Why the Indian Supreme Court’s judgment on combination drugs sends wrong signals

It indicates to High Courts that judges can sidestep the legislative procedures on complex regulatory issues if these are deemed inconvenient.

On December 15, the Supreme Court of India delivered its judgment on the government’s decision to ban marketing of 344 fixed dose combinations or FDCs – medicines that are basically a cocktail of two or more drugs that have been sold by the Indian pharmaceutical industry since the late seventies as a means to circumvent price control orders by the government. Many of these FDCs have been approved by State Licensing Authorities in violation of the existing Drugs and Cosmetics Act and lack any scientific and clinical rationale establishing their efficacy and safety to be used for therapeutic benefit.

The government’s decision to ban these “irrational” drugs was made under Section 26A of the Drugs and Cosmetics Act, 1940 and was based on the recommendations of an expert committee headed by Professor CK Kokate. The ban was poised to hit the profits of the pharmaceutical industry since there are literally thousands of FDCs on the markets. As a result, the pharmaceutical industry challenged the ban of these FDCs on the grounds that the Central Government had not consulted the Drugs Technical Advisory Board or DTAB, which is an advisory body set up under Section 5 of the Drugs and Cosmetics Act, 1940. These petitions before the Delhi High Court succeeded and the orders banning the FDCs were set aside by Justice Endlaw on the grounds that the government had not consulted the DTAB. This judgment was then appealed to the Supreme Court by the central government and the Supreme Court has correctly overruled the Delhi High Court’s ruling on this point, concluding that Section 26A does not require the Central Government to consult the DTAB. The judgment states:

“It is clear that the additional power that is given to the Central Government under Section 26A does not refer to and, therefore, mandate any previous consultation with the DTAB. On the contrary, the Central Government may be ‘satisfied’ on any relevant material that a drug is likely to involve any risk to human beings etc. as a result of which it is necessary in public interest to regulate, restrict or prohibit manufacture, sale or distribution thereof. So long as the Central Government’s satisfaction can be said to be based on relevant material, it is not possible to say that not having consulted the DTAB, the power exercised under the said Section would be non est.”   

After making such a strong case on why Section 26A does not require the DTAB to be consulted, the Supreme Court, apparently acting on a suggestion by the government counsel, decided to order the government to do exactly the opposite, that is, refer the matter to the DTAB. The judgment states that the case of the 344 FDCs “should be sent to the DTAB, constituted under Section 5 of the Drugs Act, so that it can examine each of these cases and ultimately send a report to the Central Government” and clarifies that this is a one-off event given the peculiar facts of this case.

It is astonishing that the government counsel made such a recommendation to the Supreme Court to basically ignore Parliamentary law and worrying that the Supreme Court accepted this recommendation contradicting its own judgment. From the wording of Section 26A, it is absolutely clear that the power to ban drugs lies with the central government. The question then is why the Supreme Court ignored the procedure established by Parliament and replaced statutory law with its own procedure?

What makes the matter worse is the Supreme Court’s direction to the DTAB to grant a hearing to all the pharmaceutical companies who currently market these irrational drugs and prepare a detailed report before making its recommendations to the Central Government. This directly contradicts the Court’s assertion earlier in its judgment where it refused to entertain this very question of whether the power under Section 26A is legislative or quasi-judicial in nature, stating “Though arguments have been made as to whether Section 26A is legislative in nature and therefore excludes natural justice, we do not propose to go into the same inasmuch as since the learned single Judge’s judgment is being set aside on one point and one point alone”.

If the Court had instead addressed this specific issue, it would have realised that the power under Section 26A is legislative in nature, meaning that the government is not required under law to hear the parties affected by the legislation. A legislative power is the equivalent of law making and it is nobody’s case that the government has to mandatorily hear everybody before making law (its desirable but not always feasible). Only those authorities exercising quasi-judicial functions are required to follow the principles of natural justice.

By forcing the DTAB to now conduct hearings, and by implication follow the principles of natural justice, we are looking at a scenario where the pharmaceutical industry will spend hours on making arguments why they need to continue to market these irrational drugs and use every opportunity to drag DTAB to the courts for alleged procedural infirmities.

Misunderstanding the Kokate committee’s mandate

One of the most glaring problems with the Supreme Court’s judgment is its virtual nullification of the Kokate Committee’s extensive report when it states:

“….we find that the Kokate Committee did deliberate on the 344 FDCs plus 5 FDCs and did come to a conclusion that the aforesaid FDCs be banned, but we are not clear as to what exactly the reasons for such conclusions are, and whether it was necessary in the public interest to take the extreme step of prohibiting such FDCs, instead of restricting or regulating their manufacture and supply.”

This conclusion is incorrect in law because it was never the remit of the Kokate Committee to make a policy determination under Section 26A. In other words, the central government never delegated the power under Section 26A to the Kokate Committee. The only job of the committee was to examine the drugs and provide a scientific opinion on their therapeutic benefit. In its report, the Kokate Committee makes a scientific determination that several hundred FDCs are irrational – medical parlance for the fact that these drugs lack therapeutic justification. It was then the job of the central government to make the policy determination of whether these drugs were required to be banned on the grounds under Section 26A based on a scientific recommendation of the Kokate Committee.

This policy determination was made by the central government, through the Ministry of Health and Family Welfare, when it issued a statutory order for each and every one of the 344 FDCs. Each of the statutory orders clearly state that the central government is convinced that the use of the FDC is “likely to involve risk to human beings whereas safer alternatives to the said drug are available” and therefore it was exercising its powers to prohibit the marketing of these drugs. It was precisely these orders that were the subject of the judicial review before the courts and not the Kokate Committee report.

Surprisingly, these statutory orders are not discussed in detail by the Supreme Court in its judgment. It should therefore not be a surprise when the Supreme Court makes another error in judgment when it directs the DTAB to make a determination under Section 26A, which in its opinion the Kokate Committee did not make, that is, the grounds under Section 26A that requires the drug to be banned. In doing so, the Supreme Court once again appears to have ignored a fundamental fact that Section 26A vests this power solely with the health ministry that is administered by an elected representative of the people and not unelected bureaucrats of the DTAB.

An altogether different question arises as to why the government counsel proposed this mode of action to the court, despite its clear prior rationale leading to the action it took to protect public health in the first place.

This judgement of the Supreme Court in Pfizer & Ors. v. Union of India, is gravely flawed and needs to be recalled by the Supreme Court because in its current form it sends a signal out to all the High Courts that judges can simply sidestep the legislative procedure on a complex regulatory issue if such a procedure is inconvenient.

The humility of the court to admit its errors will not diminish its standing.

Dinesh Thakur is public health activist & chairman of Medassure Global Compliance Corporation. Prashant Reddy T is assistant professor at NALSAR University of Law.

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