INDIA BUSINESS WORLD - MAY 11^th - MAY 31^st - 2008

RANBAXY GETS REPRIEVE IN FORTWIN SALES CASE

In a reprieve to pharma major Ranbaxy Laboratories, the Supreme Court has held that the company did not violate any law by selling a traumatic pain drug Pentazocine, in the formulation of Pentazocine injection, sold under brand name Fortwin beyond the exemption date of October 31, 1999.

A bench headed by Justice S B Sinha while upholding the Delhi High Court’s judgement dismissed the Centre’s petition that alleged that Ranbaxy was liable to pay Rs 2,59,76,070, an overcharged amount, with interest at the rate of 15% per annum for selling the drug beyond the period of exemption granted by the Central government under the Essential Commodities Act, 1955.

It also imposed cost of Rs 50,000 on the government. The Central government under Section 3 of the Essential Commodities Act, 1955 had issued guidelines for grant of exemption specifying that a manufacturer who had been given a price exemption for bulk drug, an essential commodity, should submit an application in prescribed forms for fixation of price of such bulk drug and formulation four months before the expiry of the period of the exemption.

Ranbaxy was granted permission to manufacture the drug and market it at a price fixed by the government till October 31, 1999.

According to the judgement, Ranbaxy fulfilled the requisite criteria. “The area of exemption is from the operation of the price control. Such exemption admittedly had been granted upto October 31, 1999. Indisputably the Central government had the power to extend the period of exemption. It could have granted further exemption subject to any condition,” it stated.

It said: “If the submission of Additional Solicitior General Gopal Subramaniam that Ranbaxy was bound not only to manufacture but also to sell at a price up to October 31, 1999 is correct, the same in our opinion leads to an absurdity. Such an anomaly and absurdity must be avoided.”