ORDER
J. Chelameswar, J.
1. The present writ petition is filed with the prayer as follows:
“…….pleased to pass an order or order or writ more particularly one in the nature of writ of mandamus declaring the action of the respondent in imposing the stipulation of WHO-pre-qualification certificate for participating in the tender process vide short Tender Notice No. 10/HMHIDC/Drugs Wing/ 2002-2003, dated 28-10-2002 as arbitrary, illegal and violative of the rights of the petitioner under Articles 14 and 19(1)(g) of the Constitution of India and consequently direct the respondent to consider the petitioner’s tender filed in response to Short Tender Notice No. 10/HMHIDC Drugs Wing/ 2002-2003 dated 28-10-2002 without regard to WHO-pre-qualification Certificate and pass such other order or orders as this Honourable Court deems fit and proper in the interest of justice.”
2. The first petitioner is a Company and the second petitioner is the shareholder of the first petitioner-Company. The first petitioner-company is engaged in the business of manufacture and sale of vaccines and drugs. The company’s registered office is at Hyderabad and its manufacturing unit is at Turkapally Village, Shameerpet Mandal, Ranga Reddy District. The first petitioner-Company has a manufacturing capacity of 100 million doses of Hepatitis Vaccine. It is stated in the affidavit filed in support of the writ petition that the first petitioner-Company commenced its commercial production in the year 1998. It is further asserted in the affidavit that the first petitioner-Company has all the necessary licences and permits to carry on the activity of manufacture and safe of various vaccines and drugs as required under the law of land.
3. The first respondent is a State owned Corporation. The second respondent is the State of Andhra Pradesh. Third respondent who got himself impleaded in the present writ petition is trade rival of the first petitioner, which is also manufacturing Hepatitis-B Vaccine.
4. It appears from the affidavit that the Government of Andhra Pradesh took up a programme called ‘Immunization Strengthening Progamme’ to immunize the citizens of the State from Hepatitis-B by administering a vaccine called Hepatitis-B Vaccine. A philanthropic organisation known as Bill and Melinda Gates Foundation contributed an amount of Rs. 50.65 crores and the Government of Andhra Pradesh is committed to contribute an amount of Rs. 18.67 crores over a period of five years, commencing from 2001. It appears that the said project was launched in six districts of State of Andhra Pradesh during the month of November, 2001. Those six districts are Anantapur, Kurnool, Cuddapah, Chittoor, Mahaboobnagar and Guntur.
5. For implementing the above mentioned programme, the Government of Andhra Pradesh requires the vaccine and therefore the first respondent issued a paper notification on 30-10-2002 calling for tenders for the supply of Hepatitis-B Vaccine. The terms of the said tender notification are not relevant for the present purpose, except Condition No. 1 which reads as follows:
“The A.P. Health and Medical Housing and Infrastructure Development Corporation is inviting tenders for supply of Hepatitis B Vaccine from Primary manufactures in India with WHO pre-qualification only”
6. From the above condition, it is clear that the Government invited tenders for the supply of Hepatitis-B Vaccine only from the primary manufacturers in India with further condition that such primary manufacturers of vaccine should possess ‘WHO pre-qualification.’
7. The subject matter of the writ petition is only the above extracted condition No. 1 of the tender notification. The petitioner challenges the stipulation of the above mentioned condition on the ground that it is arbitrary, violative of Article 14 and also that such condition is tailor-made to benefit to only one manufacturer, i.e., third respondent herein.
8. The petitioner further asserted in the affidavit filed in support of the writ petition as follows:
“……..it is submitted that so far as the
situation in India is concerned, there are well established manufacturing facilities licensed by Government under the Drugs and Cosmetics Act, 1940, with facilities for research and testing. The standard to which the particular drug or vaccine could be manufactured are set out prescribed under the Drugs and Cosmetics Act, 1940, read with the Rules.”
9. It is further averred in the writ-affidavit that other than the petitioner and the third respondent, there are some more primary manufacturers of vaccine in question, other than the petitioner and the 3rd respondent herein. It is stated in the affidavit that four other companies, such as M/s. Glaxo, Cadila, VH Bhagat and LG which are importing and marketing the vaccine in question.
10. It is specifically averred that the impugned condition of the tender notification is intended only to benefit the third respondent herein, excluding the above referred manufacturers or suppliers of the vaccine in question, thereby creating a monopoly in favour of the third respondent.
11. The petitioner also averred that insofar as the vaccines are concerned, they are required to be tested and approved by the Central Drug Laboratory, Kasauli, Himachal Pradesh before they are released into the Indian market either for actual use or clinical trial. The fact that a particular manufacturer or supplier has “WHO Pre-qualification” will not automatically entitle such person to release the vaccine into the Indian market, unless it is approved by the Central Drug Laboratory. Therefore, the petitioner submitted that the stipulation of WHO Pre-qualification is arbitrary and without any rational basis, thereby violating Article 14.
