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From:          The Secretary to Government

To:              The Drugs Controller, Thiruvananthapuram

 

Sir,

Sub:-                  Drug Licence to Private Hospitals – O. P. No. 3768/91 — reg.

Counter affidavit on Behalf of Kerala State Pharmacy Council/
Addl. Respondent No. 16 opposing the SLP

I, B. Vasanathakumaran, aged 52, S/o. K. Bhaskaran, Registrar, Kerala State Pharmacy Council, residing at T.C. 13/1540, Kumarapuram, Medical College P.O., Thiruvananthapuram, Kerala State, do solemnly affirm and sincerely state as follows: 

(1) I am the Registrar of Kerala State Pharmacy Council, which was impleaded as an Addl. Respondent in the above Special Leave Petition on 7.8.2000. 

(2) Kerala State Pharmacy Council is a statutory body constituted under Section 19 of the Pharmacy Act, 1948. I am representing Kerala State Pharmacy Council as its Registrar. I am competent to represent Kerala State Pharmacy Council and swear to this Counter Affidavit for and on behalf of the Kerala State Pharmacy Council. 

(3) I am quite conversant with the facts of this case. I have gone through the SLP filed by the petitioners and deny all the averments therein except to the extent those which are specifically admitted or otherwise dealt with hereunder. 

(4) It is submitted that the Petitioners have sought Special Leave to Appeal against the Judgment dated 29th September 1999 passed by the Hon'ble High Court of Kerala in O.P. 6529 of 1995-B. Kerala State Pharmacy Council was the Addl. 5th Respondent in the above Original Petition.  

(5) In the above O.P. No. 6529 of 1995-B, it is most respectfully submitted that the petitioners have not challenged any of the provisions of the Drugs and Cosmetics Act, 1940 or the Drugs and Cosmetics Rules, 1945. 

(6) In the above O.P., the Petitioners have challenged the decision of the Government in Annexure P4 dated 23.3.1995 and proceeding of the Drugs Controller of Kerala State for the strict implementation of Drug Licence for the sale of drugs in Private Hospitals. 

(7) It is pertinent to note that Annexure P4 letter, the decision of the Government to impose the Drug Licence to Private Hospitals for the sale of drugs as per the provision of the Drugs and Cosmetics Act, 1940 and Rules thereunder. 

(8) A Drug Licence is mandatory for a Private Hospital for the sale of drugs as per Section 18(c) of the Drugs and Cosmetics Act, 1940, and Rule 65 of the Drugs and Cosmetics Rules, 1945. It is submitted that almost 174 private hospitals in Kerala had already taken Drugs Licence. 

(9) Since the petitioners have not challenged any of the provisions of the Drugs and Cosmetics Act or Drugs and Cosmetics Rules in the above OP, they have no right to challenge any step taken by the Government for the strict implementation of those laws. Hence, the above SLP in liable to be dismissed in limine on this score. 

(10) According to a Constitution Bench decision of the Hon'ble Supreme Court of India reported in AIR 1963 SC 665 (Chimanlal Jagjivandas Sheth Vs. State of Maharashtra), the main object of the Drugs and Cosmetics Act, 1940 is as follows: 

"The main object of the Act is to prevent substandard in drugs, presumably for maintaining high standards of medical treatment. That would certainly be defeated if the necessary concomitants of medical or surgical treatment were allowed to be diluted; the very same evil which the Act intends to eradicate would continue to subsist."

(11) According to the decision of Supreme Court is Swantraj Vs. State of Maharashtra reported in (1975) 3 SCC 322 at page 326, the purpose of licensing is highlighted as follows: 

"The paramount purpose of regulation through licensing is, inter alia, to set in motion vigilant medical watch over the proper protection of drugs and medicines and the verification of the expiry of their life and the spuriousness of the products. If go-downs, temporary stores and depots can remain unlicensed, they escape official attention and can deteriorate into pool of dubious or deceptive drugs harmful to society. Every place where storage for sale is made must be licensed. That is the plain meaning of Section 18(c) in fulfilment of the clear purpose, the sensitive defence of the sick."

(12) It is submitted that in Annexure P5 letter dated 23.3.1995 of the Secretary to Government, Family Welfare Department, Thiruvananthapuram, it is made clear that the Government have taken a decision to impose Drug Licence to Private Hospitals also, since the private hospitals are also providing sale of drugs and they are not exempted under the provisions of the Drugs and Cosmetics Act, 1940. 

(13) Some of the Private Hospital owners want an exemption from taking out drug licence for the sale of drugs in a private hospital in order to enjoy the following benefits: 

(i) No pharmacist need be appointed thereby saving money and allowing drugs to be handled by unqualified persons. 

(ii) No sales tax need be paid for the medicines sold. 

(iii) Drugs can be sold without separate bill for drugs. 

(iv) Any drug can be sold without showing the expiry date and batch number of the drug in the bill, if any, issued to the customers. 

(v) Substandard and expired drugs can be put into the stream of medicines without the knowledge of patients intentionally, which in turn adversely affects the health and wealth of the patient. 

(vi) Any amount can be extracted from the patient towards the cost of drugs. 

(vii) 21 mandatory conditions of license as per Rule 65 of the Drugs and Cosmetics Rules, 1945 can be easily violated. 

(viii) The Drug Control Laws can be easily flouted. 

(ix) Licence fee of Rs. 80/- can be saved for every period of two years. 

(x) Need not maintain records of transaction of drugs. 

(xi) Drugs can be sold at inflated prices in an arbitrary manner. 

(xii) The date of expiry, exact price of drugs, batch No., quantity, etc., need not be revealed to the customer (patient) of the Private Hospital. 

(xiii) A Customer's right to know about the product (Drug) as per the Consumer Protection Act, 1986, can be curtailed. 

(14) It is submitted that the "sale of Drugs" in a private hospital is effected through the Drugs Store with a counter sales and indirectly by levying the cost of drugs supplied to patients through the Hospital Bills for hospitalisation charges. 

(15) The object and purpose of the Drugs and Cosmetics Act, 1940 is to regulate the import, manufacture, distribution and sale of drugs and cosmetics. The Drugs and Cosmetics Rules, 1945 being the Rules made under Drugs and Cosmetics Act have full force and effect as if they were part and parcel of the Act itself. 

(16) The sale of drugs in a private hospital is a part of their business and commercial activity. A patient has to pay for each and every service rendered by a private hospital. Hence, the predominant element of commercial activity of a private hospital establishment clearly distinguishes it from a purely service oriented Government Hospital. Hence, the mandatory requirement of taking out a licence for the sale of drugs by a private hospitals as a part of their commercial activity cannot be blamed as discriminatory. 

(17) In short, the significant distinguishing factors regarding the supply of drugs by a Government Hospital and Private Hospital are as follows: 

(i) Government Hospital supply drugs to the patients as a part of their service, without collecting its price. 

(ii) Private Hospitals sell drugs to the patients as part of their business, in a retail manner, by collecting its price as cost of drugs. 

(18) It is relevant to note that supply of drugs from Government Hospitals are monitored by the following procedure: 

(i) Purchasing of drugs are done as per recommendations of a Committee appointed by the Government. 

(ii) Supply of drugs to patients are done by qualified persons. 

(iii) Drugs are stored as per the required conditions. 

(iv) Sampling of drugs by the Drugs Control Department are done routinely to check the quality. 

(v) Officials involved are accountable for any sort of offences or lapses. 

(19) But, in a private Hospital no such measures are taken. Government can insist on quality of drugs purchased and sold only with the help of implementing the provisions of Chapter IV of the Drugs and Cosmetics Act by asking Private Hospitals to take out a Drug Licence. In fact, the control in Government sector is possible even without a Drug Licence. The framers of the law would have kept this in mind as a possible reason to exclude Government Hospitals from taking out Drug Licences. Thus, it can be seen that the supply of medicines in a Government Hospital is strictly controlled by stringent measures. 

