Supreme Court Refers Oxytocin Ban Case to Larger Bench for Constitutional Review

The Supreme Court of India, in a significant ruling on August 22, 2019, referred the case concerning the ban on the private manufacture of Oxytocin to a larger bench. The issue at hand was the Union of India’s decision to restrict the production of this life-saving drug exclusively to public sector enterprises, thereby preventing private manufacturers from supplying the domestic market. The case raised substantial legal and constitutional questions regarding the powers of the government under Section 26A of the Drugs and Cosmetics Act, 1940, and its implications on the pharmaceutical industry, public health, and fundamental rights under Articles 14 and 19(1)(g) of the Constitution.

Oxytocin, a critical drug used for maternal healthcare, was subject to a government notification issued on April 27, 2018. This notification barred private companies from manufacturing Oxytocin for domestic use, limiting production to Karnataka Antibiotics & Pharmaceuticals Ltd. (KAPL), a public sector enterprise. However, private companies were allowed to manufacture Oxytocin for export. This move was challenged in the Delhi High Court by several pharmaceutical companies, which resulted in the quashing of the notification on grounds of arbitrariness and lack of scientific justification. The Union of India then appealed before the Supreme Court.

Background of the Case

Oxytocin is an essential medicine recommended by the World Health Organization (WHO) and is included in India’s National List of Essential Medicines (NLEM). It is primarily used to induce labor and prevent postpartum hemorrhage in pregnant women, a leading cause of maternal mortality. Given its importance in maternal healthcare, the decision to restrict its production solely to a public sector company sparked widespread debate.

The government justified the ban by arguing that Oxytocin was being misused in the dairy industry, where it was allegedly administered to milch animals to artificially boost milk production. Reports suggested that such usage could have harmful effects on both animals and humans who consume the milk. To prevent such misuse, the government decided to control its distribution strictly.

Petitioner’s Arguments (Union of India)

The Union of India defended its decision by asserting that restricting Oxytocin production to a single public sector unit was in the best interest of public health and national security. The Solicitor General, appearing on behalf of the government, made the following submissions:

“The misuse of Oxytocin has been consistently deliberated upon for over 21 years, and its illegal use in the dairy industry has harmful effects on animals and humans through milk consumption.”

The government contended that multiple expert bodies, including the Drugs Technical Advisory Board (DTAB) and the Drugs Consultative Committee (DCC), had discussed the issue for years and concluded that stricter regulation was required. It cited various instances where clandestine production and distribution of Oxytocin had been reported, leading to concerns about uncontrolled usage.

The government also maintained that Section 26A of the Drugs and Cosmetics Act, 1940, granted it broad powers to regulate the manufacture, sale, and distribution of drugs in the public interest. It argued that the provision was designed precisely for situations like this, where an essential drug was being misused, thereby justifying its decision.

Respondent’s Arguments (Pharmaceutical Companies)

The private pharmaceutical companies, which had been manufacturing Oxytocin for decades, opposed the ban, arguing that it was arbitrary and violated their fundamental right to trade under Article 19(1)(g) of the Constitution. They contended:

“The impugned notification impinges on our right to trade and conduct business under Article 19(1)(g) of the Constitution. The restriction is arbitrary and lacks any scientific basis.”

They further pointed out that KAPL, the sole public sector company authorized to manufacture Oxytocin, had no prior experience in producing the drug. This, they argued, posed a significant risk to public health as any failure on the part of KAPL could lead to shortages, potentially endangering the lives of thousands of women who depend on the drug during childbirth.

The respondents also argued that the government’s data on Oxytocin misuse was inadequate to justify such a sweeping restriction. They stated that rather than banning private manufacturers, the government should focus on better regulation and enforcement of existing laws to curb illegal production and distribution.

Supreme Court’s Observations

After hearing extensive arguments from both sides, the Supreme Court recognized that the case involved complex legal and constitutional issues that required deeper scrutiny. The Court framed several critical questions:

• Whether a drug listed in the National List of Essential Medicines (NLEM) could be restricted under Section 26A of the Drugs and Cosmetics Act, 1940.
• Whether the government’s decision to limit Oxytocin production to public sector enterprises created an unconstitutional state monopoly in violation of Article 14.
• Whether there was sufficient material before the government to justify the ban.
• Whether the power exercised under Section 26A was legislative or executive in nature.
• Whether the restriction placed on private manufacturers served the intended purpose of curbing illegal use of Oxytocin.

Referral to a Larger Bench

Given the far-reaching implications of the case, the Supreme Court decided to refer the matter to a larger bench for authoritative interpretation. The Court noted:

“We are of the considered view that this is a fit case to refer the matter to a larger Bench to consider the substantial questions of law.”

The Court emphasized the need for a detailed examination of whether the government’s action complied with constitutional principles and whether alternative measures could have been taken instead of imposing a blanket ban on private manufacturers.

Implications of the Judgment

The referral to a larger bench means that the final resolution of the case will take more time. In the meantime, the status quo will be maintained, and private pharmaceutical companies may continue manufacturing Oxytocin for export while the domestic supply remains limited to KAPL.

The case is expected to set an important precedent regarding the government’s power to regulate essential drugs and the extent to which it can impose restrictions on private enterprise in the interest of public welfare. It will also clarify the interplay between the Drugs and Cosmetics Act and constitutional rights related to trade and business.

Until the larger bench delivers its ruling, the pharmaceutical industry, healthcare professionals, and policymakers will closely watch the case’s developments, as its outcome will have a significant impact on drug regulation in India.

Petitioner Name: Union of India.
Respondent Name: BGP Products Operations GmbH and Others.
Judgment By: Justice Abhay Manohar Sapre, Justice Indu Malhotra.
Place Of Incident: India.
Judgment Date: 22-08-2019.

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