Oxytocin is life-saving drug that is used for the induction and assistance of labour in women during childbirth. It is also used to stop postpartum haemorrhage (excessive bleeding). The drug also aids milk secretion during the lactation process. Because of its inherent lifesaving properties in humans and cattle, Oxytocin is identified as an essential medicine in the 20th World Health Organization (WHO) Model List of Essential Medicines, March, 2017i. It also continues to be included as an essential medicine in the National List of Essential Medicines (NLEM), 2015ii.
Oxytocin – Misuse
In addition to its use as a lifesaving drug, Oxytocin has over the past decades been used in the dairy farming sector where its properties as a lactation enhancer have been used to increase milk production amongst milch animals. The drug has also been used by farmers to increase the size of, and speed up the ripening (conversion of starch to sugars) process in, fruits and vegetables. It is reported that the misuse of the drug is widespread and unregulated and as such is cause for deterioration of health of milch cattle.
The Ban Notification
Faced with increasing complaints of misuse of the drug as above and in order to curb such misuse, the Union of India and the Ministry of Health & Family Welfare (MoHFW), vide its notification dated April 27, 2018, bearing reference number GSR 411(E), prohibited private sector companies from manufacturing and distributing Oxytocin for domestic use (Impugned Notification). The said notification was initially to take effect from July 1, 2018, but was subsequently (by notification dated 29.06.2018- GSR 602(E)) made effective from September 1, 2018.
It is interesting to note that the only one public sector unit (PSU), namely the state-run Karnataka Antibiotics and Pharmaceuticals Ltd. (KAPL), was granted a monopoly to manufacture and sell the drug to meet the requirements of the entire country.
Challenge before Delhi High Court
The Impugned Notification was challenged across multiple writ petitions by pharmaceutical companies – manufacturers and non-governmental organisations (NGO) alike. The Petitioners challenged the validity of the: (i) Impugned Notification; and (ii) the office memorandum issued by the Directorate General of Health Services, Central Drugs Standard Control Organization on May 21, 2018 before the Hon'ble Delhi High Court (Delhi HCiii).
Contentions of Petitioners
- The directions of the High Court of Himachal Pradesh: It was argued that the sole rationale for the Impugned Notification was a judgment passed by the Hon'ble Himachal Pradesh High Court on March 15, 2016 in the case of Court on its Own Motion v State of Himachal Pradesh and Ors.iv In this case, the court had directed both the state as well as Central Government to put in a system for better coordination and handling of problems associated with the manufacture, import and distribution of drugs like Oxytocin. The Petitioners submitted that the court, however, did not call upon Central Government to prohibit Indian manufacturers from producing Oxytocin. It was argued that manufacture by multiple entities in India was not the reason for the apparent misuse, but was instead the failure of the regulator to check illegal imports and distribution.
- Extensive and approved usage over a period of time: Oxytocin is a preferred product for human use in multiple medical situations and has an established usage base spanning over 40 years. The UN Population Fund and its partners have identified Oxytocin as a priority medication used during pregnancy and childbirth. Further, WHO had also cited Oxytocin as the first option for induction of labour in certain cases. However, Central Government, while imposing a ban on the said drug, seemed to have overlooked this aspect, which is backed by the recommendations of medical institutions of international repute.
- Inclusion of Oxytocin in the NLEM: Oxytocin as a proven safe drug was included in the NLEM in 2011v and continues to be listed in the latest iteration of the NLEM. Further, there have not been any instances wherein the licences issued to manufacture Oxytocin have ever been cancelled or suspended. Despite this, manufacture of the same was banned by the Impugned Notification.
- Manufacture cannot be restricted to public sector undertakings: It was argued that restriction of manufacture to the public sector and to a single entity was against public interest. The requirement for Oxytocin in the market far outweighs its current supply. Therefore, it would be disastrous to put manufacturing rights for such an important and lifesaving drug in the hands of a single entity.