(20) The Drugs and Cosmetics Act imposes penal and punitive measures against offenders who violate the mandatory provisions of the Act. Hence, it could be seen that the Act is made years before only with the objects cited above. A Drug Licence is a weapon of Government machinery to find out offenders in the field and to check the compliance of Drug Control Laws. 

(21) Section 18(c) of the Drugs and Cosmetics Act, 1940 requires licence for stocking/exhibiting/offering for sale or distribution of drugs. The contention that drugs stocked by medical practitioners in a private hospital for the supply to their patients do not require a licence is baseless. Licence is required for the following reasons: 

(i) A group of medical practitioners working in a hospital do not become eligible for exemption under Clause 5A of Schedule K. The hospital is an institution where there are doctors, nurses, technicians, pharmacists and nontechnical staff. It cannot be treated as a place where doctors alone are practising. Supply of drugs to patients on payment of its costs even by a doctor is a 'sale' within the definition of 'retail sale' as per Rule 2 (f) of Drugs and Cosmetics Rules, 1945. 

(ii) A Private Hospital is an establishment which come under purview of the Kerala Shops and Commercial Establishments Act, 1960. 

(iii) The Petitioners' Association is not entitled to have the rights of an individual Registered Medical Practitioner and it is not the Association which stocks medicines at the hospital. It is the owner of the hospital who stocks drugs on a large scale. As per section 18 (c) any person whosoever is found stocking drugs is bound to take out a licence for that purpose. 

(iv) Clause 5 of Schedule K of Drugs and Cosmetics Act exempts only drugs stocked by an individual doctor for giving drugs to his own patients strictly subject to the following conditions: 

(a) He shall not keep an open shop;  

(b) No sale across the counter;  

(c) Shall not engage in the importation, manufacture or sale of drug. 

The situation in a private hospital where several doctors are working together is entirely different as regards the sale of drugs are concerned and cannot enjoy exemption under Clause 5A.

(22) Neither the Government nor the Drugs Controller had directed any Registered Medical Practitioner to take out a Drugs Licence for the drugs stocked by him. On the other hand, it is the "hospital" which is directed to obtain a licence for the 'sale of drugs.' 

(23) "Hospital" is an institution for reception, care and medical treatment of sick or wounded as defined in the New International Webster's Comprehensive Dictionary (1999 Edition). A doctor is only a part of this institution, of course, the main part comparing to others. But, this institution (hospital) cannot be a synonym for 'collection of doctors' or 'Organisation of Doctors.' Hence, the mandatory requirement of Drug Licence for a pharmacy in a private hospital cannot be diluted by allowing an organisation of doctors in hospital to stock and sell medicines as they like. 

(24) The Petitioners are wrong to say that Government have not taken a decision regarding the licencing of private hospitals in Kerala. The Government decision in the respect was informed by the Secretary to Government, Health and Family Welfare Department, Kerala State as per Letter No. 23696/F1/91/H&FWD dated 8.8.1994 addressed to the Drugs Controller, Thiruvananthapuram. The true-copy of the letter No. 23696/F1/91/H&FWD dated 8.8.1994 issued by the Secretary to Government, Health and Family Welfare Department to the Drugs Controller, Thiruvananthapuram, Kerala State is produced herewith and marked as Annexure R1. 

(25) Medical Service or Professional Service where 'retail sale of drug' is involved is not hampered by taking a drug licence. In fact, the licence helps to organise the service in a scientific and disciplined manner.  

(26) Compliance of regulatory provisions are checked by Inspectors from Drugs Control Department. The power of Drug Inspectors to inspect without provisions to secure compliance have no meaning. Hence, licensing is a must and it is only a regulatory measure in tune with the prevalent provisions of the Drugs and Cosmetics Act and Rules. 

(27) The role of Pharmacist in dispensing the drugs cannot be replaced by a doctor, especially in private hospitals where variety of drugs are stocked in large quantities. 

(28) The word drug has its origin from the Greek word "Pharmakon" and Pharmacist is the person who deals with drugs and it is essential that a hospital shall employ a Pharmacist. No one has ever seen a Registered Medical Practitioner dispensing drugs in the pharmacy of a Hospital. It is the duty of the Pharmacist. The claim of the petitioners that they do dispensing is far from reality. The role of Pharmacist as the competent person in health care is emphasised by World Health Organisation.

(29) Doctor as an integral part of medical care is concerned with diagnosis and treatment of patients. They can do this only with the help of nurses, Lab Technicians and Pharmacists. Hence, a hospital is an institution, which employs all such personnel, and the supply of drugs by a Pharmacist from the hospital is a part of their service. Hence, no claim can be made that Doctors alone are rendering medical service. The fear of doctors that presence of Pharmacists will create a situation where doctors are supervised by paramedical personnel is unfounded and there is no reason to exempt a hospital to take out a drug licence. It may be noted that Pharmacists are the competent persons to deal with drugs as per the provisions of the Pharmacy Act, 1948. 

(30) There is a practice of charging heavily for the drugs sold to patients in private hospitals without issuing separate bills for drugs. Charging heavily for drugs is violation of the Drugs Price Control Order, 1995 framed by Government of India as per provisions in the Essential Commodities Act, 1955. By not taking a Drug Licence, Private Hospitals are issuing bills which do not contain the price of individual drugs. Thus, they cheat their customers and make unlawful gain. 

(31) National Pharmaceutical Authority, Union of India, has recently found that Private Hospitals/Nursing Homes operating in Delhi have been charging exorbitant price towards the medicines administered to the patients during their hospitalisation treatment by issuing consolidated bills for professional services and medicines. Therefore, National Pharmaceutical Pricing Authority has requested the State Governments to conduct an investigation into the prevalent practice of Private Hospitals regarding the purchase, stock, sale of drugs and their billing system. A true copy of the letter dated 13.9.1999 issued by the National Pharmaceutical Pricing Authority to the State Drugs Controller, is produced herewith and marked as Annexure R2. 

(32) The plea that all conditions of license are to the complied with by a hospital make it clear that there is nothing wrong in taking a licence for the purpose, if the situation warrant so. But, one of the conditions of license is to issue cash/credit memo to the patient. This is not done in most of the hospitals and this is what the doctors and the owners of the Private Hospitals are afraid of by taking a Drug Licence.  

(33) It is relevant to note that the hospitals that come under the class, "by charity or voluntary subscription" in Clause 5A of Schedule K, was revoked with effect from 14.11.1994 as per Gazette Notification No. GSR 812 (E). This was solely due to the 'sale of drugs' in those hospitals. Law do not exempt Private Hospitals' right from the beginning. The privilege given to a Medical Practitioner under Clause 5A of Schedule K cannot be given to an owner of a private hospital where there is 'sale of drugs.' The job of procuring drugs, managing and running a pharmacy in a hospital is not the job of Doctors, and such acts are the job of Pharmacist, who only can effectively do this by complying with the provisions of Chapter IV of the Act. Neither the Doctor nor the Pharmacists in a private hospital are exempted from the provisions of Clause 5A of Schedule K. 

(34) As regards the supply of medicine for inpatient or outpatient in a private hospital, whenever its price is levied from patients, there is incidence of retail sale as defined in Rule 2(f) of the Drugs and Cosmetics Rules, 1945. 

(35) Public Health, Sanitation, Hospital and Dispensaries are State subjects that come under Entry 6 of List II of the Constitution of India and it is the prerogative of the State to impose the rule of the land to safeguard the health of its people. What is done in some other States is not the concern of Kerala State. 

