N95 Masks: Bombay HC Asks Union Govt and NPPA To Cap Prices in 2 Weeks
Moneylife Digital Team 09 June 2020
Coming down heavily on the Union government and the National Pharmaceutical Pricing Authority (NPPA), the Bombay High Court (BHC) on Tuesday asked the regulator to relook and pass appropriate order about capping price of N95 masks, in accordance with law, as per clause 20 of the Drug Price Control Order (DPCO). In addition, NPPA has been directed to take a decision as early as possible, preferably within 10 days but not beyond two weeks and inform its decision to the petitioners, the BHC says.
 
The bench of chief justice Dipankar Datta and justice SS Shinde says, “The NPPA cannot allow an increase in the price of a drug beyond 10% of the price in the preceding 12 months, so long as the statute is there. It cannot be left to the manufacturers.”
 
The bench was hearing a public interest litigation (PIL) filed by Sucheta Dalal, founder-trustee of Moneylife Foundation and Anjali Damania, founder-trustee of Voice of Indian Taxpayers, a non-government organisation (NGO). 
 
The PIL sought relief from black marketeering, hoarding and profiteering of N95 masks in Maharashtra, despite N95 masks being declared as essential commodity under the Essential Commodities Act, 1955. The petition also alleged that Maharashtra state had failed to take adequate measures to ensure that sufficient availability of surgical masks and other masks at fair prices.
 
During previous hearing, the BHC had told additional solicitor general (ASG) Anil C Singh to take instructions from the Union government on capping prices for N95 masks and respond by 22 May 2020 on two letters sent by Maharashtra government on the same subject.
 
However, in its reply, the NPPA submitted that on 15 May 2020, it had organised a meeting for a holistic understanding about the types and standards of N95 masks that are available and concomitant pricing issues. Representatives from the ministry of textiles, BIS and HLL Life Care Ltd attended the meeting.
 
Also during the meeting, HLL informed that it procures N95 masks from eight manufacturers, with majority coming from Venus Safety. The price of CV N95+ mask with expiratory valve is Rs60 plus GST and of N99 mask is Rs68 plus GST, the minutes of the meeting reveals, NPPA says.  
 
On 21 May 2020, NPPA contended that it issued an advisory, following which major manufacturers and importers of N95 masks have reduced their prices significantly up to 47%. 
 
 
However, the BHC pointed out that the NPPA, has not taken into consideration a statutory provision as mentioned in DPCO.
 
The para 20 of the DPCO says the maximum retail prices (MRPs) of all the medical devices would be monitored by the government to ensure that no manufacturer or importer increases the MRP of a drug more than 10% of MRP during preceding 12 month and where the increase is beyond 10% of maximum retail price, it shall reduce the same to the level of 10% of maximum retail price for next 12 months.
 
However, in its rejoinder, filed by Ms Damania, it was submitted before the Court that how the advisory issued by NPPA failed to implement the DPCO and manufactures of N95 masks were allowed to increase prices substantially. She says, “Maharashtra Food and Drugs Administration (FDA)’s letter dated 15 May 2020, clearly show that though the MRP of N95 masks have been bloated to Rs199 per mask, the average rate charged of the said masks was Rs28.57 per mask in the fourth quarter of financial year 2019-2020 and had increased to Rs42.95 per mask and Rs46.40 per mask in the months of April and May 2020 respectively. Thus, it is clear that the maximum retail price (MRP) as set by the manufacturers are almost 300% higher than the average price at which these masks were being sold. Thus, it is no surprise that these manufacturers have been more than willing to reduce these MRP by close to 50% without any protest.”
 
NPPA also submitted that the government is major purchaser of N95 masks directly from the manufacturers. It has placed an order for 2.44 crore N95 Masks till June 2020, against which 1.06 crore N95 masks have procured till 27 May 2020. A status of distribution of N95 masks for COVID19 to the states and union territories (UTs) as on 28th May is 1.16 crore masks, the affidavit says. 
 
Senior advocate Mihir Desai appeared for the petitioners, assisted by advocate Mihir Joshi while the state government was represented by advocate general Ashutosh Kumbhakoni. 
 
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