12. Counters are filed by the respondents. The relevant averments in the counters will be referred at the appropriate place in the judgment.
13. To understand the nature and scope of the controversy, an examination of law of the land relating to the maintenance of the standards of drugs and vaccines is required. Apart from that it is also required to be examined as to what is meant by the expression ‘WHO Pre-qualification.’
14. Drugs and Cosmetics Act, 1940 is the law which regulates the import, manufacture, distribution and sale of drugs and cosmetics in this country. The main object of the Act, as it is observed by the Supreme Court in Chimanlal Jagjivindas Sheth v. State of Maharashtra is to prevent sub-standards in drugs presumably for maintaining high standards of medical treatment. The expression ‘drug’ is defined under Section 3(b) of the Act, as follows:
” ‘drug includes’ : (i) all medicines for internal or external use of human beings or animals and all substances intended to be used for or in the diagnosis, treatment, mitigation or prevention of any disease or disorder in human beings or animals, including preparations applied on human body for the purpose of repelling insects like mosquitoes;
(ii) such substances (other than food) intended to affect the structure or any function of the human body or intended to be used for the destruction of (vermin) or insects which cause disease in human beings or animals, as may be specified from time to time by the Central Government by notification in the Official Gazette;
(iii) all substances intended for use as components of a drug including empty gelatine capsules; and
(iv) such devices intended for internal or external use in the diagnosis treatment, mitigation or prevention of disease or disorder in human beings or animals, as may be specified from time to time by the Central Government by notification in the Official Gazette after consultation with the Board”.
15. An examination of the scheme of the Act discloses that it deals with the drugs falling under various medical systems called Allopathy, Homoeopathy, Ayurveda, Siddha and Unani. There cannot be a second opinion other than that a vaccine is also a ‘drug’ within the meaning of that expression as defined under the Act. It is common knowledge that vaccine is a substance administered for preventing disease.
16. For the purpose of regulating the standards of drugs, the Act contemplates establishment of the Drugs Technical Advisory Board under Section 5 of the Act, the function of which is to advice the Central and State Governments on technical matters arising out of the administration of the Act and to carry out the other functions assigned to it by the Act. Similarly a Drugs Consultative Committee is contemplated under Section 7 of the Act, the purpose of which is to advice the Central and State Governments and the Board referred to above, ‘on any matter tending to secure uniformity throughout India in the administration of this Act.’
17. It is also to be noticed that various Chapters of the above enactment deal with the various varieties of drugs separately. For the purpose of the present case we are only concerned with those provisions which deal with allopathic drugs.
18. Chapter IV of the Act deals with the manufacture for sale, selling and distribution of drugs. Section 16 stipulates that for the purpose of the said Chapter, expression ‘standard quality’ in relation to a drug means that the drug should comply with the standard set out in the second Schedule. Section 17 of the Act deals with ‘Misbranded drugs’. Section 17-A deals with ‘Adulterated drug’. Similarly Section 17-B deals with the ‘spurious drugs’.
19. Section 18 of the Act mandates that from such date as may be fixed by the State Government by notification in the Official Gazettee, no person shall manufacture for sale or for distribution or sell or stock or exhibit for sale or distribute any drug which is not of a standard quality or is misbranded, adulterated or spurious. Proviso to Section 18 also mandates that none of the above referred activities shall be carried out by a person except under and in accordance with the conditions of licence issued for such purpose under the Chapter. Section 18(b) stipulates that every person holding a licence shall keep and maintain such records, registers and other documents as may be prescribed and further mandates that such person shall furnish to any Officer or authority exercising any power or discharging any function under the Act for carrying out the purposes of this Act. Section 20 contemplates appointment of Government Analysts by the State Government as well as Central Government subject to limitations imposed under Section 20. Section 21 contemplates appointment of Inspectors by both the Governments. The powers and functions of the Inspectors are required to be prescribed by the Government appointing them by Rules. Section 22 confers certain enumerated powers on the Inspectors, which powers are required to be exercised subject to the Rules made by the Central Government and provisions of Section 23.
20. Section 27 prescribes the penalty for the manufacture, sale etc., of any drug which is adulterated or spurious or any drug used by any person for or in the diagnosis or prevention of any disease or disorder, which is likely to cause the death or is likely to cause such harm to the human body, which would amount to grievous hurt within the meaning of Section 320 IPC, punishable with imprisonment for a term which may extend up to a term of life and with fine. Analysis of the other provisions of the Chapter-IV may not be necessary for the purpose of the present case.
21. Second Schedule of the Act is relevant for the present purpose which deals with the standards to be complied with, by both the imported drugs and drugs manufactured for sale. This Schedule is referred to both in Section 8 of the Chapter-Ill (dealing with the import of drugs) and Section 16 of the Chapter-IV (which deals with the manufacture, sale and distribution of drugs). Both the provisions stipulate that standard quality for the purpose of these two Chapters is set out in the Second Schedule.