- Prohibition without due consultation of DTAB or DCC: It was argued that neither the Drugs Consultative Committee (DCC), nor the Drugs Technical Advisory Board (DTAB) had ever advised Central Government to prohibit the manufacture and sale of Oxytocin by private licensees altogether for national purposes as there was no evidence to allude to any misuse on part of the licensed manufacturers. As a matter of fact, it was on the basis of recommendations made in the 65th meeting of the DCC that a notification restricting bulk drug supply only to manufacturers licensed to produce Oxytocin formulations was issued on January 17, 2014, vide gazette notification bearing reference number GSR 29(E). Further, the 76th meeting of the DTAB recorded that legally manufactured Oxytocin was not subject to misuse and that the raw materials / drugs for the manufacture of Oxytocin were smuggled into India, manufactured clandestinely and sold to dairy owners, which was leading to misuse.On the aspect of safety, it was argued that health minister had himself stated that according to the Indian Council for Agricultural Research, no ill effects had been observed in animals in experiments carried out on the use of Oxytocinvi.Therefore, the available material clearly indicated that there was no widespread misuse of Oxytocin by licensed manufacturers and that there was no scientific data to show that Oxytocin is injurious to the health of cattle.
- Impugned Notification was contrary to Section 26A of the Drugs and Cosmetics Act, 1940 (D&C Act): It was argued that the power under Section 26A of the D&C Act could only be exercised if a drug posed a risk to human life and /or was lacking in therapeutic value / therapeutic justification and further if there was complete satisfaction of the Central Government in this regard. There was no material on record to justify such satisfactionvii.
- A complete ban was contrary to Constitutional provisions: The impugned actions were arbitrary and unreasonable and violated Articles 19(1) (g) and 14 of the Constitution of India, 1950 (Constitution). Further, Section 26A of the D&C Act is not concerned with the creation of monopoly and, therefore, not protected by Article 19(6) of the Constitution.
Contentions of the Respondents
In response to the Petitioners' contention, the Respondent (i.e. the Union Government) made the following submissions:
- Himachal Pradesh High Court judgment: The High court of Himachal Pradesh had issued directions for the regulation of manufacture, distribution and sale of the drug, and consideration of restricting manufacturing only to PSUs.
- DTAB and DCC recommendations considered: The recommendations of the minutes of the DCC and the DTAB were taken into account by the Central Government at the time when the impugned notification was issued. As a matter of fact, acting upon the recommendations of the DCC, a notification was issued, amending the rules, restricting the sale of bulk Oxytocin to only manufacturers licensed by law and further completely restricting the sale of the drug for veterinary use to veterinary hospitals. The same was upheld by the Punjab and Haryana High Courtviii.
- Misuse of Oxytocin in dairy and agriculture sectors: The matter involved an undeniable public interest as the status quo with regard to domestic manufacture and sale of Oxytocin was responsible for its misuse in the dairy and agriculture sector. Therefore, an undeniable public interest was involved in the matter. It was also submitted that whether or not the material on the record is adequate cannot be a subject matter of judicial review.
- Cogent material to exercise powers under Section 26A of the D&C Act: Sufficient material under Section 26A existed by way of abundant material, collected over several years.
- Notification under Section 26A of the D&C Act is legislative in nature: The Impugned Notification was issued under Section 26A of the D&C Act in exercise of legislative powers that have a higher threshold of immunity, and the courts should, therefore, exercise restraint while interfering with the sameix.
- Ban was not contrary to Constitutional provisions: By virtue of Article 19(6) of the Constitutionx, subordinate legislation creating a State monopoly should be presumed to be in the interest of the general publicxi. Reliance in this regard was placed on Akadasi Pradhan v. State of Orissa and Ors [AIR 1963 SC 1047].
- Limited interference by courts in matters of public policy: In regard to issues and matters, including complex assumptions in decisions affecting the public at large, especially public health, the Courts in the past have declined to interfere in judicial reviewxii.
- Prohibition backed by actual field research: The Respondents also placed reliance upon data regarding raids and seizures made by authorities between August 29th and 31st, 2018, from licensed manufacturers of Oxytocin's active pharmaceutical ingredient and formulations.
