Cartel Of Doctors, Pharma Companies And Diagnostic Labs Fleecing The Patients : Madras HC Takes Suo Moto Case [Read Order]

The bench comprising Justices Kirubakaran and Velmurugan noted that in spite of the medical facilities in India being equal compared to foreign countries and being a contributor to the second largest share of pharmaceutical and biotech workforce in the world, unnecessary drugs are being prescribed by a section of medical practitioners apart from prescribing unnecessary tests, scans, x-rays etc.

In this case, M/s. Fourrts (India) Labs Pvt. Ltd., is a private company engaged in the business of manufacturing Pharmaceutical Formulations. Their products cannot be sold more than the basic price fixed by the Regulatory Authority under the Government of India. The company was selected for scrutiny for admitting a total income of Rs.14,69,29,707/- as their return for the Assessment Year 2012-2013. Further, during the course of assessment proceedings, it was noted that the Company claimed deduction for a sum of Rs. 5,45,77,209/- as Licences & Taxes and Rs.42,81,986/- towards "Sales Promotion Expenses" including payments to the doctors for promotion of Company's brands of medicine.

It was also found that the National Pharmaceutical Pricing Authority (NPPA) ordered the company to refund the excess amount collected by overcharging of prices higher than those fixed or notified by the Government and the same was challenged by the Company.

The court observed that the Medical Mafia is controlling the pharmaceutical field and they are responsible for the overpricing of drugs. " For the purpose of promoting their drugs in the Market, it is being said that the companies are giving incentives such as providing hospitality and foreign trips to the doctors who prescribe their medicines to patients without considering as to whether it is required or not,'' said the court.

While noticing that a section of doctors are receiving gifts, travel facilities, cash and other monetary benefits from pharmaceutical companies for prescribing their drugs, the Medical Council of India by virtue of notification dated 14.12.2009 inserted regulation 6.8.1 in Medical Council (Professional conduct, etiquette and ethics) Regulations, 2002 and another clause 6.8.1(b) on 01.12.2016. The said provision states that doctors shall not accept any facilities from the pharmaceutical companies and it is declared to be unethical and action would be taken against the said doctors.

The court further opined that in spite of the regulations the companies and doctors are indulging in malpractices and therefore there should be an integrated approach by the Ministry of Health and Family Welfare, Ministry of Pharmaceuticals, National Pharmaceutical Pricing Authority, Medical Council of India and the Income Tax Department to take appropriate proceedings and also the Central Government to frame statutory "Uniform Code of Pharmaceutical Practices" at the earliest.

Though the case was Tax Case Appeal filed under Section 260A of the Income Tax Act, 1961, the High Court suo motu invoked Article 226 to consider the larger issues, i.e., bribing the doctors and overpricing of drugs by Pharmaceutical Companies as they directly affect citizens by violating their rights under Article 21 of the Constitution of India.

The matter is kept on 20.01.2020.