22. Entry 2 of the Second Schedule of the Act deals with the vaccines, which reads as under:
Class of drug
Standard to be complied with
1. Xxxx xxx
Xxx xxxxx
2.
Substances commonly known as Vaccines, sera, toxins, toxoids, antitoxinsand
antigens and biotagical products of like nature for human use or for veterinary
use
The
standards maintained at the International Laboratory for Bio-logical
standards, Stantans SerumInstitute, Copenhagen and at the Central VeterinaryLaboratory, Weybridge,
Surrey, UK and such other laboratories recognised by the World Health Organisation
from time to time and such further standards of strength quality and purity
as may he prescribed.
23. Rules are made by the Union of India in exercise of various powers conferred under the Act. Those rules are called Drugs and Cosmetics Rules, 1945. The Central Drug Laboratory mentioned earlier by definition under Rule 2(e) is the Laboratory for the purpose of Rules.
24. The sale of drugs other than Homoeopathic drug is regulated by Part VI of the said Rules. Rule 59 therein contemplates appointment of licensing authority for various purposes mentioned in the said part. Part VII of the Rules deals with manufacture, sale and distribution of drugs other than Homoeopathic drugs. Rule 68-A stipulates the requirement of a licence for manufacture, sale or distribution of drugs specified by the Central Government by a notification published in the Official Gazette, which is required to be taken from the Central Licence Approving Authority. Various forms of licences are prescribed for various persons who deal with drugs in various capacities such as manufacturers, dealers, stockists etc. Similarly Rule 69 deals with various forms of licences prescribed for the manufacture of various kinds of drugs. Licences insofar as manufacture of Allopathic drugs are concerned are granted either in Form 25 or 25 F. Rule 71 prescribes various conditions which are required to be satisfied before a licence under Form 25 or 25F is granted. One of the conditions is that the manufacturing activity shall be conducted under the active direction and personal supervision of competent technical staff, (whose qualifications are stipulated under the rules) and another is that the factory premises shall comply with the conditions prescribed in Schedule M.
25. Schedule M to Rules deals with good manufacturing practices. Such as the standards or safeguards to be maintained in the premises, plant and equipment. It also provides for the various stringent measures which are required to be followed by a manufacturer who seeks a licence either in Form 25 or 25F. Those stipulations deal with, the quality of the water used in the manufacturing process, appropriate arrangements for disposal of waste, health, clothing and sanitation of the workers, precautions to be taken while designing the machinery, systematic maintenance of the record of the raw materials which are used in the manufacturing process, etc., Para 9 of the Schedule M also mandates the maintenance of records as per the Schedule-U for each batch of drugs produced, and further stipulate that such records ‘provide a complete account of the manufacturing history of each batch of a drug showing that it has been manufactured, tested and analysed in accordance with manufacturing procedures and written instructions as per the master formula’. Para 16 stipulates that manufacturer must have an exclusive Quality Control Department, the duties of which are specified in the said paragraph to ensure maintenance of standards.
26. Similarly Rule 76 deals with grant of licences in Form 28 for the manufacture of drugs specified in Schedules C and C 1. Even in the case of Form 28 licences, the conditions stipulated in Schedule M are required to be complied with. Rule 74 (2) mandates the same.
27. Appropriate sanctions are provided for in the Act to deal with those persons who violate the law. Section 27 already noticed is one of them.
28. The analysis of these provisions made so far demonstrates that the law of this country is very strict in dealing with the activities of manufacture, sale etc., of the drugs. The standard quality that is required to be maintained, is the same as is maintained by the various international institutions referred in the Second Schedule.
29. Now the rationale behind the stipulation of the tender notification which required WHO Pre-qualification for intending tenderer is required to be examined. As a first step the meaning of the expression ‘WHO Pre-qualification’ is required to be found out.
30. A document titled “procedure for assessment and acceptability in principle of vaccine that produced by the United Nation Agencies” is placed before me. The following facts emerge from the examination of the said document. World Health Organisation (WHO) advises UNICEF and other agencies of the United Nations on the acceptability in principle of vaccines considered for purchase by such agencies. For the purpose of tendering advise, WHO is necessarily required to have a procedure for evaluation of the vaccines manufactured and offered for sale to the agencies of the United Nations. In fact the purpose of evaluation is described in the document as follows:
“The present document is a new revision that takes into consideration the above mentioned considerations and also includes a new policy governing pre-qualification of vaccines from manufacturers that perform only bulk filling and formulation activities.
The purpose of the assessment is to verify that the vaccines (a) meet the specifications of the relevant UN agency and (b) are produced and overseen in accord with the principles recommended by WHO, including those for Good Manufacturing Practices (GMP). This is to ensure that vaccines used in national immunization services in different countries are safe and effective and that they meet particular operational specifications for packaging and presentation”.
