Background

On 10 March 2016, the Central Government issued 344 identically worded notifications (Notifications) prohibiting the manufacture, sale and distribution of 344 fixed dose combinations (FDCs). The Notifications purported to ban the FDCs in question because they posed substantial risks to human life and safer alternatives were available. The Notifications were purported to be based on the findings and recommendations of an expert committee appointed by the Central Government, which stated that the FDCs in question were found to have no 'therapeutic justification'. Lastly, the Notifications were touted as an exercise in 'public interest'. The Notifications were issued by the Central Government in exercise of its powers under Section 26A of the Drugs and Cosmetics Act, 1940 (Drugs Act). Five similar notifications were issued on 8 June 2017 whereby five FDCs were banned.

Challenge before the Delhi High Court

The pharmaceutical industry immediately proceeded to challenge the Notifications on various grounds. Although writ petitions were filed before various High Courts of the country, the Delhi High Court received over 500 petitions. The Delhi High Court accorded priority to these hotly contested matters and they were taken up for hearing on a day to day basis. In light of this, the Delhi High Court pronounced its judgment on 1 December 2016.

Judgment dated 1 December 2016

The Delhi High Court judgment came as a welcome relief to the pharmaceutical industry as all Notifications were set aside. Although several issues were raised, the Delhi High Court chose to answer the principal issue – whether consultation with Drugs Technical Advisory Board (DTAB) and Drugs Consultative Committee (DCC) is mandatory before exercise of powers by the Central Government under Section 26A of the Drugs Act. The Delhi High Court answered this issue in the affirmative and held that consultation with DTAB / DCC is sine qua non for exercise of powers under Section 26A of the Act.

Challenge before the Supreme Court

As the pharmaceutical industry expected, the Central Government challenged the judgment of the Delhi High Court before the Supreme Court. Although stay of the Delhi High Court judgment was not granted while issuing summons to the respondents (pharmaceutical companies), the Supreme Court appreciated the urgency and importance of these matters. Accordingly, it decided to do away with time taking procedures of issuing formal summons by the Supreme Court Registry and completion of pleadings which are prerequisites before which a matter can be finally heard by the Court. In the Supreme Court, the matters were heard by a bench comprising of Hon’ble Mr Justice R F Nariman and Hon’ble Mr Justice S K Kaul.

Supreme Court lays down the law

On 15 December 2017, the Supreme Court pronounced its judgment allowing the appeal of the Central Government.

The Supreme Court held that Section 26A does not 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 life, 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 is satisfaction, it can be said to be based on relevant material. However, the absence of any previous consultation with the DTAB, does not make the power exercised under Section 26A non-est.

Directions in respect of 344 FDCs

Despite setting aside the judgment of the Delhi High Court, the Supreme Court proceeded to refer the FDCs to DTAB so that it may examine each of these cases and ultimately send a report to the Central Government. However, the Supreme Court clarified that the considering peculiar facts of these cases and in order to obviate further litigation, the Court has sought the expertise of the DTAB for fresh examination of the FDCs. The Supreme Court further noted that the expert committee (Kokate Committee) did deliberate on the FDCs and come to a conclusion that the FDCs must be banned. However, the reasons for recommending a ban on the FDCs were not clear i.e., the exact reasons for such conclusions 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. Considering the same, the Supreme Court proceeded to set the parameters which are required to be met by DTAB for the re-examination of the use of the FDCs. The Supreme Court directed as under:

“33. First and foremost in each case, the DTAB/Sub-Committee appointed by it must satisfy itself that the use of the Fixed Dose Combinations (FDC) in question is likely to involve any one of the aforesaid three things:

(a) that they are likely to involve any risk to human beings or animals; or

(b) that the said FDCs do not have the therapeutic value claimed or purported to be claimed for them; or

(c) that such FDCs contain ingredients and in such quantity for which there is no therapeutic justification.

34. The DTAB/Sub-Committee must also apply its mind as to whether it is then necessary or expedient, in the larger public interest, to regulate, restrict or prohibit the manufacture, sale or distribution of such FDCs. In short, the DTAB/Sub-Committee must clearly indicate in its report:

(1) as to why, according to it, any one of the three factors indicated above is attracted;

(2) post such satisfaction, that in the larger public interest, it is necessary or expedient to (i) regulate, (ii) restrict, or (iii) prohibit the manufacture, sale or distribution of such FDCs.

35. The DTAB/Sub-Committee must also indicate in its report as to why, in case it prohibits a particular FDC, restriction or regulation is not sufficient to control the manufacture and use of the FDC. We request the DTAB/Sub-Committee to be set up for this purpose to afford the necessary hearing to all concerned, and thereafter submit a consolidated report, insofar as these FDCs are concerned, to the Central Government within a period of six months from the date on which this judgment is received by the DTAB. We may also indicate that the Central Government, thereafter, must have due regard to the report of the DTAB and to any other relevant information, and ultimately apply its mind to the parameters contained in Section 26A of the Drugs Act and, accordingly, either maintain the notifications already issued, or modify/substitute them or withdraw them.”

It may be noted that certain drugs which were launched or first manufactured prior to 21 September 1988 have been excluded i.e., they have not been referred to DTAB. In respect of these drugs, the concerned Notifications have been set aside as those cases were never meant to be referred to the Kokate Committee. The Supreme Court did not agree with the pharmaceutical companies that the FDCs which are approved by DCG(I) should also be excluded for the reason that doubts have been raised by the Parliamentary Standing Committee in relation to the manner in which DCG(I) approvals had been granted.

The Supreme Court also granted interim protection in the form of status quo to the pharmaceuticals companies till such time a final decision is taken by the DTAB and the Central Government with respect to the FDCs.

In so far as the ban on 294 FDCs which were challenged before the Madras High Court in the year 2007, the Supreme Court noted that DTAB has already examined the 294 FDCs and has recommended prohibition on certain drugs. Hence, no direction has been passed in relation to the 294 FDCs but the Supreme Court accepted the report of DTAB.

Comment                                                                                   

The Hon’ble Supreme Court has expanded the powers of the Central Government under Section 26A of the Drugs Act thereby enabling the Central Government to prohibit the use and manufacture of any drug without the consultation of the DTAB or any other committee provided the parameters of Section 26A of the Drugs Act are met. Although the fate of the FDCs which have been referred to DTAB is still to be decided, the pharmaceutical companies can manufacture and sell those FDCs till the Central Government issues appropriate notifications after receiving the recommendation of DTAB. Also, the fate of pre 21 September 1988 FDCs which were approved by DCG(I) is not clear. One may argue that since these are launched pre 21 September 1988, they are outside the purview of the fresh exercise which DTAB has been directed to undertake. It can also be argued that since these are DCG(I) approved, DTAB is entitled to re-examine their safety and rationality. However, it may be noted that while pre 21 September 1988 FDCs have been excluded, the Supreme Court has preserved the right of the Central Government to carry out an inquiry as to whether such drugs should be the subject matter of a notification under Section 26A of the Drugs Act.