Price of essential drugs fixed by the National Pharmaceutical Pricing Authority (NPPA) cannot be caught in a time warp nor can non-furnishing of cost information by drug companies be an alibi for passivity on its part. So held the Karnataka High Court in Ishaan Labs (P) Ltd v Union of India, when it found that the price fixed in 1999 for the formulation Glipizide was continued even in 2003 whereas the Drug (Prices Control) Order 1995 clearly envisages fixation of prices on the basis of cost findings from time to time. The court did not agree with the contention that unless the drug companies came forward with information as to rise in cost of inputs, there was no way to allow increase in the prices of the scheduled drugs.
The NPPA, the court said, must conduct its own research and keep tabs on the price movement of inputs including packaging materials.
That cost of packaging was completely cold shouldered came for special criticism from the court.
In short, the court upheld and reiterated the Supreme Court view that price fixation must meet the test of reasonableness and cannot be caught in a time warp.
(The author is a New Delhi-based chartered accountant)