(36) In most of the developing countries, the job of dispensing drugs are entrusted to graduate pharmacist while in India it is only up to the level of Pharmacists holding D. Pharm. Newer and newer potent drugs having interactions formulated with special technology for administration are being introduced extensively. Service of a highly competent pharmacist have become a necessity. Government and Pharmacy Council of India are seriously considering the change of minimum qualification of Pharmacists as B. Pharm. In this context allowing dispensing of drugs in hospitals by unqualified hands of staff of hospital would lead to serious health hazards in Kerala. Drugs Licence requires the service of a qualified Pharmacist. Hence, implementation of provisions of Chapter IV of the Drugs and Cosmetics Act will help a lot in improving the health status of our nation. 

(37) In the decision reported in AIR 1996 SC 929 (Common Cause vs. Union of India and Others) the Hon'ble Supreme Court had given a direction that all Blood Banks in the country shall obtain licence and legal measure be instituted against offenders. The argument that collection of blood to save the life do not require licence was rejected in view of threats posed by AIDS, Hepatitis, etc. Similarly, licence to private hospitals is the only measure to control the quality. Quality also depends on its proper storage. In several hospitals the situation is that drugs requiring cold storage are kept at room temperature and vice versa. This is because of the handling of drugs by unqualified people. By implementing the provisions of the Drugs and Cosmetics Act, such storage of drugs, monitoring of date expired drugs, etc., could be effectively dealt with. Hence Drug Licence in a private hospital is a must and Pharmacists ought to be appointed as per conditions of licence to properly dispense drugs to patients. The findings of the Hon'ble High Court of Kerala in this regard reflects public interest. 

(38) All drugs have a profit margin of 15%. Hence supply of drugs also ensures a profit to the hospital which in turn makes hospital a profit oriented business than a service oriented one. Thus, the status of a Private Hospital is different from that of a Government Hospital as regards 'the sale of drugs' is concerned. 

(39) Hospitals are not owned by Doctors in all cases. Nobody objects their participation in management, but the position of a doctor in management is different from that of his position as a doctor. Hence implementation of Drug Licence in Hospitals do not in no way affect the professional practice of a doctor. 

(40) The claim that the Act is insisted now only is not correct. On the other hand the hospitals are not ready to abide by the Act even after 60 years of this enactment. If we trace to the history of Act, it could be seen that the Drugs and Cosmetics Act was enacted because of the flow of misbranded, adulterated and spurious drugs to our country and also due to its awesome methods of handling. The Act at its root aim to achieve the object of controlling the quality of drugs manufactured in India, imported and sold in India. Also the Pharmacy Act was enacted to control the profession of Pharmacy in India. If the plea of the petitioners are accepted our country will be going back to the situation that existed in 17th and 18th century and private hospitals will be flooded with spurious drugs. A licence under Drugs and Cosmetics Act could only save the country. Not alone that, when all the developing countries are upgrading the requirements of health safety by prescribing strict measures like scrutiny of prescription by Pharmacists before dispensing. The granting of exemption from taking out a Drug Licence to private hospitals will totally put the health of the citizen in India in jeopardy. 

(41) The exchequer of the Government has suffered substantially for the last 60 years due to the non-implementation of the Drugs and Cosmetics Act in the country. The Audit report of the Accountant General of Kerala actually opened the eye of the Government to consider the matter seriously and thus the Government took decision to implement the Act by insisting Drug License in our State. Later on, based upon the report of the Accountant General the Public Accounts Committee of the State Legislature recommended for implementation of licences in Private Hospitals. This is in the right perspective. As doctors rendering service to the public through their profession, they ought to cooperate with Government in this matter so as to upgrade the health status of the State and in the best interest of protecting revenue to our country. 

(42) The different organisations of Pharmacists have made this application as it is a grave matter affecting the very existence of the profession in our country. The service of the Post Graduates, Graduates and Diploma holders in Pharmacy cannot be ignored in private hospitals at the whims of certain doctors. The consequences of not implementing the Drugs Licence in private hospitals would be an irreparable damage done not to the Pharmacists alone but to the people of our nation. The wealth of a nation is the health of its people and we the pharmacists, humbly pray that but for the sheer benefit of hospitals, the important factor like health of the people shall not be gambled. For a better tomorrow it would be worthwhile to place every citizen of India equally before law whether he be a doctor, Engineer, or a layman, at least in the matter of health. 

(43) In Kerala, an average of Rs. 40 crores worth drugs are procured by Government alone. Almost an equivalent quantity of drugs are being distributed from Private Hospitals also, i.e., nearly 50% of the States requirement. While Government are empowered to monitor drugs procured by them the drugs procured in Private Hospitals is not subjected to the same due to difficulty posed by the lack of implementation of Drug Licence. Also Government is loosing tax revenue. 

(44) The profession and practice of pharmacy cannot be replaced by the profession of medical practitioners. 

(45) The significant role of qualified pharmacist as per the provision of the Drugs and Cosmetics Act, 1940 and the Drugs and Cosmetics Rules, 1945 and the Pharmacy Act, 1948 cannot be subterfuged in any indirect manner. 

(46) The profession of Pharmacists is shaped and designed by the above said Acts and Rules solely in the public interest to avoid all possible unfair trade practice from the part of persons interested in the commercial lial. 

(47) From the Customer's point of view that is to say, when a patient is purely a customer as in the case of private hospitals, the patient has a right to be informed about the quantity, quality, potency, purity and the price of goods. Section 6 (b) of the Consumer Protection Act, 1986 guarantees this right. 

(48) Exploitation of consumers of private hospitals can be checked by the Government, in the larger interest of the public, only by implementing the mandatory provisions for taking a Drug Licence. 

(49) Sale of Drugs by a Doctor is against the medical ethics formulated by the authorities.

Para-wise reply to the SLP

(50) The Petitioners' averment regarding the proportionate coverage of private hospitals in dispensing medicine is true. According to them the Private Hospitals occupy 80% of the field. This itself, signifies the relevance of taking the drug licence in Private Hospitals. Because there is incidence of sale of drugs in every Private Hospital irrespective of its size. 

(51) In the second para of the synopsis, the Petitioners' averments that the Private Hospitals are not at all indulging in the sale of medicines is not at all correct. Every Private Hospital charges the cost of medicine supplied to its patient. It is relevant to note that the Private Hospitals stock drugs in large quantities, maintain a Pharmacy Unit and sell the drugs to its patients and the cost of drugs are levied from the patients through Composite Hospital Bills. It is submitted that even for stocking of drugs in Private Hospital it requires a licence as per Section 18(c) of the Drugs and Cosmetics Act, 1940. The decision of the Hon'ble Supreme Court in (Swantraj & others Vs. State of Maharashtra) 1975, 3 SCC 322 reiterates this point. 

(52) The averments in para (3) of the synopsis is with the respect the working condition of the Pharmacist. The working condition of the Pharmacist as per the Labour Laws cannot be blamed as a reason for wiping out the Pharmacist from the Pharmacy in Private Hospitals. The financial burden in appointing the Pharmacist is only a lame excuse. Financial burden cannot be taken as a ground to stultify the mandatory provision of the law. A qualified pharmacist is must in a Pharmacy as per Section 42 of the Pharmacy Act, 1948. 

(53) The Petitioners' averments in para (4) of the synopsis that the Petitioners' have no knowledge about the implementation of Drugs Control Act and Rules in other States is not correct. The Drugs Control Laws are strictly implemented in other States. The following rulings of the Hon'ble Supreme Court are the concrete proof of the implementation of Rules in other States:

(i) AIR 1963, SC 665: Chimanlal Jagjivandas Sheth Vs. State of Maharashtra.
(ii) 1974, 4 SCC 209: S. K. Amir Vs. State of Maharashtra.
(iii) (1975) 3 SCC 322: Swantaraj & others Vs. State of Maharashtra. 

