26 December 2023 Business Laws >> Business & Commercial Law   |   Consumer Protection Act >> Consumer Rights   |   Medical, Pharma & Healthcare >> Miscellaneous  

Pharmaceutical giant GlaxoSmithKline (GSK) has emerged victorious in a legal battle concerning the price control of their well-known inhaler medication, Salbutamol (Ventolin). The dispute centered around whether the National Pharmaceutical Pricing Authority (NPPA) could penalize GSK for increasing the price of the drug during a period when it wasn't classified as a price-controlled medication.

Facts:

The crux of the issue lies in the Drug (Price Control) Order 1995 (DPCO 1995). This regulation lists specific drugs and sets a ceiling price for them. Initially, Salbutamol was included in the DPCO. However, the High Court of Bombay ruled in 2002 that it shouldn't be on the list. This decision meant there was no set price for Salbutamol during that period.

GSK, in accordance with the High Court's ruling, raised the price of Ventorlin. However, the Supreme Court later overturned the High Court's decision, reinstating Salbutamol under price control. The NPPA then demanded over Rs. 5.5 crore from GSK, claiming they overcharged during the period when the drug wasn't on the price control list.

GSK's Defense:

GSK challenged the NPPA's claim, arguing that since the High Court's decision removed Salbutamol from the DPCO, there was no price ceiling to violate. They emphasized that they never charged more than the price set by the DPCO when it was applicable.

Court Agrees with GSK:

The court sided with GSK. The judge acknowledged that during the disputed period, Salbutamol wasn't a scheduled drug under the DPCO. As a result, the price control mechanism wasn't in effect, and so there was no overcharging on GSK's part. The court further clarified that a previous Supreme Court ruling cited by the NPPA was inapplicable because it dealt with a situation where a manufacturer was already overcharging before contesting the price control.

Conclusion:

The court's verdict quashed the NPPA's demand for Rs. 5.5 crore. It also directed the NPPA to refund any amount deposited by GSK and return the bank guarantee they furnished during the legal proceedings. While GSK has secured a win in this specific case, the larger question of Salbutamol's price control classification remains undecided. The High Court of Bombay's initial decision on removing the drug from the DPCO list is still pending a final verdict. This case highlights the complexities of drug price regulation in India and the ongoing legal battles surrounding it.