Sanofi INDIA LTD. And Anr vs. Union Of INDIA & Ors

Held

The Court held that the pharmaceutical products 'Amaryl MV- 1 mg' and 'Amaryl MV- 2 mg' are not 'New Drugs' under paragraph 2(u) of the DPCO, 2013. The Court reasoned that for a drug to be classified as a 'new drug', it must be launched by an existing manufacturer of a drug of specified dosages and strengths as listed in the NLEM. The petitioner, at the time of launching 'Amaryl MV- 1 mg' and 'Amaryl MV- 2 mg', was not manufacturing Metformin in its conventional form, which was the drug listed in the NLEM. Therefore, the petitioner could not be considered an 'existing manufacturer' of such a formulation. The Court found that the rationale behind the 'new drug' provisions was to prevent existing manufacturers from evading price controls by modifying existing products without prior approval. Since the petitioner did not meet the criteria of an existing manufacturer of a scheduled formulation listed in NLEM, the drugs in question could not be classified as 'new drugs'. Consequently, the impugned price notifications, show cause notices, and demand notices, all premised on the drugs being 'new drugs', were unsustainable and set aside. The impugned order rejecting the review application was also set aside.

Facts

Petitioner, Sanofi India Ltd., challenged an order dated July 2, 2018, by respondent no. 1 (NPPA), which rejected its review application. The review application challenged notifications fixing the ceiling price of 'Amaryl MV- 1 mg' and 'Amaryl MV- 2 mg' under paragraph 5 of the Drugs (Prices Control) Order, 2013 (DPCO). The petitioner also challenged price notifications dated November 23, 2017, and December 20, 2017, which fixed the retail prices of these drugs at ₹7.14/₹9.05 and ₹6.85/₹8.68 per tablet, respectively. Furthermore, the petitioner impugned show cause notices and demand notices issued by the NPPA for alleged overcharging and manufacturing/marketing without prior approval, totaling significant amounts. The core dispute centered on whether the drugs were 'New Drugs' as defined by paragraph 2(u) of the DPCO.

Key Issues

1. Whether the pharmaceutical products 'Amaryl MV- 1 mg' and 'Amaryl MV- 2 mg' are to be considered 'New Drugs' as defined under paragraph 2(u) of the DPCO, 2013, for the purpose of price fixation under paragraph 5 and 15 of the DPCO? Petitioner's arguments: The petitioner contended that the drugs in question are not 'New Drugs' because they were not launched by an existing manufacturer of Metformin in its conventional form, which was listed in the National List of Essential Medicines (NLEM), 2011. They argued that the NPPA's approach of fixing prices under paragraphs 5 and 15 of the DPCO, treating these drugs as 'New Drugs', was contrary to the DPCO's provisions. Revenue/State's arguments: The judgment does not record specific arguments made by the respondents (Union of India and others/NPPA).