- Use in human trafficking: The Trafficking of Persons (Prevention, Protection and Rehabilitation) Bill, 2018 recognised the rampant and systemic abuse of chemical substances for the purposes of early sexual maturity. It was submitted that Oxytocin was used in the offence of human trafficking and speeding sexual maturity of young girls.
Questions framed by the Delhi HC
The Delhi HC, based upon submissions made by both the parties and a review of the material on record, framed the following questions for determination:
- Whether the Impugned Notification fall within the scope of Article 19(6) of the Constitution?
- Whether the Impugned Notification ultra vires provisions of the D&C Act?
- Whether the Impugned Notification is arbitrary and, therefore, unsustainable?
Decision of the Delhi HC
The Impugned Notification did not fall within the scope of Article 19(6) (ii) as claimed by Central Government
It was held that while the Central Government is empowered to prohibit the manufacture, sale, distribution etc. of a product, the D&C Act does not authorise the creation of a monopoly, including a State monopoly. It was held that Article 19(6) of the Constitution grants immunity only to provisions that create or enable the creation of State monopolies. However, Section 26A of the D&C Act was held to not be a law that creates, or enables the creation of, State monopolies and therefore it does not fall within the protective ambit of Article 19(1) (6) (ii) of the Constitution. The court was of the opinion that Section 26A of the D&C Act does not and cannot be considered as a law that creates State monopolies or enables the creation of State monopolies.
Impugned Notification not ultravires of Section 26A of the D&C Act as it gives the Central Government the power to partially / completely prohibit certain activities
It was held that in certain circumstances, the power to regulate may be used to prohibit completely or partially any activity, and that Section 26A of the D&C Act provided a statutory framework for such action. The Impugned Notification could not, therefore, be said to be ultra vires powers under the D&C Act.
Legislative nature of the Impugned Notifications hence indefeasible. Threshold of immunity for 'executive action' and 'delegated legislation' was the same
In response to the Respondents' submission that the powers under Section 26A of the D&C Act were legislative in nature and, therefore, immune from judicial review: it was held that there is no bar per se to review regulatory provisions, even if they are made in the exercise of subordinate legislative power. Such rules or regulations did not carry a threshold of immunity greater than any other statutory or non-statutory instrument. The threshold of immunity in the case of both – executive policy or norms and statutory regulations – is the same.
Data available with Respondents did not warrant the Impugned Notification
The Court evaluated and reviewed various Governmental documents in relation to the issuance of the Impugned Notification and found that it was issued as a direct consequence of the directions given by the Himachal Pradesh High Court, without consideration of scientific and empirical data underlying the issue. No instance of any wrongdoing by the licensed manufacturers was cited. Therefore, a complete prohibition for domestic manufacture of Oxytocin by licensed manufacturers was not called for.
Multiple and conflicting public interests
It was held that in this case, the following public interests were involved:
- Interests of the public, i.e. consumers and pregnant women who would be affected.
- Misuse of Oxytocin and failure of all attempts to regulate it.
- The licensed manufacturers' right to carry on business in the product.
The court held that in judicial review, while a court cannot be expected to carry out a merits review, when the matter pertains to right to life and lifesaving medicines, the court cannot understate its duty to scrutinise the record and ensure that all materials pointing to the inevitability or the compelling nature of the choice exercised by the executive in fact exist. The lack of evidence about long-term impact of Oxytocin on milch cattle was noted in this regard.
Misuse on animals. Effect of canalised supply to humans impacted right to life of pregnant women.
The Delhi HC opined that the predominant consideration in the Central Government's decision-making process was misuse on cattle. The Government overlooked the benefits and importance of the drug to humans. If there were no established channels of experienced manufacturers, availability of the drug would suffer, further canalising production into the hands of just one inexperienced entity i.e. KAPL. This could have unsettling effects if the supply chain was disrupted for any reason. This, given the lifesaving nature of the drug, could impact the lives of scores of pregnant women that were protected under Article 21. Reserving production to the PSU through a single manufacturing entity, which has no previous record in its production, was fraught with potential adverse consequences.
