NEW DELHI: The Supreme Court has trashed India’s largest pharmaceutical company Sun Pharma’s appeal against a demand notice of Rs 4.6 crore by National Pharmaceutical Pricing Authority (NPPA) to recover the higher price the company charged from people for the anti-bacterial medicine Roscilox.
Sun Pharmaceutical Industries Ltd, the sixth-largest generic pharmaceutical manufacturer in the world, had questioned NPPA’s demand notice of 2005 for payment of Rs 4.6 crore “to recover the higher price charged in relation to Roscilox, a brand of a Cloxacillin-based drug formulation, than that fixed by the govt under Drugs (Price Control) Order (DPCO)”.
In 2014, SC had ordered status quo with regard to recovery of the balance amount when Sun Pharma said that it has already paid Rs 1.2 crore toward the demand by the authorities. A bench of Justices Sanjay Kumar and Augustine G Masih rejected Sun Pharma’s 2014 appeal against the Delhi HC paving way for NPPA to recover the amount due.
Writing the judgment, Justice Kumar said, “The intent and purpose thereof are to control the prices at which medicinal drug formulations are made available to the common man by holding out the threat of recovery of the higher prices charged for such drug formulations by those involved in their manufacture and marketing. Given the laudable objective underlying the provision, it cannot be subjected to a restricted or hidebound interpretation.”
The bench noted that Sun Pharma’s counsel made an attempt to enlarge the scope of this appeal by questioning the very validity of the demand made under the DPCO. “We are not inclined to permit the same. More so, as there is no evidence of the appellant having raised such an issue properly before the Delhi high court,” the bench said.
The HC had undertaken the exercise of piercing the corporate veil and found that there was overlapping and merger of identities of Oscar Laboratories Pvt Ltd, from which Sun Pharma claimed to have purchased the drug formulation, with Sun Pharma’s own group companies.
SC noted that Sun Pharma had admitted purchase of the drug from the manufacturer itself. “Thus, in terms of its own admissions in its replies, Sun Pharma had direct contact with the ostensible manufacturer. Be it noted that a ‘dealer’, as defined in the DPCO, would be a wholesaler or retailer who undertakes the purchase or sale of the drug while a ‘distributor’, as defined thereunder, would include a distributor of the drugs or a stockist appointed by a manufacturer,” the bench said.
“Given its own inconsistent versions and in the absence of a firm factual foundation being built up by Sun Pharma with proper documentation as to its status, it was not open to it to baldly claim that it was not a ‘distributor’ but only a ‘dealer’.” the SC said dismissing its appeal.
Sun Pharmaceutical Industries Ltd, the sixth-largest generic pharmaceutical manufacturer in the world, had questioned NPPA’s demand notice of 2005 for payment of Rs 4.6 crore “to recover the higher price charged in relation to Roscilox, a brand of a Cloxacillin-based drug formulation, than that fixed by the govt under Drugs (Price Control) Order (DPCO)”.
In 2014, SC had ordered status quo with regard to recovery of the balance amount when Sun Pharma said that it has already paid Rs 1.2 crore toward the demand by the authorities. A bench of Justices Sanjay Kumar and Augustine G Masih rejected Sun Pharma’s 2014 appeal against the Delhi HC paving way for NPPA to recover the amount due.
Writing the judgment, Justice Kumar said, “The intent and purpose thereof are to control the prices at which medicinal drug formulations are made available to the common man by holding out the threat of recovery of the higher prices charged for such drug formulations by those involved in their manufacture and marketing. Given the laudable objective underlying the provision, it cannot be subjected to a restricted or hidebound interpretation.”
The bench noted that Sun Pharma’s counsel made an attempt to enlarge the scope of this appeal by questioning the very validity of the demand made under the DPCO. “We are not inclined to permit the same. More so, as there is no evidence of the appellant having raised such an issue properly before the Delhi high court,” the bench said.
The HC had undertaken the exercise of piercing the corporate veil and found that there was overlapping and merger of identities of Oscar Laboratories Pvt Ltd, from which Sun Pharma claimed to have purchased the drug formulation, with Sun Pharma’s own group companies.
SC noted that Sun Pharma had admitted purchase of the drug from the manufacturer itself. “Thus, in terms of its own admissions in its replies, Sun Pharma had direct contact with the ostensible manufacturer. Be it noted that a ‘dealer’, as defined in the DPCO, would be a wholesaler or retailer who undertakes the purchase or sale of the drug while a ‘distributor’, as defined thereunder, would include a distributor of the drugs or a stockist appointed by a manufacturer,” the bench said.
“Given its own inconsistent versions and in the absence of a firm factual foundation being built up by Sun Pharma with proper documentation as to its status, it was not open to it to baldly claim that it was not a ‘distributor’ but only a ‘dealer’.” the SC said dismissing its appeal.
