HOECHST PHARMACEUTICALS V/S C.V.S. MANIDate:- Friday, August 13, 1982Court:- High Court of DelhiJudges:- THE HONOURABLE CHIEF JUSTICE MR. PRAKASH NARAIN & THE HONOURABLE MR. JUSTICE S.S. CHADHA

The dispute really is whether respondents 1 2 and3 as above-mentioned can acting within the scope of the power conferred by the Act and the Rules compel the petitioners or the other manufacturers of drugs to either not use the brand name or trade name at all in marketing the drugs respectively produced by them or can compel manufacturers of drugs to market the drugs by giving proper name or the scientific name more prominently than the brand name or the trade name on the labels or containers. During the course of hearing the second point was not much pressed and the petitioners said that they may even comply with this mandate of the amended rules if otherwise the rules as promulgated are within the power of the rule making authority and the rules were not ultra vires the Act or the Constitution of India. But on the first point namely complete. prohibition to use the brand name or trade name the contention is that such prohibition is ultra vires the petitioners rights under Articles 13 14 and 19 of the Constitution.

It is urged that if drugs are to be sold only by their scientific names or proper names the trade may even be influenced by the commission or profit margin that each manufacturer may give to the traders chemist. He would not be bothered about the quality of the drug or its therapeutic impact. Indeed not having seen or known the patient or having any qualifications to adjudge the patient and the disease with which he is suffering he would not be in a position to judge the therapeutic impact of the make he dispense sat all. It is further contended by the petitioners that the abolition of brand names by the impugned notification is totally unrelated to the prices of the drug which are under statutory control by virtue of the drugs (Price Control)Order 1979. (13) NOVALGIN it is not disputed is produced both for oral administration and by injection. The petitioners have set out the process at some length but it is not necessary to repeat it here. It is common case that Novalgin has been marketed as such for very many years. (14) IN April 1975 the Committee on Drugs and Pharmaceutical Industry (commonly known as the Hathi Committee) presented its report to the Parliament. This report inter alia dealt with brand names and generic names. The committee noted the argument about brand names leading to better quality control and suggested that it was necessary that quality control organisations should be tightened up. It however expressed the view that very often drugs which are marketed under brand names are sold at higher prices. The committee noted that under the
In other words by purported exercise of the power conferred by Section 33 (1) in framing rules the central Government cannot impinge upon the law relating to trade mark and prevent the use of trade names or brand names. (3) That prohibition to use trade names or brand names amounts to interference in the proprietary or property rights of the petitioners who are registered users or/and proprietors of trademarks. Thus the impugned amendments amount to infringing property rights of the petitioners. (4) The impugned notification is also violative of article 14 of the Constitution inasmuch as there is no valid classification having a nexus with the objects of the Act in selecting the aforesaid5 drugs in particular and generally in banning use of trade or brand names. The action is per se arbitrary and unreasonable besides being unjust. The notification is liable to be struck down for hostile discrimination both in initially selecting 13 drugs and out of 13 only5 drugs for enforcement of the new policy. (5) The Hathi Committee had made an integrated proposal with regard to abolish of brand names of formulations and making those available at reduced prices. Inasmuch as prices are already under statutory control even the Committee?s recommendations are not being implemented which amounts to arbitrariness. (6) The impugned notification is also otherwise unreasonable and unjust inasmuch as (a) brand names are absolutely necessary to identify each drug for the consumer; (b) the formulations of the same drug by different manufacturers differ in therapeutic efficacy; (c) at present the choice is with the qualified person like a doctor to choose a specific drug; – (d) the chemist is a trader and would have a profit motive in selecting a drug and will be tempted to push a drug yielding higher margin of profit; (e) the proposal will shift the choice of the drug to a less competent person; (f) the doctor prescribes medicines not merely for the disease but for a specific person; (g) brand name means that the manufacturer is staking its reputation on the product; (h) abolition of brand name would lead to spurious drugs being brought into the market; (i) Hathi Committee took the view that abolition could be done only when certain conditions were met like after strengthening Drug Control Inspection Organisation and revising the formulary; (j) the reason of Hathi Committee for abolishing of brand name was that the drugs will become cheaper. This whole basis now disappears by equating such formulation; (k) the experience of other countries like Pakistans hows that abolition of brand names leads to spurious drugs coming into the market; (1) the argument against irrational formulation does not apply to single ingredient drug; and (m) the Drug Organisation is totally ina dequateto check sub-standard drugs which will been couraged. (15) THE rule is opposed by respondents 1 2 and 3. It has been averred that on 8/02/1974 the Ministry of petroleum and Chemicals constituted a Committee on the Drugs and Pharmaceuticals industry under the Chairmanship of shri Jaisukhial Hathi to go into various aspects relating to the drugs and pharmaceuticals industry. This Committee submitted its report to the Government in April 1975. The report contains a large number of recommendations relating to all aspects of the drugs and pharmaceuticals industry. Chapter X of the Hathi Committee report which deals with measures for providing essential drugs and common household remedies to the general public specially in rural areas contains recommendations relating to the substitution of brand names by generic names. The Committee dealt with this subject though it was not specifically referred to it asit felt that the question of substitution of brand names of the medicines marketed by the industry by generic names flows clearly from the other terms of reference