31. The assessment of the product even according to the said document is based on the principles described in the document in the following terms:
“Reliance on the National Regulatory Authority (NRA) of the country of manufacturer;
General understanding of the product and presentations offered, production process, quality control methods and relevance for the target population of available clinical data.
Assessment of production consistency through compliance with GMP specifications.
Random check testing of vaccines to monitor compliance with tender specifications on a continuing basis.
Monitoring of complaints from the field.
Since reliance on effective and independent quality assurance by the NRA plays a critical role in the system, WHO recommends that manufacturers (a) inform their NRA of their application for the assessment procedure (b) at the same time request the NRA to participate in the process; (c) provide the NRA with the necessary authorization to discuss the relevant files with WHO representatives.
WHO can advise UNICEF and other UN agencies whether vaccine effectively meet WHO recommended requirements only if the National Regulatory Authority of the producing country exercises independent and appropriate oversight of the vaccines in question and if the vaccines have been assessed through the procedure described in this document.
It should be noted that other vaccines that have not gone through this process may be as safe and effective as those that have actually been assessed”.
32. From the above it can be seen that even WHO places reliance on the National Regulatory Authority of the country of manufacture and it is further categorically made clear that vaccines which have not gone through the assessment process by the WHO should be as safe and effective as those that have actually been assessed. From the language of the document, it appears that such assessment is made by the WHO either at the instance of the manufacturer itself or otherwise.
33. The assessment procedure starts with the collection of data which includes information regarding the premises and equipment, the vaccine composition, production, quality control, satiability, clinical experiences etc. After the data is collected by the WHO, the same is examined by experts appointed by the WHO. The next step is that samples of the product are actually tested in the laboratory chosen by the WHO. WHO also makes an evaluation of the existing regulatory mechanism of the country of manufacture. The next step in the process of evaluation is the visit of the site where the manufacture took place. The experts committee constituted by the WHO visits the place of manufacture to examine the manufacturing process, more specifically with reference to the process of production, quality control and good manufacturing practices. After the site visit, a report is prepared by the WHO, a copy of which is required to be sent to the manufacturer as well as the National Regulatory Authority. At that stage ‘if minor adjustments need to be made by the manufacturer, WHO will postpone it’s final recommendations to UNICEF or the other UN agency involved until such adjustments have been incorporated and verified by WHO’.
34. After completion of the entire exercise described above, if the WHO is satisfied, the vaccine would be included in the list of Pre-qualification. Such assessment is undertaken at regular intervals usually every two years or at such shorter intervals if required, in situations where the pre-qualified vaccine fails to meet WHO recommended requirements and/or the specifications of the offer to bid etc.
35. From the above it can be seen that the WHO makes an assessment of the quality of the product as well as the efficiency and purity of the manufacturing process. What exactly is the criteria adopted by the WHO while making such assessment is not indicated in the document. I hasten to add that the WHO is not under any. obligation to disclose the same and also conscious of the fact that these are the internal procedures adopted by the WHO for the sake of a fair and systematic conduct of its operations and WHO is not making any law which would be amenable to the scrutiny of the Courts administering Municipal Law. The fact I wish to highlight is that nothing is brought to my notice to establish the fact that the WHO adopts any standards which are higher than the standards adopted by the Indian Law for assessing the quality of the product. The Indian law in this regard as already noticed also seeks to ensure the quality of the product by very stringent measures and standards which are adopted from the international institutions and international practices in the matter of manufacture and sale of the drugs.
36. The letter of the Indian Law in this regard takes every care to ensure avoidance of the sub-standards in the field of drugs. In fact in a letter dated 14-6-2001, Mr. John J. Gillmartin, Chief Procurement Officer, UNICEF, New Delhi addressed to the Commissioner, Family Welfare and Ex~ Officio Secretary to Government, Health, Medical and Family Welfare Department, Government of Andhra Pradesh, stating as follows:
“3….. I believe the HbV specification in India conforms with the WHO requirements.
4. What difference WHO Certificate in India versus WHO Inspection for GMP; UNICEF’s experience with pharmaceuticals and vaccines manufactured in India indicates that the GMP Certificate is issued by State authorities does not reflect high levels or consistent application of the GMP standards. We have seen some inspections which were rigorous and the certificate reflects a high level of GMP compliance. Others appear to be using a very different interpretation of the standards. The frequency of re-inspection has not been consistent, nor generally well documented. The follow up with manufacturers to correct deficiencies noted is also not consistent with good GMP compliance……”
37. The background and relevance of the letter will be discussed in the later part of the judgment. Two points are required to be noted from the above letter that even Mr. John Gillmartin opined that Hepatitis-B Vaccine specifications in India conforms with the WHO specifications. All that Mr. John Gillmartin pointed out in substance is that there is some laxity on the part of the executive in enforcing the standards stipulated by the law and that too, such laxity is not a general feature, but there are occasions where such laxity is noticed by WHO. The said observation is general in nature and does not specifically refer to any particular manufacturer.
