Pharmaceuticals - Deciphering the pricing policy prescription; sector update:: Edelweiss PDF link

We had organised a conference call with Mr. Suhaan Mukerji to understand his views on the current regulatory framework for the pharma pricing policy and the likely course of action by the Supreme Court. Mr. Mukerji heads the policy and government affairs practice group at Amarchand Mangaldas.  Following are key takeaways from the conference call:

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Authority to formulate, enact pricing policy rests with government

While the Supreme Court (SC) has set a deadline for the government to submit the policy, it does not have a mandate to decide on the final pricing policy as the right to legislate lies only with the government. However, in the interim order, the apex court could give a final deadline to the government, failing which the Secretary of Department of Pharma and Department of Health Ministry could be held under contempt of court, which would result in penalty or prosecution. This is likely to be avoided by the government as it is in its interest to abide by the timeline.

Government can buy more time for final policy submission

The government, with due reasoning, could get a window of 3-6 months from SC to submit the final policy. However, in the event of further non compliance, the apex court could extend the current principal of cost-based pricing on all the 348 essential medicines and ask the current authority (DPCO) to monitor prices of these drugs. However, any decision by SC could always be challenged by review petition.

Policy cannot remain in limbo forever

While fast tracking submission of final pricing policy is SC’s priority, even beyond the policy submission, the court can mandate the government to enact and implement the policy. Thus, the policy cannot be in limbo forever.

Final policy outcome impervious to changes in judiciary bench

Even if the current judge presiding over the case is changed, majority of the judges (the case is being heard by a bench of three judges) will remain the same and hence will not lead to change in course of action stated by the SC. We highlight that Chief Justice Mr. S H Kapadia will retire by September end.

Pharmaceuticals - Deciphering the pricing policy prescription; sector update

Regards,