Pricing control over scheduled formulations cannot extend beyond the delegated authority granted by the price order.

Condoms were held to fall within the definition of "drug" under the Drugs and Cosmetics Act, 1940 and, as essential commodities, their inclusion in the 2013 price-control framework was upheld. However, the pricing authority's ceiling-price mechanism under the Drugs (Prices Control) Order, 2013 could not be applied to condoms because the relevant provisions were confined to scheduled formulations with specified strength and dosage, which condoms lacked. Accordingly, the ceiling-price orders were found impermissible and were set aside, while the broader policy of including condoms within the essential medicines framework remained valid.

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Issues: (i) Whether condoms are "drugs" and "essential commodities" so as to fall within the scope of the Essential Commodities Act, 1955 and the Drugs (Prices Control) Order, 2013. (ii) Whether the National Pharmaceutical Pricing Authority could lawfully fix a ceiling price for condoms under Paragraphs 4, 6 and 14 of the Drugs (Prices Control) Order, 2013.

Issue (i): Whether condoms are "drugs" and "essential commodities" so as to fall within the scope of the Essential Commodities Act, 1955 and the Drugs (Prices Control) Order, 2013.

Analysis: Condoms were treated in the materials relied on by the policy framework as contraceptives serving reproductive health and prevention of disease, and were included in the National List of Essential Medicines and thereafter in the First Schedule to the 2013 Control Order. The Court held that condoms answer the description of medicines and substances intended for prevention of disease or disorder, and therefore fall within Section 3(b)(i) of the Drugs and Cosmetics Act, 1940. Once so characterised, they are covered by the definition of "drug" adopted into the Essential Commodities regime and are essential commodities under the Schedule to the 1955 Act.

Conclusion: The inclusion of condoms in the 2013 Control Order was not ultra vires the Essential Commodities Act, 1955.

Issue (ii): Whether the National Pharmaceutical Pricing Authority could lawfully fix a ceiling price for condoms under Paragraphs 4, 6 and 14 of the Drugs (Prices Control) Order, 2013.

Analysis: The 2013 Control Order draws a distinction between scheduled formulations and non-scheduled formulations, and Paragraph 4 is confined to scheduled formulations of specified strengths and dosages. Condoms were included in the First Schedule, but their dosage and strength were not specified. On a combined reading of the relevant definitions and pricing provisions, the Court held that the power to determine ceiling price under Paragraphs 4, 6 and 14 did not extend to such formulations. The policy of price control was not disturbed, but the particular price-fixation mechanism used for condoms exceeded the authority conferred by the Order.

Conclusion: The ceiling-price orders dated 05.11.2013 and 10.07.2014 were impermissible and unsustainable.

Final Conclusion: The petitions succeeded to the extent that the impugned ceiling-price orders were set aside, while the policy of including condoms within the essential medicines framework was upheld.

Ratio Decidendi: A pricing authority under a delegated control order can act only within the specific pricing mechanism authorised by that order, and a formulation included in the schedule but lacking specified strength and dosage cannot be subjected to a ceiling price under provisions confined to scheduled formulations of specified strengths and dosages.

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