38. It is a very sad commentary on the state of affairs in the country regarding the enforcement of law by the executive. The executive instead of rectifying the deficiencies pointed out seeks to take shelter under the above observations to justify it’s stand in stipulating the impugned condition of the tender notification.
39. It is also relevant to notice that there are only two manufacturers of the vaccine in question in the State of Andhra Pradesh. It is not very difficult for the State to cross-check the correctness of the observation of Mr. Gillmartin with reference to the two local manufacturers. Apart from the present problem the State owes such a legal obligation under the Constitution and the Drugs Act.
40. The entire thrust of the argument of the respondents 1 and 2 is that by stipulating a condition such as one challenged in the present Writ Petition, the State is only ensuring a higher quality in the commodity which is sought to be procured. It is argued by the learned Additional Advocate-General that the criteria adopted and object sought to be achieved by the adoption of such criteria being inherently rational, the same should not be interfered with by this Court in exercise of its jurisdiction under Article 226 of the Constitution. I have no doubt about the said proposition of law. But, the question is whether the criteria adopted by the State can be called a rational one. The learned Additional Advocate-General submitted that such criteria of adopting ‘WHO Pre-qualification’ is not found for the first time at the time of issuing the impugned tender notification, but in fact was adopted earlier also in the year 2001 when the State sought to procure Hepatitis B vaccine. He therefore argued that submissions made by the learned Counsel for the petitioner that the impugned stipulation is only tailor-made to benefit the third respondent is factually incorrect and legally unsustainable.
41. In the year 2001, when the Government of Andhra Pradesh wanted to procure Hepatitis B Vaccine, the Government of India, (Department of Family Welfare) guidance was sought regarding the source from which the vaccine is to be procured. By a letter dated 8-5-2001 the Secretary to the Government of India informed the Government of Andhra Pradesh that the Government of India did not have any past experience in that regard and advised the Government of Andhra Pradesh to contact Mr. Gill Martin, who is the Chief Procuring Officer of UNICEF at New Delhi for further action on the issue. In fact the relevant portion of the letter, which is filed by the Government along with the counter reads as follows:
“Kindly refer to your letter dated 25-4-2001 regarding assistance in procurement of Hepatitis B Vaccine could claim equipment and AD Syringes under the Bill and Melinda Gates Foundation Project.
During 2001-2002 HSCC is procuring the cold chain equipment for the Universal Immunization Programme. However they do not have any past experience in vaccine procurement or on procurement of AD Syringes. UNICEF has a very large base and mechanism for procurement of this item and could be contacted as they have been supplying these items to more than 100 countries.
I would suggest that you may like to contact Mr. Gill Maritn, Chief Procurement Officer, UNICEF, New Delhi for further action on this issue. So far as WHO approved Hepatitis B vaccine is concerned, one of the Indian manufacturers are currently approved by
WHO. The Indian manufacturers have applied to WHO for inspection which will take some more time.”
42. As a consequence, the Government of Andhra Pradesh started correspondence with Mr. Gill Martin. In one of the letters written by the Secretary to Government of Andhra Pradesh dated 9-6-2001 the Government sought certain information from Mr. Gill Martin in the context of the procurement of Hepatitis B Vaccine. The relevant portion of the letter reads as under:
“Thank you for sending the signed MOUs promptly. Regarding the comments on the domestic vaccine issue for Hepatitis B Vaccine, I request you to kindly furnish the information on the following issues for facilitating the Government of Andhra Pradesh to take a decision.
1. What are the pre-requisites/ qualifications that a vaccine manufacturing company must have, if the Vaccine is to be procured by UNICEF for use in EPI/UIP.
2. What are the technical clearances if any the company needs to possess for supply of vaccine to UNICEF for EPI use.
3. Are there any differences in composition/ specifications between the Hepatitis-B vaccine when marketed domestically and when marketed internationally.
4. What is the difference between WHO GMP issued by Drug Controller of India and inspection by WHO for review of manufacturers for GMP mentioned in your letter.
5. Are there any companies in India manufacturing Hepatitis-B Vaccine which meet all the pre-requisites/requirements for procurement of Hepatitis-B Vaccine by UNICEF for use in EPI/UIP.
6. What is the cost difference of Hepatitis-B Vaccine if procured locally and if procured internationally.”
43. One thing that is required to be noticed from the above referred letter is that at that point of time, the Government of Andhra Pradesh was also conscious of the fact that there could be a cost difference in the procurement of the vaccine in question depending upon the fact whether the same is procured from the local manufacturer or international manufacturer.
