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Outbreak of Coronavirus: Concerns over Black Marketing, Hoarding and Exorbitant Pricing of Essential Medical Supplies and its Legal implications in India

 > Uncategorized  > Outbreak of Coronavirus: Concerns over Black Marketing, Hoarding and Exorbitant Pricing of Essential Medical Supplies and its Legal implications in India

Outbreak of Coronavirus: Concerns over Black Marketing, Hoarding and Exorbitant Pricing of Essential Medical Supplies and its Legal implications in India

The 2019 Novel Wuhan Coronavirus (Covid-19) which originated from the Wuhan district of China has infected nearly 96,500 people and has claimed the lives of over 3,300 people globally. The global pandemic, as reported by the World Health Organization (WHO) has no diagnosis until today and though the survival rate is quite high, yet stringent measures need to be taken at both the micro-level and the macro-level to fight the virus. In India alone, the virus has infected 30 people, though no deaths have been reported yet. Having said that there is no diagnosis till date, precautionary measures become really important and in such a scenario adequate supply of disinfectants, masks and other medical equipment at a reasonable cost to all the people living in India become really crucial. India’s pharmaceutical industry – especially the Active Pharma Ingredients (APIs) is heavily dependent upon China. The latter accounted for 67.56% of total imports of drugs at USD 2,405.42 million in 2018-19. Due to the outbreak of the virus, China has practically run out of labour and traffic which has caused a sharp decline in the supply of medicines reflecting a massive spike in prices of medicines in India. On the other hand, India, the world’s no.1 supplier of generic drugs, putting its citizens first, has curbed the export of twenty-six pharmaceutical ingredients and the medicines manufactured from them. Fearing acute shortage of pharmaceuticals, it will be interesting to see how both India – China and the rest of world react to the sudden restrictions imposed on the trade of pharmaceuticals.

Due to a sudden rise in the demand of the previously mentioned medical necessities, there is a high chance of illegal hoarding of medicines and other medical equipment by the chemists in the garb of business. The question, which arises, is that legally justifiable, especially when the situation is as alarming as this?
Further, due to the rapid human-to-human transmission of the Coronavirus, certain important and necessary medical supplies such as thermometers, hand sanitizers, masks, surgical gloves, common cold medications such as-cough and cold syrups, antibiotics for fever could be hoarded and black marketed in India by various pharmacies and druggists, in the lure of profit-maximization. The law on the point, the Essential Commodities Act, 1955 was enacted to regulate the production, supply and distribution of various commodities labelled as “essential” in order to make such commodities available to the consumers at a fair and reasonable price. The Act draws its inspiration from Article 39(b) of the Constitution of India, which enjoins a duty on the State to secure “that the ownership and control of the material resources of the community are so distributed as best to sub-serve the common good.” The Central Government can take measures such as, licensing, distribution and imposition of stock limits. They can also fix the prime limit and anybody sells such items over and above the prescribed limit will attract fines and penalties. The Central Government has full liberty to include and exclude items on and off the list, and drugs are one of the essential commodities, as of today.

The Essential Commodities Act, 1955 is extremely important in heavy crackdown of hoarders and black-marketers of the essential commodities, given the fact that such commodities are vital for survival and to carry out routine activities.
Section 7 of the Essential Commodities Act, 1955 prescribes an imprisonment term of three-seven years along with fine.
Section 9 of the Essential Commodities Act, 1955 prescribes an imprisonment term of five years and/or fine for making false statements and/or information.
Section 10 of the Essential Commodities Act, 1955 deals with offences committed by companies and the both the company and the person in charge of the company shall be punished accordingly.

The Hon’ble Supreme Court of India in Union of India v. Cynamide India Ltd., held that it is the right of the Citizen to obtain essential articles at fair prices and it the obligation on the State to provide them. The Court refused to agree with the argument that the price fixation only affects manufacturers and producers. It observed that the general public is the worst affected in such times.

