The Supreme Court on Friday issued a notice to pharma major Pfizer on a government plea over slashing the price of a popular cough syrup, Benadryl, a brand it no longer owns.
It also stayed the Bombay High Court order that asked the drug price control authority to review its order against the pharma firm. Benadryl was sold by Pfizer to Johnson and Johnson
A bench headed by Justice Ranjana Desai while seeking reply from the company stayed the HC order after the government said that no personal hearing was essential before passing of the price control order and officials of the National Pharmaceutical Pricing Authority had agreed with the price order.
The National Pharmaceutical Pricing Authority's (NPPA) in September 2007 had slashed prices of Benadryl 100 ml to Rs 38.61 citing “public interest” after Pfizer had increased the maximum retail price of the medicine by more than the then permissible 20% limit over November 2005 to November 2006. Then, the margin was just 10%.
The government had termed the price increase within a year as unreasonable and had directed the company to follow the price fixed by it. It was mandatory for the company to implement the same and not to charge exorbitant prices by making slight variation in the strength of Diphenhydramine Hydrochloride and sell the same with the same brand to gain unjust and unauthorised benefit at the cost of consumer, additional solicitor general
L Nageshwar Rao told the court.
NPPA could force companies to slash their profit margin if they increased prices by more than 20% (then) in 12 months to ensure that drug costs don't go unchecked.
Pfizer's review plea against the price watchdog's order was rejected by the ministry of chemicals and fertilisers.
Pursuant to this, the Indian arm of the US company had challenged the Authority's price notification and penalty notice in the High Court, which had quashed the authority's order on technical ground that the same was not passed by the officer who heard the arguments.