- The Impugned Notification is both unreasonable and arbitrary.
- The effect of restricted supply of a lifesaving drug on the public and especially women was deleterious and the same was not considered by the Government. Further, this could lead to drastic consequences.
- The Impugned Notification and decision-making process place too much importance on the need to control veterinary misuse as triggered by the directions of the Hon'ble Himachal Pradesh High Court, which did not notice the essentiality of the drug while doing so.
- No scientific data has been placed on record to support the conclusion that the drug poses a risk to human life.
- Weighing up the options to bring in suitable measures geared to achieve the same objective in a different manner were not undertaken. The absence of such a balancing process, and the choosing of the most drastic option, renders the decision to issue the Impugned Notification both arbitrary and unreasonable.
The Delhi HC proceeded to quash the Impugned Notification and all consequential orders with the observation that the conclusions recorded by the court do not transgress the arena of permissible judicial review, but rather are enough for the court to say that the present case is on the right side of any line that could reasonably be drawn.
Appeals before the Supreme Court
The Central Government filed an appeal against the Delhi HC's judgment dated December 14, 2018, before the Supreme Court vide Civil Appeal Nos. 6588-6591 of 2019, arising out of SLP (Civil) nos. 3296-3299 of 2019. The matter was heard by the division bench comprising the Hon'ble Justice Ms. Indu Malhotra, and Hon'ble Justice Mr. Abhay Manohar Sapre.
Decision of the Supreme Court: Reference to Larger Bench
A detailed judgment was written by Hon'ble Justice Ms. Indu Malhotra, wherein it was held that this matter raised serious issues with far-reaching implications. The following substantial questions of law were, therefore, referred to a larger bench to consider and authoritatively pronounce upon the same:
- Whether a drug included in the NLEM would be subject to the provisions of Section 26A of the D&C Act?
- Whether the Impugned Notification had resulted in the creation of a monopoly in favour of a PSU, and if so, whether it was protected by Articles 14 and 19(6) (ii) of the Constitution?
- Whether the classification made by the Impugned Notification between public and private sector companies would achieve the object and purpose of preventing illegal use of the drug?
- Whether it would be in the public interest to restrict the manufacture of a lifesaving drug to a single PSU, to the complete exclusion of private-sector companies?
- Whether there was relevant and objective material before Central Government to form the basis of satisfaction to exercise the power under Section 26A of the D&C Act?
- Whether the object of curbing the clandestine manufacture and unregulated use of Oxytocin could be achieved by imposing a ban on the manufacture of licensed drugs by private-sector companies?
- Whether the exercise of power by Central Government under Section 26A of the D&C Act was legislative or executive in nature?
Hon'ble Justice Mr. Abhay Manohar Sapre, in his concurring judgment also held that the matter had far-reaching consequences on the rights of the citizens qua State and legal issues such as:
- Whether the nature of powers exercised by Central Government under Section 26A of the D&C Act was legislative or executive?
- Whether invoking the powers under Section 26A of the D&C Act was in conflict with the exercise of powers conferred under the Essential Commodities Act, 1955?
- Whether the Impugned Notification had resulted in creating a monopoly in favour of the State, and whether it had satisfied the rigour of Article 14 read with Article 19(6) (ii) of the Constitution?
- Whether the material relied on by the Central Government in this regard was sufficient?
It was also held that depending upon whether exercise of powers under Section 26A of the D&C Act are held to be either legislative or executive in nature, the parameters to examine the legality of the Impugned Notification would also vary. Further, the final decision should lay down general principles delimiting the scope of powers of the Central Government under Section 26A of the D&C Act, and its relation to the Essential Commodities Act, 1955.