such as reduction/rationahsation of prices of formulations for the consumers making the essential drugs available to the general public attainment of leadership role by the public sector promoting the growth of the Indian sector etc. The Committee was also of the view that this question was directly linked with many important facets of the industry such as drug patents irrational practice of medicine excessive use of ingredients in multi-drug formulations proliferation of such preparations and baneful influence on the medical profession etc. of medicines marketed under brand names. The hathi Committee having decided to look into this aspect constituted an expert panel of eminent medical specialists. This panel examined the question of substitution of brand names by generic names in all its details and submitted a report to the Committee which in turn examined the matter including facets such as Indianisation of brand names impact of drug prices bio-availability quality of drugs enforcement of drug control multiple ingredient preparations exports of drugs labelling difficulties impact on small scale industry patent rights distribution system acceptance by the medical profession role of distributors and pharmacists effect on the growth of pharmaceutical industry difficulties and inconvenience in the use of tongue twisting generic names etc. The committee also met representatives of the various organisation such as Indian Medical Association Organisation of the Pharmaceutical Producers of India Indian Drugs Manufacturers Association of India manufacturers organisationand members of the Development Council for Drugs and pharmaceuticals to elicit opinion on these important questions of far reaching significance. Memoranda submitted by state Governments public sector undertakings as also small-scale sector undertakings and different associations were also considered. After taking into consideration all pros and cons of the problem the Committee came to the conclusion that there was a strong case for substitution of brand names by generic names. The Committee however felt that it would not be advisable to accomplish this change immediately and suggested that brand names should be abolished in a phased manner and a beginning should be made for change over to generic names starting with single ingredient preparations of 13 drugs. The Committee also recommended that the Drugs Controller (India) should while granting permission be requested not to give recognition to brand names of new drugs and the drugs should not be allowed to be marketed under brand names when first introduced in this country. This report was considered by the Central government in March 1978 and the report was laid on the table of the Lok Sabha on 29/03/1978. In pursuance of the decision taken by the Government that brand names should be abolished in a phased manner it was decided that to start with this policy be implemented in respect of five single ingredient drugs and that no new drug should be permitted to be marketed under brand name. Draft amended rules were published on 16/08/1980. The objections and representations received were duly considered and the impugned notification was issued on 17/01/1981. The contentions of the petitioners that the impugned notification impinges upon Articles 1. 4 and 19 of the Constitution and the same is ultra vires the rule making power have not been specifically denied. The impugned notification however has been supported by contending that it was within the ambit of the rule making power. It is the respondents? case that justice and fair play requires that the impugned notification should not be struck down as otherwise it would nullify the efforts of the Government of India to encourage the marketing of 
. This makes the issue of the notification wholly arbitrary and violative of Article 14 of the Constitution. The banning of use of the trade name besides being violative of the provisions of the Trade Marks Act as noticed by us earlier is also violative of the provisions of Article 19 (l) (g) of the Constitution. This provision guarantees to every citizenthe right to practice any profession or to carry on any occupation trade or business. The factual basis for this contention on behalf of the petitioners is set out in paragraph19 Ground (k) and sub-grounds (i) to (xiv) of the petition filed by Hoechst. Similar submissions have been made in the other petitions also. There is no specific reply to these averments in the counter-affidavit. In our view brand names are absolutely essential to identify each drug to the consumer. When brand names are used the formulations of different manufacturers are made known to the consumer leaving the choice with the doctor to prescribe a particular drug manufactured by a particular party. It was said on behalf of the respondents that there is no objection to the drug being prescribed by the doctor by its generic name with the manufacturers name being indicated. If that be so it is wholly un-understandable why the brand names cannot be allowed to be used. If brand names are not allowed to be used it interferes with the right to carryon trade or business. The sale of a formulation manufactured by a particular manufacturer would be dependent upon the chemist who for monetary or other reasons may prefer to sell one durg rather than the other. The formulator would be therefore at the mercy of the chemist. The argument about high-powered marketing techniques and advertisement has no relevance in modern India. Surely it could not be the respondents intention that the Indian formulator with no multi-national connection should continue to market his goods without adopting modern marketing techniques. 
we have noticed earlier the petitioners have no objection to giving a generic name along with the trade name and even displaying the generic name more prominently than the trade name. Therefore holding that the impugned rule is bad in law we strike down the impugned portion of Rule 96 to the extent that the said five drugs included in Schedule w will be marketed only under generic or proper name Clause (B) of the impugned notification dated 17/01/1981 is held to be illegal and ultra vires of both the Act other laws and Articles 14 and 19 (l) (g) of the Constitution. The impugned amendment in Rule 96 is struck down. The respondents are further directed to amend the said notification and the maximum restriction that they can put is that the proper name of the drug will be given more prominently than the trade name as is postulated by clause 2 (b) of the impugned notification. 

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