(54) The allegations that the implementation of Drugs Control Rules had effected the degradation of the hospital pharmacy is totally baseless. In fact for the proper maintenance of the hospital pharmacy and drug store strict observance of the Drugs Control laws have to be ensured through the licensing system as per the statutes. The Petitioners have deliberately suppressed the facts regarding the incidence of sale of drugs in private hospital and levying the cost of drugs with composite bills towards hospitalisation charge, professional charges and cost of drugs. 

(55) The averments of the petitioners regarding the rigours and restrictions of the Drug Control Laws are baseless. The Petitioners' plea that the petitioners may be exempted from taking Drug Licence in order to avoid the harassment of the Drug Inspectors is not sustainable in law. There was no harassment from the part of the Drug Inspectors in any manner. A Drug Inspector can inspect the premises wherever the drugs are stocked or supplied or has reason to believe that an offence under the Act is committed. There is absolutely no prohibition that the Drug Inspector should inspect only the licensed the premises. Since licence is essential for stocking of medicine in a private hospital as per the statute, the plea that they need exemption from taking out Drug License for sale of drugs is not sustainable in law. 

(56) The Petitioners' averments in the 6th paragraph of the synopsis that there is no sale of medicine in the private hospital is totally false. For each and every item of drug administered to a patient, its cost is levied from the patients through bills issued for hospitalisation charges. 

(57) Moreover, the averments in para (6) are misleading. Nothing is said about the management of private hospital by employing doctors, pharmacists, etc. A private hospital is purely a commercial venture where doctors, nurses and pharmacists and other required staff are appointed. Under a private hospital's management a doctor cannot assume the role of the pharmacist. The role of pharmacist is confined to a pharmacy in regard to the dispensation of the drugs as per the prescription made by the doctors. Hence, there is absolutely no scope for a supervision by the pharmacist over the prescription of medicine by doctors. 

(58) As per the Medical Council Ethical Rules Medical Practitioners are totally prohibited from running a medical shop and engage in the sale of drugs. 

(59) In the column of list of dates, Section 33(2) (q) of the Drugs and Cosmetics Act is misinterpreted. There is no Section as 33 (q) in the above said Act.  

(60) The Petitioners' averment that there has been no instructions from the Drugs Control Department for taking out the Drug Licence by the private hospitals for the last decades is totally incorrect. Already 174 private hospitals in Kerala State had taken Drugs Licence 

(61) The 1st Petitioner, Qualified Medical Practitioners' Association has published a Journal of Medical Science, in which there is a report regarding the insistence for drug licence from the part of the Drugs Control Department. The true copy of the first paragraph reported in page No. 139 of the Qualified Medical Practitioners Association's QPMPA Journal of Medical Sciences, Volume XIV, No. 4 dated April 2000 is extracted below for quick reference:

"In 1974 the Drugs Controller issued an order asking all Private Hospitals and Nursing Homes to obtain Drugs Licence to dispense medicines at such places. The QPMPA could then help withdraw that order. In 1988 the same order was again repeated. (Ref.: History of QPMPA — QPMPA.JMS 1995:9;45)."

This report reveals that the Drugs Controller has been insisting for taking the Drugs Licence even from 1974.  

(62) The Petitioners' plea that the Government have not taken a decision in the matter of licensing of private hospitals in Kerala is totally false. The decision in this respect was already taken by the Government on 8.8.1994 as per Annexure R1 letter. The Drugs and Cosmetics Act, 1940 was implemented in Travancore-Cochin area on 1.12.1953 as per Notification No. HL-3577/52 II D dated 19.11.1953 published by the Government in the Travancore -Cochin Gazette dated 24.11.1953. For Malabar area, the Drugs and Cosmetics Act, 1940 and the Drugs and Cosmetics Rules, 1945 came into force with effect from 1.4.1947 as per the Fort St. George Gazette Notification dated 11.3.1947. 

(63) The Petitioners' averments that the dispensation of medicine is an integral part of treatment and that it is a professional activity of medical practitioners is a misleading statement. Because the petitioners have overlooked the relevant aspects of incidence of sale of drugs in a private hospital by the Hospital Management. In other words, the Hospital Owners are the persons who purchase the drugs and sell the drugs to the patients. The doctor simply prescribes the drugs. Hence, the Medical Practitioners need not worry about the duty of the Private Hospital Management to take a Drug Licence in a Private Hospital. 

(64) The Petitioners' plea that there is no counter sale in a private hospital is totally false. There will be Pharmacy Unit and a Drugs Store in Private Hospitals from which the drugs prescribed by the doctors are taken out or distributed to patient as per the doctors' prescription. Therefore, there is absolutely no meaning in saying that there is no counter sale in a private hospital. 

(65) The Petitioners' plea that only the essential emergency medicine alone are stocked in a private hospital is not correct. 

(66) It is relevant to note that the medical practitioners resist the insistence of Drug Licence for the private hospital for the sale of drugs as if they are the 'owners' of private hospitals. The status that of an 'owner of a private hospital' and that of 'a medical practitioner' in a private hospital are entirely different. 

(67) The vested commercial interests of the owners of the private hospitals have to be differentiated from the rights of the individual medical practitioner. If the doctors join as a group and form a private limited company for running a hospital, then their status as the 'owners' of the private hospital is the relevant factor to consider the issue of the incidence of sale of drugs in a private hospital. 

(68) The owners of a Private Hospital while doing a commercial activity under the guise of Medical Practitioners cannot claim any exemption provided for A Medical Practitioner by misinterpreting the term 'Medical Practitioner' by using it as a synonym for "Hospital." 

(69) It is respectfully submitted that the questions of law raised in the above Special Leave Petition do not relate to constitutional validity of a statute, or the interpretation of any statute. Therefore, in the strict legal sense, they are not at all substantial questions of law. 

(70) The question whether Circular of the Drugs Controller directing the private hospitals in the State of Kerala to take out a licence under Section 18 of the Drugs and Cosmetics Act, 1940 is arbitrary, illegal and violative of Article 14 of the Constitution of India needs no answer since none of the provisions, either in the Drugs and Cosmetics Act or the Drugs and Cosmetics Rules were challenged in the Writ Petition filed in the High Court as O.P. No. 6529 of 1995. Since annexure P3 circular was issued as per Section 18 of the Drugs and Cosmetics Act, there is nothing illegal, arbitrary or violative of Article 14 of the Constitution. 

(71) The Question of law No. 2 in the above SLP regarding the validity of Clause V and V (A) of Schedule K of the Drugs and Cosmetics Rules, 1945 was not raised in O.P. No. 6529/1995 before the High Court of Kerala. Hence, a new plea cannot be setup in the above Special Leave Petition. 

(72) Question of law No. 3 in the above SLP is purely a question of fact. The questions of law Nos. 4, 5, 6 and 7 have no relevancy since there is no challenge against the relevant statute. 

(73) Regarding the Question of law No. 8 in the above SLP, it is submitted that the Medical Council Act, 1956 is not related to Drugs and Cosmetics laws in any manner. 

(74) The Petitioners' plea that Government have not taken a decision in the matter of licencing of private hospitals in Kerala is totally false. The decision in this respect already taken by the Government of Kerala on 8.8.1994. Annexure. 

(75) No Drug Inspector had harassed any doctor in any manner. On the other hand many owners of the private hospitals had obstructed the Drug Inspectors from doing their official duty. 

(76) By not entering the details of drugs like Batch No., Manufacturing, Expiry Date, etc. in the bills issued by private hospitals, the patient is denied the opportunity to know what they have purchased. This is against the established principle of natural justice. A licence is also a measure to check the clandestine deals of private hospitals and to effect transparency in this respect, in the interest of public safety. 