Thoughts to ponder
While it is clear that the Hon'ble Supreme Court of India has taken it unto itself to frame the law in this regard, one cannot ignore the fact that the final judgement of the Hon'ble Apex court would have far-reaching consequences from a jurisprudence perspective in that:
- The scope and powers of the Central Government as exercisable under Section 26A of the D&C Act would be defined. Depending on how this is decided, the Central Government could exercise more regulatory control in banning approved drugs should the need so arise. Powers of the Government to ban would become absolute in this regard. We have recently seen how assiduously the Government has pursued its ban against fixed-dose combinations and how it is reacting to public sentiment in cases of drugs and medical devices that have been a cause of concern to patients. The final decision of the Hon'ble Supreme Court of India would either give wind to the wings of the Government or clip them as the case may be.
- The extent of judicial intervention and review would be delineated, depending on what the court holds qua the nature of power, i.e. executive or legislative, the parameters and extent of judicial intervention would differ and apply accordingly. Actions in the shade of legislative power would have a lesser scope of judicial review than those in the shade of executive power.
- The differences between regulate, restrict and prohibit may be elaborated and decisions of the government in this regard would need to be supported with cogent reasons.
An additional thought does arise: was an ultravires challenge before the High Court overkill given the facts of the case?xiii
Industry-wide effects of this judgement cannot be underestimated. One can only hope that the industry gives its perspective to the court and relevant stakeholders intervene rather than just relying on the submissions made by affected companies and respective NGOs. The matter is to be looked upon as a collective action given that the law as laid down would be, as eloquently stated by their lordships, ... in rem.
It would be interesting to see how this case finally turns post completion of the hearing before the larger bench at the Hon'ble Supreme Court of India.
iii the office memorandum issued by the Directorate General of Health Services, Central Drugs Standard Control Organization on May 21, 2018 bearing File No. X-11026/103/2018-BD before the Hon'ble Delhi High Court vide Writ Petitions (WP(C) 6084/2018, WP(C) 8555/2018, WP(C) 8666/2018 and WP(C) 9601/2018).
iv AIR 2016 HP 109.
vii Reference on Union of India v. Pfizer Ltd and Ors. 2019(2) SCC39.
viii Narang Medical Store v Union of India, W.P. (C) No. 7135 of 2014.
ix Reliance placed on Union of India v. Cynamide India Pvt. Ltd 1987 (2) SCC 720; E Merck (India) Limited v. Union of India 2001 (90) DLT 16; Macleods Pharmaceuticals Limited v. Union of India 2012 SCC online Mad 1735 and Franklin Laboratories India v. Drugs Controller (India) Limited AIR 1993 P&H 10.
x Article 19(6) of the Constitution – Nothing in sub clause (g) of the said clause shall affect the operation of any existing law in so far as it imposes, or prevent the State from making any law imposing, in the interests of the general public, reasonable restrictions on the exercise of the right conferred by the said sub clause, and, in particular, nothing in the said sub clause shall affect the operation of any existing law in so far as it relates to, or prevent the State from making any law relating to:
- the professional or technical qualifications necessary for practising any profession or carrying on any occupation, trade or business, or
- the carrying on by the State, or by a corporation owned or controlled by the State, of any trade, business, industry or service, whether to the exclusion, complete or partial, of citizens or otherwise.
xi Reliance placed on Akadasi Pradhan v. State of Orissa and Ors. AIR 1963 SC 1047; Orient Paper Industries Pvt. Ltd. v. State of Orissa 1991 (1) SCC Suppl.81; State of Tamil Nadu v. L. Abu Kavur Bai and Ors. 1984 (1) SCC 516; Tinsukhia Electric Supply Co. Ltd. v. State of Assam and Ors. 1989 (3) SCC 709 and Uday Singh Dagar and Ors. v. Union of India and Ors. 2007 (10) SCC 306.
xii Reliance placed on Directorate of Film Festivals v. Gaurav Ashwin Jain and Ors. 2007 (4) SCC 737; Systopic Laboratories Pvt. Ltd. v. Dr.Prem Gupta 1994 Suppl (1) SCC 160 and Macleods Pharmaceuticals Limited v. UOI 2012 SCC online Mad 1735.
xiii If an ultravires challenge had not been raised, the matter would have been heard by a single judge at the outset. Any appeal would have been heard by a division bench of the same court. The Supreme Court would eventually hear the matter in final appeal.
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