, 2016 and May 09, 2016 are applicable to the DPI dosage forms as well,
notwithstanding that the same was not specifically mentioned.
15. There is no doubt that the impugned notifications merely revised the
ceiling price on the basis of the annual WPI and on account of
implementation of GST. No separate exercise to fix the ceiling price of the
subject formulations was carried out, as required under Section 4 of the
DPCO. Thus, concededly, if the price notifications dated April 27, 2016 and
May 09, 2016 are held to be inapplicable to the DPI dosage forms of the
subject formulation, the impugned notifications would also be wholly
inapplicable to the DPI dosage form for the subject formulations. In view of
the above, the central controversy to be addressed is whether the price
notification dated April 27, 2016 was applicable to the formulation
Budesonide (A) + Formoterol (B) in the DPI Dosage Form and whether the
price notification dated May 09, 2016 was applicable to the Tiotropium
Inhalation in the DPI dosage form.
16. As noticed above, the notification dated April 27, 2016 and May 09,
2016 do not specifically mention the DPI dosage form. Thus, it is difficult to
accept that the ceiling prices fixed under the said notifications for the subject
formulations in MDI form could also be imputed to the subject formulations
in DPI form. Moreover, considering that MDI and DPI dosage forms are
specifically mentioned in Schedule 1 to the DPCO, thus, it cannot be readily
accepted that the respondents were not conscious of the difference between
them.
17. The contention that there is no material difference between the MDI
and DPI dosage forms is unmerited, as there is significant difference
between the two dosage forms as noticed hereinbefore. Indisputably, the
technology involved in manufacturing such dosage forms is also materially
different. It is not disputed that DPI delivery system is easier to use as the
user is not required to co-ordinate inhalation with the release of the
medication as is required for the MDI delivery system. Further, as explained
by the petitioner, MDI uses propellants for delivery of the medication which
is not so in the DPI delivery system.
18. At this stage it is also relevant to examine whether NPPA had in fact
fixed the ceiling price for DPI Dosage form, as required under Section 4 of
the DPCO, which prescribes the manner for calculation of the ceiling price
of a scheduled formulation. Section 4 of the DPCO is set out below:-
"4. Calculation of ceiling price of a scheduled formulation.-
(1) The ceiling price of a scheduled formulation of specified
strengths and dosage as specified under the first schedule
shall be calculated as under
Step 1. First the Average Price to Retailer of the scheduled
formulation i.e. P(s) shall be calculated as below:-
Average Price to Retailer, P(s) = (Sum of prices to retailer of
all the brands and generic version of the medicine having
market share more than or equal to one percent of the total
market turnover on the basis of moving annual turnover of that
medicine) / (Total number of such brands and generic versions
of the medicine having market share more than or equal to one
percent of total market turnover on the basis of moving annual
turnover for that medicine.)
Step 2. Thereafter, the ceiling price of the scheduled
formulation i.e. P(c) shall be calculated as below:
P(c) = P(s).(1+M/100), where
P(s) = Average Price to Retailer for the same strength and
dosage of the medicine as calculated in step 1 above.
M = % Margin to retailer and its value = 16
(2) The ceiling price calculated as per sub-paragraph (1) and
notified by the Government shall be applicable to
scheduled imported formulations also."
19. It is apparent from the above that the ceiling prices are fixed by
averaging the Price to Retailer (PTR) of brands and generic versions of the
medicine. Therefore, the key question is whether NPPA had included the
prices of DPI dosage forms of the subject formulation while calculating the
average price for determining the ceiling prices as notified under the
notifications dated April 27, 2016 and May 09, 2016.
20. This aforesaid question has been answered by the Central
Government (respondent no.2) in an order dated October 30, 2017 passed by
it in a review application preferred by M/s Glenmark Pharmaceuticals
Limited (GPL), under Section 31 of the DPCO. GPL had assailed the
impugned notification dated April 01, 2017 in a review petition filed before
respondent no.2, inter alia, contending that the notifications dated April 27,
2016 and May 09, 2016 did not fix the ceiling prices for the DPI dosage
forms of the subject formulations. Respondent no.2 accepted the aforesaid
contention and directed NPPA to re-fix the ceiling price of the said
formulations by considering the PTR of both types of inhalers, that is, MDI
and DPI. The relevant extract of the said decision is set out below:-
"5. Examination :
The company submitted that NPPA, while fixing the
ceiling prices of subject formulations, considered the data of
only MDI formulations, and while revising the ceiling prices of
660 formulations, including these formulations, treated the
formulations as "MDI/DPI". The company's submission is that
there is basic difference in both the formulations, MDI comes in
AEROSOL form whereas DPI comes in the form of
CAPSULES. For administration, AEROSOL is actuated
directly in the patient's mouth for inhalation, whereas in the case
of DPI, the capsules are broken and put into a special device,
which needs to be kept in mouth and inhaled by the patient.
Hence, separate ceiling prices should be fixed for both types of
formulations.
The issue of considering separate price fixation for
metered dose counter/digital inhaler and autohaler was
discussed in the Expert Committee of NPPA on 8.5.2017. The
Committee observed that Budesonide is a respiratory medicine.
The conventional dosage is 100mcg, 200mcg & 400mcg. This is
often given in combination with Formeterol in dose of 6 mcg.
There are different delivery systems available for inhalations
ranging from simple/conventional inhalation device to metered
dose inhaler/digital inhaler and autohaler. There may be other
different variants/drug dispensing mechanisms available in the
market. Although they offer technological advantage/ease of
administration say in old age/children or patients with poor
coordination ability, there is no significant difference in clinical
efficiency and therapeutic outcome once an adequate dose is
administered/delivered. Hence, separate price for metered dose
counter/digital inhaler and autohaler may not be considered,
rather they should be clubbed together for the purpose of price
fixation."