44. In response to the above mentioned letter, Mr. Gill Martin wrote to the Government of Andhra Pradesh on 14-6-2001 which is already referred to earlier. In this context, it is necessary to extract the entire letter:
“Dear Dr. Sawhney,
Thank you for your fax received 11.06.2001 requesting information on vaccine procurement. The following is an interim reply as some points will need further consultation.
1. Qualifications for vaccine supply through UNICEF: Most Vaccine UNICEF buys is supplied by export from one country to another, i.e., it moves in international trade. Suppliers in this market are required to comply with a WHO qualification process for supply to UN Agencies. UNICEF is the major vaccine supply agency in the UN and provides funding for WHO to carry out qualification services. They include licence review, clinical data review, assessment of the National Control Authority and National Laboratory and finally assessment of the manufacturer’s GMP. Occasionally, UNICEF buys a domestically made vaccine for domestic consumption OPV made in India is the largest example of this type. In this case, the manufacturers in India were reviewed by WHO for GMP compliance. This was done to reassure the large number of donors, the World Bank and the GOI who collectively were investing about Rs. 200 crore annually, that the quality of OPV used for eradication met high standards for safety and effectiveness.
2. Technical clearance a company requires: Essentially, the supplier need to demonstrate that it is selling a fully licensed product, meeting all national vaccine requirements, meeting the WHO technical requirement for that vaccine in EPI use and confirming to WHO Good Manufacturing Procedures (what is generally referred to as ‘WHO GMP’).
3. Differences between domestic marketed and International HbV: there are several specifications for HbV in use in different countries: plasma derived, recombinant, pediatric and adults strength levels vary among countries. UNICEF refers evaluation of a specific vaccine to WHO to confirm that it conforms with the WHO HbV requirements. In the case of a domestic HbV Vaccine for domestic use, the national licence and regulatory authority determine acceptability within that country. UNICEF would consult with WHO to advise if there were significant differences between the nationally licensed vaccine and the international specifications. I believe the HbV specification in India conforms with the WHO requirements.
4. What difference WHO certificate in India versus WHO Inspection for GMP: UNICEF’s experience with pharmaceuticals and vaccines manufactures in India indicates that the GMP certificate is issued by State authorities does not reflect high levels or consistent application of the GMP standards. We have seen some inspections which were rigorous and the certificate reflects a high level of GMP compliance. Others appear to be using a very different interpretation of the standards. The frequency of re-inspection has not been consistent, nor generally well documented. The follow up with manufacturers to correct deficiencies noted is also not consistent with good GMP compliance. That was the basis for requesting WHO to provide additional inspection services. These are always conducted with national inspection authorities to assure that consistent interpretation of the standard are applied regardless of the location of the supplier. The findings of the WHO inspection team are discussed and shared with the manufacturer and national inspectorate. WHO provide GMP experts with extensive international experience and the observations are clarified before departure so that all parties understand the findings, the recommendations if any. Most manufacturers and inspectors find the process a valuable professional audit by well qualified professionals. Generally it offers an opportunity to further improve the vaccine.
5. Suppliers in India Meeting WHO requirements: This question is being referred to WHO. I believe there are or will be several in the next months. There is an on going assessment in process and the results should be available before year end.
6. Cost difference: A good question. The domestically made vaccine when approved generally is less costly than imported. The domestic vaccine would be purchased in local currency and delivery to project locations would be included in the price. Domestic vaccine will not require import clearance and transport from the international airport to the project sites. Domestic HbV will be required to meet the same VVM requirement applied for international supply. If you wish UNICEF can tender from the domestic product now to secure prices while the approval process is being completed. If domestic vaccine is not less costly then UNICEF would supply the lower cost option.
Recommendation: You may wish to purchase the first quarter of HbV from the international source and thus assure that you will have the vaccine you require before end September. Tendering can being in advance of the domestic approvals and then place future orders for domestic HbV after WHO has completed their evaluation.
I will write separately on the domestic AD syringe supply. We are confirming the availability of domestic AD’s at this time.”
45. The following features are required to be taken note from the above letter that Mr. Gill Martin opined at that time that domestically manufactured vaccine generally is less costly than imported. Mr. Gill Martin also informed that if the State so wished to procure the vaccine from the domestic market, the price structure could be examined to find out the cost of the vaccine. However in view of the urgency of the matter, he advised the State to purchase the vaccine from the international market as the assessment regarding the quality of the domestically manufactured vaccine had not yet been completed by the WHO.
46. In response to the above letter dated 14-6-2001, the Secretary to the Government of Andhra Pradesh wrote back to the Mr. Gill Martin, the relevant portion of the letter reads as under:
“Based on the information given in your e-mail dated 4-6-2001 and clarification given by you in your letter dated 14-6-2001, it is requested to take action to procure Hepatitis-B vaccine with a national tender for supplies to the project with the necessary technical clearances from the competent authorities subject to quality, availability and cost effectiveness. Further, since Hepatitis-B Vaccine is being introduced for the first time in EPI/UIP, it is necessary that the most stringent and highest quality standards are set for the vaccine. Hence, while procurement is to be done domestically, the standards set by UNICEF for a supplier to be pre-qualified for international bidding should be met by the domestic manufacturers.
