NESTOR PHARMACEUTICALS LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) By this common judgment, both the above writ petitions are being decided. Petitioner-M/s. Nestor Pharmaceuticals Ltd. in CW 7632/99 and petitioner - M/s. Pure Pharma Ltd. in CW 260/2000 are both aggrieved by the decision of Ministry of Health & Family Welfare, Union of India, denying them placement of trial orders for the manufacture and tableting of Oral Contraceptive Pills (OCP) on account of not having requisite manufacturing and marketing experience of two years. Placement of trial order was denied despite the requirement of two years' experience having been relaxed by a corrigendum, issued on 4th February, 1999, making new firms also eligible for trial orders, subject to their having valid drug licence and satisfactory good manufacturing practices. The challenge in both the writ petitions is to the non- placement of orders under a common tender. Common questions of fact and law arise for consideration. Hence the two writ petitions are being decided by this judgment.

(2.) The facts common to both the petitions are noted hereinafter. (i) The Ministry of Family Welfare, for the purposes of distribution of Oral Contraceptive Pills (OCP) to control the population under the national programme, distributes the OCPs through out the country. The Oral Contraceptive Pills contain two active ingredients namely Norgestrel IP and Ethinyl Estradoil IP. The above two hormones are not commercially manufactured in India. These are supplied by the United Nations Population Fund to the Union of India. Union of India has been entering into a rate contract with indigenous manufacturers holding valid licences, for the manufacture and tableting of OCPs. The manufacturer use the raw materials as supplied, through the Government of India, with excipients and convert the same into tablet/capsule form. (ii) The last rate contract expired in October, 1998. Union of India floated a fresh tender inquiry, prescribing the eligibility criteria of the manufacturer /bidder possessing two years manufacturing and marketing experience, or having been past supplier to the Union of India for the subject drug on the opening of the tender. The tenders was due for opening on 9th February, 1999. Representation was received from the prospective bidders for relaxation of the two year manufacturing and marketing experience. Government of India considered the matter and keeping in view that the essential ingredients for the manufacture and tableting of the OCP's were supplied by the Government and the process of tableting, involved mixing of the products, a corrigendum was issued on 4th February, 1999. As per the corrigendum, new firms not having two years manufacturing and marketing experience, but possessing a valid drug licence and satisfactory good manufacturing practices, were eligible for trial orders being placed. (iii) The tender opening date was also extended to 22nd February, 1999. The tenders were opened and 17 bids were received. The Tender Purchase Committee considered the offers only of the firms/bidders, who satisfied the condition of two years manufacturing and marketing experience. Accordingly, the recommendation of the Tender Purchase Committee for placement of orders, was confined only to Hindustan Latex Ltd., M/s. Indian Drugs Pharmaceuticals Ltd., M/s. Pharmasia Ltd. and M/s. Famycare Ltd. The Competent Authority considering the matter on 31st March, 1999, included five new comers possessing satisfactory good manufacturing practices in terms of the corrigendum. These were Pure Pharma Ltd, Shivalik Drugs, Targ of Drugs Ltd, Mann Pharmaceuticals, Nestor Pharmaceuticals Ltd. and Mega International. Petitioners-Pure Pharma Ltd. & Nestor Pharmaceuticals Ltd., were recommended for placement of trial order for 10 lacs cycles and 50 lacs cycles of OCP's respectively, subject to their providing performance guarantee. Trial orders were not placed pending inspection for good manufacturing practices. The inspection of plants of M/s. Nestor Pharmaceuticals and M/s. Megal International was carried out. The companies were advised to carry out certain rectifications for the deficiencies found. Necessary rectifications are claimed to have been carried out. Inspection for good manufacturing practices for the remaining firms, which could not be carried out earlier, was scheduled in the last week of July, 1999. (iv) In the month of August, 1999, representations were received from Members of Parliament cautioning against the inclusion of the new firms without experience in the manufacture of Oral Contraceptive Pills on the ground of risk to human health since OCPs were a hormone preparation. Curiously a Member of Parliament protested against the new entrants being given an opportunity to remove the deficiencies after the inspection for good manufacturing practices. It was represented that this would be grossly unfair to other suppliers whose bids were rejected at the preliminary stage. However the protest in the said representation was not continued or pressed. A communication was received from the Member of Parliament that the matter had been clarified and the Ministry may proceed as it deemed fit for procurements. A representation from another Member of Parliament was received against the waiver of the condition of two years manufacturing and marketing experience. It was urged that there was no justification for waiver, when the same was being insisted for other supplies, namely, Kit A & B by the department of Family Welfare Programme. It was urged that taking new supplier without experience, would tantamount to playing with the health of women of India. The Managing Director of IDPL, Major General V.K.Sarin, also represented against inducting new entrants in the field of OCPs. He claimed that there was already surplus capacity with the existing suppliers. The manufacturing and other facilities of new suppliers were not up to the mark. It is claimed hat the amendments in the tender conditions by the corrigendum had been made in a hurry, without any rationale and the representation of IDPL and others against the same was not considered. (v) Earlier pending inspection of the facilities and subsequently as a result of representations, the orders on bidders, such as the petitioner and other new entrants were not placed. The entire matter was reviewed, culminating in the decision of 13.12.1999 of not placing the order on new entrants. It is contended that pursuant to good manufacturing practices inspections, opportunity to remove deficiencies, could not have been given. It needed to be examined as to how with those deficiencies, as detected in good manufacturing practices inspections, could have got the licence to manufacture drugs. This also operated unfairly and in a discriminatory manner against bidders, who were rejected at preliminary stage. (vi) The Union of India also sought the advice of the Drug Controller General of India (DCGI), who opined that since it had already been considered to entertain applications from newcomers, having satisfactory level of good manufacturing practices, for placement of trial orders, he recommended the testing of the first three batches of OCP tablets produced by such manufacturers. Respondents sought clarification from the Drug Controller General of India, who noted that the concerned manufacturer/newcomers have put in place the facilities required for the manufacturer of OCP tablets, in compliance with GMP requirements. Accordingly under the Drug Manufacturing Rules, these firms could undertake the manufacture of OCP tablets. The DCGI declined to comment on whether it would be prudent to place orders on the fresh entrants or not?

(3.) It is in this background" that the Central Government considered the whole matter and decided that there was no good reason to relax the experience criteria and entrust the manufacture of OCP to newcomers. This resulted in denial of placement of trial orders on the petitioners in the two writ petitions among others. The petitioners are thus aggrieved by this decision and also seek quashing of the orders placed on the successful bidders.