The Committee also observed that the inhalational drugs
used for bronchial asthma are given by different methods like
MDI, DPI, Soft-mist inhaler and Nebulizer. The DPI can be
given as single dose, multi-dose and powder assisted system.
This has advantage of portability, does not require much
coordination and no spacer is required whereas MDI requires
Aerosol which is also portable and independent, reproducing
doses & has relatively low cost. In India, the Physician's
feedback is that DPI is relatively less used as compared to MDI.
Thus, there is not much significant clinical advantage in terms
of therapeutic outcome by using DPI over MDI.
On going through the calculation sheets of earlier
notifications, i.e. SO 1560( E ) dated 27.4.2016 fixing the
ceiling price for Budesonide (A) + Formoterol (B) [Inhalation
(MDI/DPI) 400 MCG(A)+6MCG(B); 200MCG(A)+6MCG(B)
and 100MCG(A)+6MCG(B)], it is noticed that PTR of only
MDI formulations were considered. Similarly, the ceiling price
of Tiotroplum Inhalation (DPI) 18Mcg/Dose was fixed vide SO
1687(E), dated 9.5.2016 by considering PTR of only MDI
Formulations.
As regards NPPA's submission about violating the
provisions of DPCO, 2013 for non-implementation of ceiling
price of DPI range of formulations by the company, the same
cannot be accepted as NPPA has never fixed the ceiling price
for Dry Powder Inhalers. Vide SO 1039(E), dated 1.4.2017,
NPPA has only revised the CP of the formulations and not fixed
the CP. Unless any ceiling price is notified, the company cannot
be expected to follow the ceiling price. Therefore, there is no
violation of the provisions of DPCO, 2013 on the part of the
company.
In view of the above, it is proposed that NPPA may be
directed to re-fix the ceiling prices of Budesonide (A) +
Formoterol (B) [Inhalation (MDI/DPI) 400
MCG(A)+6MCG(B); 200MCG(A)+6MCG(B) and
100MCG(A)+6MCG(B)] and Tiotropium Inhalation (DPI)
18Mcg/Dose by considering PTR of both types of Inhalers, i.e.
Metered Dose Inhaler (MDI) and Dry Powder Inhaler (DPI).
6. Government Decision:
"NPPA is hereby directed to re-fix the ceiling price of
Budesonide (A) + Formoterol (B) [Inhalation (MDI/DPI) 400
MCG(A)+6MCG(B); 200MCG(A)+6MCG(B) and
100MCG(A)+6MCG(B)] and Tiotropium Inhalation (DPI)
18Mcg/Dose by considering PTR of both types of Inhalers, i.e.
Metered Dose Inhaler (MDI) and Dry Powder Inhaler (DPI)."
21. Given the difference between the two delivery systems, namely, MDI
delivery system and DPI delivery system, the question whether the subject
formulations in the two dosage forms can be clubbed together for
determining the ceiling price of the said formulations is a contentious issue.
According to the petitioner the two dosage form cannot be clubbed together
for determining a single ceiling price as there is a material difference
between the two dosage forms, including the price points at which they are
sold. However, it is not necessary to examine this controversy in this
petition. This is because there can be no dispute that the PTR of the DPI
dosage forms of the subject formulations were not considered while fixing
the celing prices of the subject formulations and, therefore, the same cannot
be applied to the DPI dosage forms of the formulations in question.
Consequently, the ceiling prices of the subject formulations as notified on
April 27, 2016 and May 09, 2016 were wholly inapplicable to subject
formulations in the DPI dosage form. As noticed earlier, the said
notifications specifically mentioned MDI dosage forms and not the DPI
dosage forms of the subject formulations. It obviously follows that the
impugned notifications - which merely revised the ceiling prices on the
basis of annual WPI and implementation of GST - are also wholly
inapplicable to the DPI dosage form of the subject formulations.
22. It is relevant to note that in compliance with the directions issued by
respondent no.2 in its order dated October 30, 2017 passed in the review
petition preferred by GPL, NPPA issued another price notification dated
February 26, 2019, fixing a separate ceiling price for the subject
formulations in DPI dosage forms. Thus, the petitioner‟s grievance with
regard to applicability of the impugned notifications to the DPI dosage
forms has been addressed. However, Mr Sibal, learned senior counsel
appearing for the petitioner, contended that there is still some scope for
controversy because although the notification dated February 26, 2019
supersedes the impugned notifications, nonetheless, it carves out an
exception "in respect of things done or omitted to be done before such
supersession". He contends that in view of the said exception, NPPA may
still seek to implement the impugned notifications, insofar as the petitioner
is concerned.
23. The said apprehension is clearly unfounded as respondent no.2 has
accepted in its order dated October 30, 2017 that the ceiling price fixed
under the notifications dated April 27, 2016 and May 09, 2016 were not in
respect of DPI dosage forms of the subject formulations. This is obvious
from the fact that (a) the said notifications mentioned only the MDI dosage
form of the subject formulation; and (b) that the ceiling price fixed under the
notifications did not take into account the PTR of the DPI dosage forms.
24. In view of the above, the petitions are allowed. The ceiling prices
fixed under the impugned notifications are not applicable to the said
formulations in the DPI dosage forms. Any demands raised by NPPA or
other respondents in respect of the subject formulations in the DPI dosage
forms, on the basis of the impugned notifications, are unsustainable. The
impugned notifications to the extent they purport to fix the ceiling prices of
the said formulation in the DPI dosage forms are set aside.
25. The pending applications stand disposed of.
26. The parties are left to bear their own costs.
VIBHU BAKHRU, J
MAY 10, 2019
pkv