(77) For the reasons stated above, it is most humbly submitted that the above Special Leave Petition may be dismissed with costs. 

(78) I state the annexures accompanying the Counter Affidavit are true copies of their respective originals. I state that the contents of para 1 to 78 herein are true and correct to my knowledge and belief. Since additional grounds were urged in the Special Leave Petition with an application for permission for the same, proper reply statements are incorporated herein in addition to the facts pleaded in the Court below.

Verification

Verified at Thiruvananthapuram on this the 13th day of September 2000 that the contents of my above affidavit are true and correct to the best of my knowledge and belief.

Sd/- Deponent -B. Vasantha Kumaran

Solemnly affirmed and signed before me by the deponent whom I know personally, on this, the 13th day of September, 2000 at my Office at Thiruvananthapuram, Kerala State.

Sd/- S. V. Rajan, Advocate

Certificate

Since additional grounds were urged in the Special Leave Petition (Civil) No. 5203 of 2000 by the Petitioners with an application for permission for the same, proper pleadings in reply to additional grounds are incorporated in the accompanying affidavit in addition to the facts pleaded in the Court below.

C. N. Sree Kumar, Advocate on Record

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I, Dr. O. Baby, son of late M. Kochumman, President, Qualified Private Medical Practitioners' Association, Chempakasseril Hospital, Ettumanoor - 686631, Kerala, now at New Delhi do hereby solemnly affirm and state as under: 

1. That I am the President of Petitioner No. 1 and in the said capacity, I am conversant with the facts of the case and I am authorised to swear this Affidavit on behalf of Petitioner No. 1 as well as its Individual Members.

2. I have perused the Counter Affidavit filed on behalf of Kerala State Pharmacy Council and having understood the contents thereof, I deny each and every allegation/averment made therein save and except what is specifically admitted by me hereinafter. I reiterate each and every averment in the Special Leave Petition.

3. At the outset, I humbly state that the Kerala State Pharmacy Council has got itself impleaded as a party Respondent to the Petition before the High Court as well as before the Hon'ble Supreme Court in order to advance its self-interest. They have no locus to be heard on the issue raised by the Petitioner, namely, the impugned Circular infringing the fundamental rights of the Petitioners and the same being arbitrary apart from the fact that the Medical Practitioners working in Private Hospitals, Clinics, and Nursing Homes are being discriminated in the matter of regulation.

4. I further submit that the Kerala State Pharmacy Council has joined as party to the above proceedings with the sole intention to espouse the cause of the unemployed Pharmacists. This position is so manifest from the fact that through the Counsel for the State Council another Application for intervention was filed on behalf of the Confederation of Organisations of Pharmacists in Kerala. Both the Pharmacy Council and the Pharmacists have a vested interest in continuance of the impugned Circular. They under the guise of espousing public cause are in fact advocating their own self-interest, as they are the immediate beneficiaries if the impugned Circular is sustained.

Para-wise reply:

1 to 3. With reference to paragraphs 1, 2 and 3, I say that the Respondent No. 16 be put to strict proof of the contents of these paragraphs.

4–9. With reference to paragraphs 4, 5, 6, 7, 8 and 9, I reiterate that the Petitioners have challenged the issuance of the impugned Circular inasmuch as the said action was arbitrary, discriminatory and violative of the Fundamental Right of the Qualified Medical Practitioners. To that extent, they have challenged the vires of the provisions, which purportedly give powers to the Drugs Controller to pass the impugned Circular and also the provisions, which discriminate them vis-à-vis Government hospitals in the matter of regulation.

Further, the action of the Drugs Controller was erroneous inasmuch as he proceeded in the matter on the wrongful assumption that Private Hospitals are indulging in sale of drugs to the patients who are under treatment of the Medical Practitioners working in those Hospitals. I deny that the Petitioners have not in effect, challenged the vires of the relevant provisions of the Act and Rules. A specific plea was taken to the effect that there is no intelligible differentia to classify and treat Private Hospitals different from Hospitals owned by Government and Local Bodies and such differential treatment is discriminatory, impinging on the Fundamental Right of the Medical Practitioners who are working in Private Health Care Sector.

10. With reference to paragraph 10, I say that the Hon'ble Supreme Court has held that the Act in question is to prevent substandard drugs being supplied to the general public. No spurious or substandard drug would find its way into the supply channel without the support of the Drugs Controller and his Officers and Pharmacists. The Act gives enough powers to the Drugs Controller and his Officers to ensure that substandard drugs are not manufactured, distributed and marketed. If the Drugs Controller keeps proper vigil at the level of manufacturing, distribution and marketing, there is no basis whatsoever for the apprehension that spurious and substandard drugs would reach the public. If proper care is taken and the powers under the Act are exercised impartially, the safety of the public from spurious and substandard medicine is guaranteed. The move to license the Private Hospitals is totally unwarranted, misdirected and the same is not based on any relevant considerations.

11. With reference to paragraph 11, I say that the said judgment also emphasised that the Officers empowered under the said Act ought to be vigilant in order to ensure that no substandard and spurious medicine is made available to the public. The said judgment specifically mentions that the place where medicine is stored for sale must be licensed. The said judgment nowhere says that the Hospital Pharmacies ought to be licensed.

12. With reference to paragraph 12, I say that the Government has taken a decision to impose License on Private Hospitals on an erroneous assumption that these Hospitals are indulging in sale of drugs.

13. With reference to paragraph 13, I deny the contents thereof as incorrect. The Petitioners state that they have enjoyed the exemption all along and there is no ground to treat the Medical Practitioners working in a Hospital differently from the Medical Practitioners practising medicine individually. No Private Sector Hospital would let any unqualified person to handle the drugs. Private Hospitals have a vested interest to protect their reputation and good name. The Medical Practitioner is responsible and accountable for the dispensation of medicine also. There is no question of nonpayment of Sales Tax. The medicines are procured by paying Sales Tax and since the medicines are not sold, there is no question of charging Sales Tax from the patients and giving it to the Government. As stated above, the drugs are never sold; drugs are dispensed as part of the treatment. No responsible Medical Practitioner would sell substandard medicines to his patients if he were to survive in his profession. The Hospitals are maintaining records of their procurements, which are open to statutory verification by the Drug Inspectors. In any case, these allegations can be equally made against Medical Practitioners who are doing individual practice and they are enjoying exemption. I say that there is absolutely no merit in this wild and baseless allegation.

14–16. With reference to paragraphs 14, 15 and 16, I deny the contents thereof as incorrect. In Hospitals, like the place of practising of a Medical Practitioner, has a place to store medicines, which is called Pharmacy. The medicines stored there are dispensed to the patients against prescriptions of Qualified Medical Practitioners who are working there either to cure or prevent the disease and/or for follow-up. No Counter Sale of medicines takes place there. No commercial activity is being run in a Hospital. A Hospital has various facilities, which would, in turn help the Medical Practitioners to practice medicine effectively. The medicines are dispensed as part of a Medical Practice and drugs are never sold to the patients.

17. With reference to paragraph 17, I say that the distinction sought to be drawn between the Private Hospitals and the Public Hospitals is an artificial one. It is true that in Government Hospitals, drugs may be given free of cost to the patients but the cost of the said medicine has already been extracted from the people either in the form of Taxes and Duties. The Government never gives anything free of cost. The question to be asked and answered is whether the dispensation of medicine in Public Hospital is different from dispensation of medicine in Private Hospital. Can it be said that dispensation of medicine in Public Hospital is not sale since no price is to be paid for the same? If the dispensation of medicine from Government Hospital is not sale, the dispensation of medicine from the Private Hospital could not also be said to be a sale.

