Ceiling prices apply only to formulations specifically listed in the First Schedule of DPCO 2013.

The Petitioners, a pharmaceutical manufacturer and an association of manufacturers (IDMA), challenged the interpretation of the Drugs (Price Control) Order, 2013 (DPCO 2013) by the National Pharmaceutical Pricing Authority (NPPA).

Following the National Pharmaceutical Pricing Policy 2012, DPCO 2013 shifted price control from bulk drugs to specific formulations listed in its First Schedule, which mirrored the National List of Essential Medicines (NLEM) 2011.

The NPPA issued demand notices to the Petitioners alleging overcharging on "Sustained Release" (SR) formulations (specifically Metformin SR 500 mg), contending that since the plain "Metformin 500 mg" tablet was a scheduled formulation, the SR version was also subject to the ceiling price.

The Petitioners argued that SR/CR (Controlled Release) formulations utilize sophisticated drug delivery technology and constitute distinct formulations that are not "scheduled" unless explicitly listed.

Communications from the parent Ministry of Chemicals and Fertilizers and the Ministry of Health (2013) supported the Petitioners' view that modified-release forms were not included unless specified.

The court primarily interpreted the Drugs (Price Control) Order, 2013, specifically the definitions of "ceiling price" [Para 2(d)], "formulation" [Para 2(i)], "non-scheduled formulation" [Para 2(v)], and "scheduled formulation" [Para 2(zb)].

It applied Paragraphs 4, 11, and 14 regarding the calculation and fixation of ceiling prices for scheduled formulations and Paragraph 17 concerning the amendment of the First Schedule.

The court relied on the National Pharmaceutical Pricing Policy 2012 to establish the shift toward formulation-based pricing.

It further referenced the principle from Pfizer Ltd. & Anr. v. Union of India & Ors. (2025), which recognized distinct drug delivery systems as separate from ordinary tablets for the purpose of price control schedules.

The Court conducted a plain reading of the DPCO 2013 definitions, concluding that "scheduled formulations" are strictly those "included in the First Schedule".

The court observed that the Ministry of Chemicals and Fertilizers had historically issued separate, specific orders to include SR versions of drugs (e.g., Nifedipine) alongside their conventional counterparts, fixing different ceiling prices for each.

This practice demonstrated that distinct drug delivery systems are treated as separate formulations by the rule-making authority.

The NPPA’s argument—that any mention of a medicine/salt in the schedule covers all delivery systems—was found "unworkable" and "fallacious" because it ignored the reality that different delivery systems involve different manufacturing technologies and costs.

The court emphasized that the NPPA, as a subordinate body, could not act in defiance of the parent Ministry’s clarifications (dated 19/20.09.2013) and the Ministry of Health’s memorandum (dated 06.12.2013), which explicitly stated that modified-release forms are excluded unless specified.

The Court quashed the impugned demand notices and held that the notification dated 21.06.2013 (fixing the price for plain Metformin) could not serve as the basis for the demand notice dated 16.01.2015 regarding Metformin SR.

While acknowledging that courts generally do not interfere in price-fixing, it held that judicial intervention is necessary when an authority acts arbitrarily and contrary to the governing policy and statutory definitions.