This would include, I presume as per your letter, licence review, clinical data review, assessment of the National Control Authority and National Laboratory, assessment of the manufacturers GMP by WHO experts among others. Further it is presumed that the specifications of Hepatitis-B Vaccine will conform with the WHO requirements for UIP programme. Further, I presume that the manufacturers will have all such technical clearances needed to demonstrate for supply of vaccine to UIP as per UNICEF standards. Further I presume that it would be preferable that in keeping with the current practice in respect of polio vaccine, samples of every consignee be tested by the National Control Authority (CRI, Kasauli).
This testing could be organised either by you or us as per convenience.
I would appreciate if you could kindly confirm whether the presumptions made in para above are in order and will not lead to unduly delay and are exhaustive enough to ensure that the highest standards are set for the vaccine.
Regarding AD Syringes and cold chain equipment also, Government of AP prefers national procurement subject to availability, quality and cost effectiveness. If these are not available, procurement will have to be done from international market”.
47. After some correspondence in this regard, the Government of Andhra Pradesh took a decision to procure the vaccine in question from the international sources for the year 2001. The reason for such decision is mentioned in Para 12 of the counter affidavit filed by the State-second respondent and Paragraph 12 of the counter-affidavit reads as under:
“However, UNICEF was not able to procure Hepatitis-B Vaccine locally. As per UNICEF, ‘all three local invitees effectively offered the same prices, there was only one US cent difference between the three offers which were substantially higher than the equivalent offshore landed price. This factor plus the reality that none of the local suppliers are pre-qualified does not advance the matter in a direction that would ensure an imminent or positive outcome’. Therefore UNICEF recommended and desired that the procurement be done internationally from a pre-qualified source that would ensure a guaranteed delivery at a very competitive price. Accordingly, considering the issue of quality, guaranteed delivery, the competitive price, and WHO pre-qualification, UNICEF had procured Hepatitis-B vaccine internationally”.
48. It can be seen from the above that UNICEF advised the State Government to procure Hepatitis-B Vaccine from international sources for two reasons. First is that none of the local manufacturers had ‘WHO pre-qualification’, secondly, the difference in price offered by the three domestic manufacturers was only about one American cent, which in turn was substantially higher than the equivalent offshore landed price. In fact this assertion of the State goes against the earlier opinion of Mr. Gill Martin that domestically manufactured Vaccines generally are cheaper than the imported vaccines. For all the said reasons, both UNICEF and State Government thought that it would be better to procure the vaccine in question from the foreign sources.
49. Once again for the present year, when the State wanted to procure the Vaccine, it started enquiries to find out whether there are any WHO pre-qualified manufacturers in the country. An examination of the original files/records clearly indicates that by the date of the decision to call for tenders from primary manufacturers of India who have WHO pre-qualification, the State was aware of the fact, that there is only one manufacturer who acquired the WHO pre-qualification. In fact the respondents were in regular correspondence. Still the State went ahead with the process of calling for tenders stipulating the condition, that the tenderer should be a primary manufacturer with WHO pre-qualification.
50. It may be open for the State to prescribe such rational conditions as it thinks fit in the matter of entering into a contract for procurement of commodities. In my view the rationality of the decision, cannot be decided only on the basis of the prescription of the standard of quality of the commodity sought to be procured. It is already noticed that for the earlie year, the State had more than one criteria for identifying sources from which vaccine is to be procured. Undoubtly one of them is quality of the commodity, but the second and equally important is the cost of procurement. As already noticed from Paragraph 12 of the counter, the State was advised by the UNICEF to go for procurement from the international market for the reason that it not only ensured the quality of the material, but also worked out cheaper.
51. However, when it came to the present year, the State does not appear to have considered the question whether procurement from the domestic market would be cost effective. A factor which was considered relevant for the previous year. For the reasons best known to the State, the State ignored that consideration. The counter of the State is silent in this regard. Yet the State seeks to justify the impugned stipulation in the tender notification to be a rational one and beyond the reach of the Court’s scrutiny.
52. The only reference with regard to the cost effectiveness of the procurement in the domestic market is to be find at the Paragraph 13 of the counter, which reads as under:
“…Accordingly, APHMHIDC was addressed, vide letters dated 11-10-2002 and 21-10-2002 to procure from National manufacturers with WHO pre-qualifications at a cost less than last year’s procurement price from UNICEF APHMHIDC invited tenders for supply of Hepatitis-B Vaccine from primary manufacturers in India with WHO pre-qualification only…”
53. In the background of the above, it becomes very difficult to understand as to why the State decided to call for tenders from the primary manufacturer in India with WHO pre-qualifications. The State had definite information that only one such manufacturer exists. When State decided to procure vaccine at a price less than the cost of the imported vaccine only from the domestic manufacturers with WHO pre-qualification, the State could have straightaway negotiated with the third respondent after actually ascertaining the actual current cost of the imported vaccine. However the State did not choose to take such course of action. For some mysterious reasons, the State chose to call for tenders with the impugned condition. Therefore the allegation of the petitioner that the impugned condition is tailor-made to suit only one person, i.e., third respondent is to be accepted.