18. With reference to paragraph 18, I say that the procedure mentioned for procuring medicines is mutatis mutandis applicable in the case of procurement of medicine by the Private Hospitals. As per the Rules, a Private Hospital can procure medicine only from the Authorised and Licensed Dealers against Purchase Order written and signed by a Registered Medical Practitioner, which need to be preserved for 2 years. If qualified persons do supply of medicine in Government Hospitals, persons more qualified do the supply of medicines in Private Hospitals. Most of the Medical Practitioners in Private Sector are highly qualified compared to the Medical Practitioners in Government Hospitals. The medicine stored in Private Hospitals is liable to be tested by the Drug Inspectors and the Medical Practitioners in Private Hospitals are also accountable for any sort of lapses.

19. With reference to paragraph 19, I deny that no quality control measures are taken in a Private Hospital. The only source for drugs for the Private Hospitals is the authorised and licensed medical stores, which are supposed to store and sell only quality drugs. If the Pharmacists working there in the medical stores or with the wholesalers and the Drugs Controller do their duty properly, no spurious drugs would reach the Hospitals. The need of the hour is that the Pharmacists who are the members of the Council, presently employed in Drug Manufacturing Units and with the Wholesalers and Retailers, should sincerely discharge their duties. The Drugs Controller should stringently exercise his power conferred under the Act and the Rules. The people of the State or the country do not believe that there is control in Government Hospitals nor does there even exist a myth regarding that. The public perception and the public experience are quite contrary to that. Nobody would question the role of the Private Health Care Sector in Kerala in achieving superior Health Care Indicator compared to the national average, while the Government's contribution is almost negligible in this area. It is the Private Sector, which has contributed substantially, and significantly to achieve this position and the Health Care Sector in Kerala is becoming comparable to Health Indicator existing in developed countries. The bogey of spurious drugs has been raised to achieve the hidden agenda, i.e., to compel these Hospitals to employ Pharmacists, without realising that such a course would make these small and medium Hospitals unviable and that would give a setback to the achievements made so far. If spread of spurious drugs were the real reason for asking Private Hospitals to take Licenses, it would be equally important to insist the Government Hospitals and the individual Medical practitioners also to take Licenses. These groups are dispensing considerable drugs to the public. The assertion of the Pharmacists that supply of medicines to Government Hospitals is controlled by stringent measures is without any basis and just kidding.

20. With reference to paragraph 20, as submitted earlier, even without Licenses, the Private Health Care Sector is well within the purview of the Act and the Rules and they are also equally accountable for any act of omission and commission on their part. It is not the case that Government cannot take any action against an offender from the Private Sector for want of Licences. The said contention is totally erroneous and misconceived.

21. With reference to paragraph 21, I deny the contents thereof as incorrect. It is only a qualified Medical Practitioner who is authorised to practice medicine and the paramedical staff working in the Hospitals cannot and do not practice medicine as contended by the Council. It is a fallacy to contend that Hospitals are meant only to supply medicines to patients and Doctors' profession is to supply medicines. As submitted earlier, supply of medicines is only a part of the treatment and the Doctors' job is to investigate, test, diagnose and treat the patients. It is a Professional activity and not a Commercial activity simply because the said Professional activity involves dispensation of medicine. The fact of whether the Hospital is covered under the purview of Kerala Shops and Commercial Establishments Act, is not at all material to decide whether the practice of medicine which is being carried out under the roof of the hospital is a Professional activity or not. It is equally fallacious to contend in the teeth of the legal dicta that singular includes plural, that Medical Practitioners cannot claim their right conferred to the Medical Practitioner. In Kerala, 95% of the Private Hospitals are owned and run by Medical Practitioners only. The drugs stored are meant to be dispensed to their patients only and therefore, they do not indulge in sale across the counter nor do they engage in importation, manufacture or sale of drugs. The Medical Practitioners do exactly the same practice as an individual Practitioner does in this regard and, therefore, the Medical Practitioners working in Hospitals, Clinics, and Nursing Homes are equally entitled to exemption under Schedule K of the Drugs and Cosmetics Act.

22. With reference to paragraph 22, I say that the stand of the Drugs Controller is totally misconceived and his insistence that the Private Hospitals should obtain the License is on a totally erroneous and legally untenable assumption that they are indulging in sale of drugs.

23. With reference to paragraph 23, I say that a Hospital provides all the facilities for treating patients and the treatment is always being rendered by the qualified Medical Practitioners and dispensation of medicine being a necessary concomitant, it cannot be said to be a sale, and therefore, the Doctors working in a Hospital are equally entitled to the exemption.

24. With reference to paragraph 24, I reiterate that the Government's decision in this regard is based on arbitrary and extraneous considerations.

25. With reference to paragraph 25, I say that the Medical Practitioners do not sell medicines to their patients and, therefore, they should not be compelled to take licenses, which could degrade their profession.

26. With reference to paragraph 26, I say that Drug Inspectors can check compliance of Regulatory provisions. Though the Private Hospitals are not covered by Licenses, the Drug Inspectors can inspect the medicine stocks and test the samples. The Officers concerned do carry out search in Hospitals, therefore, it is wrong to contend that without License, Drugs Controller cannot exercise Regulatory powers on the Private Health Care Sector.

27. With reference to paragraph 27, I submit that the character of the functions being discharged by a Doctor as an individual Medical Practitioner will not change when he discharges the same functions in a Hospital. It is the Doctor who is responsible for the medicines dispensed against his prescription. No Hospital worthy of its name would employ unqualified hands for this purpose. After all who is a Pharmacist? As per the definition, a 'Pharmacist' is only a Matriculate with a few years' experience in dispensing medicine.

28. With reference to paragraph 28, I submit that the contents of this paragraph expose the sole motive behind issuance of the Circular. As stated above, the main objective behind the move to bring the Private Health Care Sector under the Licensing System is in order to compel them to employ Pharmacists. There is absolutely no material basis for the stands that for want of Pharmacists in the last 60 years, the Private Health Care Sector could not and are not dispensing quality drugs. The data speaks to the contrary and, as submitted earlier, the Private Health Care Sector is functioning efficiently, as is clear from the superior health indicator achieved by the State of Kerala. There are qualified persons in Hospitals who dispense medicine. If a Medical Practitioner practising individually can dispense medicine why a Medical Practitioner working in a Hospital cannot do the same function. The stand of the Pharmacy Council advocating employment of Pharmacists in Hospitals is motivated by selfish reasons but altogether imaginary and irrelevant reasons advanced by them in support of their selfish cause is wholly untenable.

29. With reference to paragraph 29, I deny that it is only the Pharmacist who is competent to deal with drugs. The Doctors are more competent to deal with drugs while practising medicine and they always derive support from the paramedical personnel working with them who are sufficiently qualified.

30. With reference to paragraph 30, I say the contents thereof are incorrect. The allegation made therein has no bearing on the question as to whether the Medical Practice in Private Hospitals involved sale of medicines or not. As stated herein above, in Hospitals Bills are raised for the treatment rendered and for all other services. What is being rendered, as the Professional Service is investigation, testing, diagnosis and treatment? The dispensation of medicine is part of treatment, and, therefore, the question of selling medicine and charging exorbitantly does not arise and are only wild allegations without any basis whatsoever. I strongly deny that the Doctors cheat the customers and make unlawful gains.

31. With reference to paragraph 31, I deny the contents thereof as incorrect. In Kerala, the per-capita income being lower than the National Average, there is no question of patients being overcharged. The fact that 70% of the medical care is being given by the Private Sector itself speaks for the faith the people have in this sector. In any case, whether the patients are being overcharged or not has no bearing on the cause being espoused by the Council, i.e., employment of Pharmacist, who are supposed to dispense medicine correctly and not to oversee the Billing. This is an exercise within the powers of Officers authorised by the Price Control Act.

