"It's not that you do not have the power for carrying out the exercise, it's the manner in which you exercise it that is being questioned," the bench said after the counsel for the NPPA contended that withdrawal of the guidelines has not taken away the authority's power to fix prices.
"File an affidavit indicating framework within which prices for non-scheduled drugs are now sought to be sustained in the absence of the guidelines," it said.
The Department of Pharmaceuticals under the Ministry of Chemicals and Fertilizers had on September 19 ordered the NPPA to withdraw a guideline under the Drug (Prices Control) Order (DPCO) of 2013 that gave the pricing authority powers to cap prices of non-scheduled drugs.
The NPPA had on the basis of the May 29 guideline issued a notification on July 10 capping prices of 108 anti-diabetic and cardiovascular drugs.
Senior advocate Kapil Sibal, appearing for the Organisation of Pharma Producers of India (OPPI), said since the guidelines for the price fixation of drugs has been withdrawn, it would also affect the operation of the July 10 notification.
The OPPI has moved the court challenging the notification and seeking an order preventing the government from taking any further steps in pursuance of the same.
The NPPA submitted before the court that only some internal guidelines were withdrawn and the same would not in any way affect the July 10 notification.
The court, however, directed the authority to file an affidavit making its stand clear on the issue.
The NPPA had on July 10 brought prices of over 100 non-scheduled drugs under price control as per Paragraph 19 of DPCO 2013, which authorises it in extraordinary circumstances, if it considers necessary so to do in public interest, to fix the ceiling price or retail price of any drug for such period as it deems fit.
While bringing the drugs under price control, the NPPA had noted that it is of the considered view that there exist huge inter-brand price differences in branded-generics/off patent drugs, which is indicative of a severe market failure.