54. Nothing further is brought to the notice of this Court in this regard whether any assessment was made to find out the difference between the current cost of the imported vaccine vis-a-vis the vaccine manufactured in India. On the other hand, I am informed at the time of hearing that when the tenders are opened there is a price variation of almost 100% between the petitioner who participated in the process pursuant to the interim order in this writ petition and the third respondent, the price offered by the third respondent being higher. A premium which the third respondent obviously demands for being the only manufacturer in this country who satisfied the conditions stipulated in the tender notification.
55. But that does not solve the problem in the present case. The third respondent filed an affidavit along with certain documents indicating that the petitioner had also made an attempt in the month of July, 2001 to obtain WHO Pre-qualification, but failed. This fact is not disputed by the petitioner though the petitioner raised some objections regarding the production of the document on the ground that it is a confidential correspondence between the petitioner and WHO, the third respondent being the trade rival of the petitioner cannot be permitted to place the document on the record of the Court, without disclosing the source from which he had obtained the document.
56. In a case like the present one the larger public interest, that is the requirement of maintenance of higher standards in the health care of the society, should prevail over the private law rights of the parties. The examination of the said document discloses that the WHO made certain observations to the effect that the petitioner’s manufacturing operations did not meet the good manufacturing practices set up by the WHO. Such observation was made an year and half back. The learned Counsel for the petitioner vehemently submitted that, now the first petitioner meets all the standards set up by the WHO. In fact in the counter-affidavit filed in response to the implead petition, the writ petitioner also made an assertion that the petitioner has already initiated the process once again to obtain WHO pre-qualification.
57. From the above facts, it is clear that the third respondent definitely has the WHO pre-quaiification whereas the petitioner does not have the same as on today. Since the acquisition of the WHO pre-qualification is optional on the part of any domestic manufacturer, it is doubtful whether such a prescription could be sustained if a manufacturer who never attempted to acquire such pre-qualification ever challenges the condition such as the one impugned. For the present I do not wish to examine the said question, as the petitioner unsuccessfully attempted to acquire such pre-qualification cannot now complain that such a stipulation in the tender notification is arbitrary.
58. The state of facts inevitably lead to another question. Whether the State can take a stand that the quality of the petitioner’s product is not up to the required standard for purchase by the State, whether such a stand would be consistent with its obligations under the Drugs and Cosmetics Act and the obligations of the executive under the Constitution to administer the law.
59. The State permits the petitioner to sell its product including Hepatitis B Vaccine in open market, in fact the petitioner asserted in the affidavit filed in support of the Writ Petition as follows:
“…It is submitted that the first petitioner is a regular manufacturer and supplier to both trade and institutions which include both Central and State Governments and also to countries like Peru, Mexico, Phillipines, Moldavia and also in the process of registration and supplies to various other countries like Georgia, Ghana, Zimbabwe, Sri Lanka, Bangladesh etc.”
60. The allegation is not rebutted by any one of the respondents.
61. If the product of the petitioner is available for purchase in the open market with a certification of the State that the quality of the product is in accordance with the standard stipulated by the law of the land, I do not understand how the State can contend that the same product cannot be purchased by the State as it does not have WHO Pre-qualifications.
62. The only basis for the contention can be that, the State obviously has no faith either in the adequacy of the law dealing with the standard quality of the drugs manufactured in the country or in the standard of the implementation of such law. But the State does not disclose it’s stand in this regard.
63. But, in view of my conclusion that the legality of prescribing the condition of WHO pre-qualification cannot be decided in the present case, I shall assume for the sake of argument, that the belief of the State that a WHO pre-qualified manufacturer’s product would be of a higher standard is justified, still the State will have to explain the reasons which prompted the State to call for tenders only from the domestic manufacturers with WHO pre-qualification. For by making such a stipulation the State obviously overlooked the cost factor which even according to the State was a relevant factor in the previous year. No explanation is forthcoming from the State, to justify the stipulation to procure the material from only a domestic manufacturer with such pre-qualification. Therefore I find it difficult to accept the submission of the State that the impugned stipulation is inherently a rationale stipulation.
64. No assessment of the current price of the commodity manufactured by the WHO pre-qualified manufacturer in the international market is demonstrated to have been made.
65. For the abovementioned reasons, I am of the opinion that the impugned stipulation insofar as it invites tenders only from domestic manufacturers is arbitrary. The Writ Petition is therefore allowed to
that limited extent.