32. With reference to paragraph 32, I submit that the question of treatment, is always accounted for and documents in support thereof are always given to the patients under the Act and Rules.

33. With reference to paragraph 33, I say that under the Act and Rules the medicines are supplied to the Hospitals against the order given in writing signed by a Medical Practitioner. There is no need or obligation for a Pharmacist to procure and store medicines.

34. With reference to paragraph 34, I deny the contents thereof as incorrect. There is no sale of medicine when the medicines are dispensed while treating the patients.

35. With reference to paragraph 35, I say that the proposed action is not in the interest of Public Health. It is an established fact that the State is unable to cater to the needs of the entire Public and they could render medical relief only to 25% of the people of the State and the 75% are deriving medical care from the Private Sector. If the Circular is implemented, the Hospital will have to employ 4–6 Pharmacists, which would render them unviable and consequently forcing them to close down such Units. When it is known that the Government cannot and do not have the infrastructure to cope with the needs of the people, the proposed action is not in the interest of public health at all. The proposed action of the Government was arbitrary, short-sighted and was done for extraneous reasons.

36. With reference to paragraph 36, I say that in the Private Sector qualified hands dispense drugs.

37. With reference to paragraph 37, I say that the averments made in the para under reply have no bearing on the issues involved in this Petition, especially in Kerala, there is no complaint in functioning of the Private Health Care Sector so far. Therefore, the apprehensions expressed have no factual basis. The apprehension is evidently made to promote the self-interest of the Council.

38. With reference to paragraph 38, I say that viability of an activity is the motivating force behind any human endeavour. The fact that the activity is economically viable is no reason to suggest that the activity is of a commercial nature. The Government Hospital may dispense medicine free of cost but as far as the Government is concerned, nothing is given free to public inasmuch as money has been already collected from the people in advance for rendering social welfare measures. The payment of cost is no relevant consideration to conclude whether the activity is of a commercial nature or not.

39. With reference to paragraph 39, I deny the contents thereof as incorrect. I deny that implementation of Drug Licenses for Hospitals do not affect the professional practice of Doctors.

40. With reference to paragraph 40, I deny the contents thereof as incorrect. I say that there is absolutely no material on record, which would justify the proposed action. It is an admitted position that the Private Health Care Sector has been functioning in this State without a Licence for the last 60 years and the State could achieve the present level of Health Indicator solely because of the Private Sector and when the Government's contribution in this area is absolutely negligible.

41. With reference to paragraph 41, I say that the Government should at least spare this sector considering the commendable contribution it has made to improve the Health Care in Kerala. This Sector should not be treated as an area from where further income can be extracted. When Government is aware of its inadequacies in the field, they should encourage this Sector so that they could reach more people and render more efficient service. The proposed action is short sighted and without appreciating the deleterious consequences if the Drug Licensing is implemented on the Private Sector.

42. With reference to paragraph 42, I say that the Council, in order to promote its selfish interest is calculatedly raising the bogey of Public Health in order to confuse the issues.

43. With reference to paragraph 43, I say the drugs, which are procured by the Hospital, are quality controlled by the Drugs Controller and the Pharmacists working in Retail and Wholesale Sector. The drugs so procured are subject to further check and tests by Drug Inspectors. Therefore, there is no merit in the contention that the drugs procured by the Private Hospitals are not subject to any control. It is surprising to see the Council shedding crocodile tears regarding the Government losing taxes heavily.

44. With reference to paragraph 44, I say that there is no question of the Medical Practitioners replacing Pharmacists. The real question here is are not the Pharmacists becoming a bit ambitious in thinking that they can take the place of Medical Practitioners?

45. With reference to paragraph 45, I say that the Medical Practitioners are qualified and licensed to practice medicine, which includes dispensation of medicine. The presence or assistance of paramedicals in treating patients is no ground to contend that Medical Practitioners cannot dispense medicine and he should always dispense medicine through a Pharmacist. The contention raised in the said paragraph cannot derive any legal sustenance from the Act and Rules.

46. With reference to paragraph 46, I say that Pharmacists are duty bound to ensure that quality medicines are supplied to Hospitals and against prescriptions of qualified Medical Practitioners only. There are various instances of Pharmacists not discharging their duty properly in Medical Shops. They do sell medicines without prescriptions from qualified Medical Practitioners. Copies of some such instances, which are proof enough to demonstrate the callousness with which the Pharmacists discharge their duty, are annexed hereto as Annexure 'A'.

47. With reference to paragraph 47, I submit that Private Hospitals are the only institutions, which are accountable under the Consumer Protection Act. As has been stated herein-above, the Private Hospitals have a vested interest in maintaining quality and delivering service, which is to the satisfaction of its patients. The Medical Practitioners are competent enough to inform the patients about the quality, quantity and purity of the medicines dispensed to them and for the said purpose they do not need to employ Pharmacists.

48. With reference to paragraph 48, I say that the public at large is aware of their rights and they would not hesitate to assert their right even without the assistance of the Government. No Hospital could survive if they over-bill the patients and render substandard medicines. The Government has enough control over the affairs of the Hospitals so as to ensure that no malpractices occur and quality medicines are dispensed. It is not at all needed to impose a Drug License on the Private Hospitals to achieve the said objective. The imposition of Drug License would only help the unemployed Pharmacists to get employment and it is in no way going to advance the Public interest.

49. With reference to paragraph 49, I say that no qualified Medical Practitioners indulge in sale of medicines. Precisely for that reason, the Government as well as the Pharmacy Council has totally erred in assuming that the Medical Practitioners are indulging in sale of medicines. The case, as advanced by the State and the Council is founded on erroneous assumption and as such this Hon'ble Court ought to quash the impugned Circular.

50. With reference to paragraph 50, I say that nobody can convincingly and confidently dispute the role of Private Health Care Sector in enhancing the Health Indicator in the State of Kerala. The role of Private Health Care System and Private Education System in the public life of Kerala is undisputed and in these two areas, Kerala is the leading State with high Social Indicators compared to the other States in the Union of India. It would be contradictory to say on the one hand that Kerala has a high Social Indicator for Good Health Care while having low income and on the other hand, to undermine the said position by stating incorrectly that, even though they have been catering to 80% of Medical Care, they are in fact, an uncontrolled sector indulging in sale of spurious and substandard drugs. I say that the bogey of sale of substandard drugs, safety of public health are being raised for extraneous considerations.

51. With reference to paragraph 51, I reiterate that there is no sale of drugs in the Hospitals. As stated above, drugs are dispensed as part of treatment. Stocking of medicines for dispensing them from the Wards, rooms, operation theatre, ICU, and other rooms only to their own patients and recovering the costs of services and medicines is no ground to conclude the said activity as sale of medicines.

52. With reference to paragraph 52, I say that the Pharmacists have no locus to be heard in the matter and this is not a proceeding in which they could assert their employment rights. The question here is whether the right of a qualified Medical Practitioner who is licensed to practice medicine, which includes his right to dispense medicines, can be curtailed and taken away by the impugned Circular. It is the case of the Petitioner that presence of Pharmacists is not a must in a Hospital for the purpose of treating patients. Pharmacists can be gainfully employed in manufacturing units and marketing outlets. If sufficient and diligent Pharmacists were appointed there would be no room for misapprehension regarding the substandard medicine reaching hospitals. The Trade Unionism of the Pharmacists is disturbing. Their presence in Hospital would vitiate the work atmosphere and, it is a fact that no private Medical Shops work in the night. The only source for the patients who fall sick and in emergency cases is the Hospitals, which work for 24 hours. This fact is evident from a News item in Indian Express dated March 6, 2000, which is annexed hereto as Annexure 'B'.

53. With reference to paragraph 53, I say that no other State, as far as the Petitioners know, impose License on Hospitals, Clinics and Nursing Homes. It is true that Licensing is imposed on manufacturing and marketing.