Amidst, the outbreak of the Novel Coronavirus, the price of a common Active Pharma Ingredient (API), “Paracetamol” such as Crocin increased from INR 262 to INR 330 (i.e. 26%) in January this year. Despite the rise of the price, the positive is that none of these prices is likely to affect the consumers since the pharma companies aren’t legally allowed to push up the prices of key drugs by more than 10% annually. The prices of drugs in India is controlled by the National Pharmaceutical Pricing Authority (NPPA) which uses the Drugs Prices Control Order (DPCO), the latter being an issue by the government under Section 3 of the Essential Commodities Act, 1955.

Latest reports suggest that there are no restrictions on the import of Active Pharma Ingredients (API) from China and the government is working actively in ensuring adequate supply of the same to the citizens of India and at the same time prevent black-marketing, and illegal hoarding of APIs.

What possible problems can Indian Citizens face by the Coronavirus?
• Lack of Medicines.
• Shortage and hoarding of medical equipment such as thermometers, hand sanitizers, disinfectants, normal masks as well specially designed masks to battle the Coronavirus, and surgical gloves.
• Excessive rise in the demand and shortage of medicines and medical equipment will lead to a steep price of the same causing financial problems especially to the people from lower economic backgrounds.
• Such items will be first available in large cities due to a high population and better healthcare facilities, due to which rural India might as well have to suffer, if the Coronavirus spreads to that extent.

The public who often has to bear the consequences of shortage, non-availability and/or high price of medical supplies and pharmaceutical equipment are often the worst sufferers. In such a scenario like this the people have the following options i.e.
A. The public can definitely reach out to the National Pharmaceutical Pricing Authority/ State Drugs Controller and the District Drugs Inspector and take legal help.

In such a scenario like this the people have the following options i.e.
A. The public can definitely reach out to the National Pharmaceutical Pricing Authority/ State Drugs Controller and the District Drugs Inspector and take legal help.

B. Problems such as charging more than the printed Manufactured Rated Price (MRP) of a medicine attracts the provisions of the Drugs Price Control Order, 2013, whereas, any defect in the quality of the medicine attracts the provisions of the Drugs and Cosmetic Act, 1940. The Drugs Control Organization of various states is the enforcing agency prescribed under the Drugs and Cosmetics Act, 1940 at the state level.

C. Online complaints can also be lodged at the official website of the National Pharmaceutical Pricing Authority (NPPA). Moreover, not complying with the Manufactured Rated Price and breaching other applicable local taxes would also lead to overcharging the consumer, which along with interest is recoverable through the Public Demand Recovery Act of 1952.

D. Applications can be sent to the appropriate Health Ministry of the State Government briefly noting down all the problems such as overcharging of medicines, defect in the quality of medicines etc.

E. Undue-advantage, illegal hoarding and black marketing of medicines can be reported to the Police and they will definitely take appropriate legal actions.

The Right to Health is a Fundamental Right under the broad dimension of “Right to Life and Personal Liberty” as contemplated under Article 21 of the Constitution of India as held in State of Punjab and Ors. v. Mohinder Singh Chawla [A.I.R. 1997 S.C. 1225, (1997) 2 SCC 83]. In Paschim Banga Khet Mazdoor Samity and Others v. State of West of Bengal and Another [A.I.R. 1996 S.C. 2426, (1996) 4 SCC 37], the Hon’ble Supreme Court has observed that the Constitution envisages the establishment of a welfare State. In a welfare State, the primary duty of the Government is to secure the welfare of the people. Providing adequate medical facilities for the people is an essential part of the obligations undertaken by the Government in a welfare State. The Government discharges this obligation by running hospitals and health centers, which provide medical care to the person seeking to avail of those facilities. Preservation of human life is thus of paramount importance (also reiterated in Union of India (UOI) vs. Mool Chand Khairati Ram Trust, Civil Appeal No. 3153-3157 of 2017). Thus, people can also approach the High Court of their respective jurisdictions by issuing a Writ Petition under Article 226 and request the Court to issue necessary directions to the concerned State Health Departments/ Drug Control bodies.

Thus, there are a plethora of legal options available to the public at large in case it is found that the essential medical supplies are being black marketed, hoarded or sold at a steep price while taking undue advantageof the outbreak of any virus, in a most illegal manner.

Authored By: Adv. Anant Sharma & Mayank Barman

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