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Price Capping on Luxury condoms set aside: Delhi HC

Much to the relief of condom makers in India, Delhi High Court quashed the government's decision to fix a price ceiling even for luxury condoms by bringing them under essential drugs under the Drug Price Control Order (DPCO). Terming the earlier orders issued by National Pharmaceutical Pricing Authority (NPPA) on November 5, 2013 and July 10, 2014 as 'illegal and unsustainable', Chief Justice G Roini and Justice Rajiv Sahai set aside the earlier orders much to the joy of pharma companies.

Condom industry vehemently opposed the order as soon as it passed as premium variants cannot be brought under the price cap which is priced under Rs 7, whereas the average cost of a luxury condom is close to Rs. 30.

Luxury Condoms for Pleasure

Because of this price capping, otherwise booming condom industry reported a slide in the industry growth during the financial year end in March 2015. And this order brought big relief to the industry.

Industry watchers and pharma company owners welcomed it saying the order has ushered in the industry in the right direction and consumers can expect 10 to 20% price increases for the luxury condoms range.

The order is the result of counter affidavit filed by Reckit Benckiser and JK Ansell Ltd challenging the NPPA orders.

Condom manufacturers reportedly argued that fixing low ceiling price will drive condom manufacturers to stop production, which will have serious impact on the population control measures. Further, they argued that inclusion of condoms under 'drugs' is not appropriate as condoms are 'devices not medicines" and thus condoms cannot be brought under DPCO at all. However, government has maintained that condoms are already brought under essential 'medicines' as they prevent diseases and there cannot be any gradations in it such as luxury or ordinary. And their prices can be controlled by NPPA.

Further, it is reported that Reckitt Benckiser argued condoms may be for common man but pleasure condoms are not for common man. There has to be distinction between 'ordinary' and 'pleasure' condoms. Unless such distinction is not made, it is not fair to subject both the condoms to same pricing mechanism.

A further claim made by Reckitt Benckiser was that pleasure condoms do not meet the parameters under the Essential Commodities Act for them to be classified as essential commodities.

Pharma majors argued that luxury condoms are meant for 'pleasure' and those condoms should not be capped under essential medicines and if so, NPPA can fix another price ceiling for luxury ones.

However, NPPA set forth in its argument that removing luxury condoms from DPCO will allow manufacturers to flood the market only with luxury variants and push the customers to indirectly go for luxury ones. And consumers end up paying more for population control measures.

“We are of the view that NPPA exceeded the powers conferred by DPCO-2013 while fixing the ceiling price for condoms. The language of para 4 (of DPCO 2013) is unambiguous and makes clear the legislative intent that the ceiling price can be fixed only for scheduled formulations of specified strengths and dosages as specified under the First Schedule. Consequently, fixation of the ceiling price for condoms under DPCO-2013 is impermissible under law. Accordingly, we declare that the orders of NPPA dated November 5, 2013, and July 10, 2014, are illegal and unsustainable. In the result, both the said orders are hereby set aside,” the court said.