54. With reference to paragraph 54, I say that the implementation of Licensing would result in additional burden on the small and medium scale Hospitals, as they would have to employ 4 Pharmacists and an equal number of Salesmen. Therefore, the only beneficiaries, if this Circular is operative, are the Pharmacists and a few other persons who will have to be appointed as Salesmen. If this happens, it would financially burden these institutions and certainly there would not be any corresponding benefit to the public at large as these institutions even without the Pharmacists and Salesmen have been rendering satisfactory service to the people at large, for the last 60 years. The Pharmacists have no locus to question costs of drugs and how these are being prepared in Private Hospitals. The Government has the power and they can do the same under the Price Control Act even without imposing the license. There is no necessity of a license being imposed for this purpose.

55. With reference to paragraph 55, I say that under the Act and the Rules, the hospitals do not require license to procure and store medicines and since they do not indulge in sale of medicines across the Counter they do not need to have a license for dispensing medicines to its patients. It is true that a Drug Inspector can inspect drug stock and test the quality of the same even without a license. Therefore, imposition of license would serve no purpose except to financially burden these units and vitiate the working atmosphere as the Pharmacists would certainly ride rough shod over the qualified Medical Practitioners as their appointment would be under a statute and they would assert that they do not fall within the discipline of the Hospitals as maintained by the Private Sector.

56. With reference to paragraph 56, I reiterate that there is no sale of medicines to the patients and recovering costs of treatment and dispensation of medicines could not be termed as sale.

57. With reference to paragraph 57, I say that the source of salary or who is paying the salary of Medical Practitioners is totally irrelevant and has no bearing on the issue. For the purpose of the issue in question, what is to be looked at is the role of the Medical Practitioner. Is not the Medical Practitioner who is treating the patient or is it by the management of the Hospital? If the Medical Practitioner is treating the patients and in law he is qualified to do so, he does not need the assistance of a Pharmacist for this purpose.

58. With reference to paragraph 58, I say that the Hospitals, which dispense medicine as part of treatment and only to their patients (both inpatients and outpatients), are not indulging in sale of medicines. Therefore, Doctors who are practising there do not violate the Act and the Rules. It is true that there are big Hospitals that in addition to the Pharmacies in the Wards, Emergency rooms, Labour rooms, Operation Theatre, ICU, may have a Medical Shop in the Compound, which is mandatorily licensed and the said Medical Shop is entitled to sell medicines to the public also. But, that is not the case with the Pharmacies maintained in the Hospital, wards and emergency rooms.

59. With reference to paragraph 59, the contents thereof need no reply, as the same is a matter of record.

60. With reference to paragraph 60, I say that the Circular has created confusion in the minds of the Private Health Care fraternity. It is true that some Hospitals, in order to avoid harassment and awaiting the decision of the Petition have taken a license as a provisional measure.

61. With reference to paragraph 61, I say that under the pressure of unemployed Pharmacists, the Government has been attempting to impose License on Private Hospitals.

62. With reference to paragraph 62, I say that the Government proposal to impose License on Private Hospitals was taken in 90s only, i.e., almost 50 years after the Act in question has come into force and that too, without any material to warrant such an action.

63. With reference to paragraph 63, I say that no material has been produced to sustain the allegation made in this paragraph. As stated earlier, if the Drugs Controller does his duty properly there would occur no instance of dispensation of substandard medicines. Even without license they could verify the stock and test the samples. In fact, such exercises are going on and the Hospitals have been fully cooperating with the concerned officers. If the Pharmacists who are working in the Wholesale Depots and Retail outlets do their job properly, no substandard medicines would reach Hospitals. The Medical Practitioners would remain responsible for any malpractices to his patients whether the medicines are given from a Hospital Pharmacy or from his own Pharmacy.

64. With reference to paragraph 64, I say that in Hospitals, the place where medicines are kept can be called a Pharmacy but in no way they are Medical Shops. The medicines are stored in Wards, in Labour Rooms; medicines are stored in Operation Theatre and medicines are stored in Intensive Care Units and for treating outpatients, medicines are stored in rooms next to the Consulting Rooms. If the interpretation sought to be given by the Pharmacists are to be accepted then Pharmacists will have to be appointed in every room where medicines are stored and if this happen, obviously, the only beneficiaries are the unemployed Pharmacists as they would get as many jobs as in as many number of places where medicines are stored. The inpatients are given medicines from the Ward and most of the time they are administered, and according to the Pharmacists, this would also be treated as 'Counter Sale.'

65. With reference to paragraph 65, I say that there are around 80,000 medicinal formulations available in the market. But the Hospitals keep only about 80 to 100 formulations, which Doctors and Hospital staff can efficiently administer and dispense. They do not need Pharmacists for dispensing them to their own patients.

66. With reference to paragraph 66, I say that about 90% of the private Medical Hospitals are all owned and administered by Doctors. Assuming that the ownership is by non-doctors, even then the Medical Practice is being done only by the qualified Medical Practitioners and they remain accountable to the patients for malpractices, if any. The source from which the Medical Practitioners draw their salary is immaterial to decide whether they are discharging professional duty or doing a commercial activity.

67. With reference to paragraph 67, I say that the Council is casting expression on everybody associated with a Private Hospital, which should not be encouraged. If they have an independent right, they should assert the same in separate proceedings. As stated above, there is a vested selfish interest, which is obviously prompting the Council to stretch the reasoning to show that there is sale of medicines in Hospitals. If there is no sale of medicines in Hospitals, then there is no place for Pharmacists in Hospitals. Such a situation would not be palatable to the Council and the unemployed Pharmacists. Hence, this labours to demonstrate that there exist sale of drugs in Private Hospitals.

68. With reference to paragraph 68, I say that the Drugs Controller in his Affidavit has conceded that they did not make a proper classification while issuing the impugned Circular and in fact, there was non-application of mind. In the circumstances, they should withdraw the impugned Circular.

69. With reference to paragraph 69, I reiterate that the Petition raises substantial questions of public importance for consideration by this Hon'ble Court.

70. With reference to paragraph 70, I say that the Constitutional Validity has been raised inasmuch as a specific plea has been taken as to discriminatory effect of the impugned Circular, which is argued before the Hon'ble High Court.

71–73. With reference to paragraphs 71 to 73, I say the Questions of Law raised need to be considered by this Hon'ble Court keeping in mind the general public importance of the issues involved.

74. With reference to paragraph 74, I say that the impugned decision to impose license was motivated by extraneous considerations.

75. With reference to paragraph 75, I submit that it is interesting to note the bonhomie between Drug Inspectors and the Pharmacists. It is common knowledge that licensing in any sphere breeds corruption. The evolving culture is that of doing away with Licensing System. The Council is advocating Licensing System for selfish reasons and this Hon'ble Court ought to be through their game-plan.

76. With reference to paragraph 76, I say that the allegations made therein are no concern of the Pharmacists and the Government has adequate power to deal with such instances. In any case, the allegations made therein are wild and incorrect and have been made with a view to prejudice the mind of this Hon'ble Court. I submit that for the reasons stated above, this Hon'ble Court ought to reject the contentions raised in the Counter Affidavit as being devoid of any merit and I pray that the Petition be admitted and the resultant Appeal therefrom be allowed.

That I have read and understood the contents of the above affidavit and I say that the facts stated therein are true and correct to the best of my knowledge and belief based on the records of the case. I say that nothing herein is false and no material has been concealed therefrom.

Verified and signed at New Delhi, on this the ... day of October 2000.

 Sd/-  Deponent

Certificate

 Certified that no facts, which were not, pleaded before the Courts below have been pleaded in this Affidavit.

 Sd/-  Deponent

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