Prajwal Suman, a student at National Law University Odisha, India, and Richa Pushpam, a student at Banaras Hindu University in Varanasi, India, discuss the measures to cap the price of N95 Masks during the ongoing pandemic...
“In the pandemic economy, face masks are like bars of gold. Hoarders are hoarding them. Governors are bartering for them. Hospital workers desperately need them.” – Michael Schulman
The N95 mask is very important armor in battling the COVID-19 pandemic. Instances of hoarding and black marketing of masks are rising in India. Healthcare personnel risk their lives in times of crisis, and come out as sentinels of the nation, while being deprived of adequate protective gear. The government claims to have been consistent but only few sincere measures have been taken to address this issue.
We discuss the course of action adopted by the Bombay High Court (HC) and Central Government with the price capping of N95 masks in light of instances of hoarding and black marketing of N95 masks and the recently filed Public Interest Litigation (PIL) before Bombay HC. We also discuss whether price capping is the best choice.
The Ministry of Consumer Affairs included the masks (2-ply, 3-ply, surgical & N95 masks) and sanitizers in the Schedule to the Essential Commodities Act, 1955, (hereinafter referred to as the EC Act) invoking Section 2A (2) of the same Act vide order dated March 13, 2020. It also directed states to ensure the prevention of hoarding, black marketing, and profiteering in selling essential commodities. Further, the retail prices of 2-ply and 3-ply masks were capped at Rs.8 per piece and Rs.10 per piece respectively. However, the price of N95 masks was left untouched.
Further, the Ministry of Chemicals and Fertilizers ordered all State Governments/ Union Territories to ensure sufficient availability of surgical and protective masks (including N95 masks) at prices which should not exceed the Maximum Retail Price of the mask, on March 13.
Standard of Mask Required and N95
N95 respirators, as the name suggests, tend to block 95% of airborne particles. They also avoid spread of micro-organisms from the user to the recipient, according to the standards set by the WHO.
N95 masks require special fit testing and are not recommended for the general public, especially for people with facial hair or children. These are essential resources that should be reserved for emergency care personnel and other workers who are constantly subjected to respiratory infections in the workplace.
Availability and Black Marketing
As soon as the government released advisories, businessmen, chemists, and suppliers began hoarding large amounts of N95 masks and sanitizers to sell it at much higher prices than MRP. Hoarding and black marketing of an essential commodity is punishable for a minimum of three months and a maximum of seven years under section 7(a) of the EC Act and such an offender could be detained for a maximum period of six months under section 13 of The Prevention of Black Marketing and Maintenance of Supplies of Essential Commodities Act, 1980.
The Kolkata Police conducted raids throughout the city to prevent price gouging. In Delhi, hoarding is a problem, such that healthcare workers were unable to procure N95 masks even before the initiation of lockdown.
According to the Ministry of Health of Delhi, one in every 25 patients infected with the coronavirus in Delhi is a healthcare professional, with not less than 42 doctors, hospital staff or nurses catching infection due to inadequate PPEs. The Ministry of Textiles also noted on March 18, 2020 that the Health Ministry would need more than six million N-95 masks and up to 700,000 protective coveralls until the end of May, but the scarcity of material resulted in inconsistency with the rate of supply.
The healthcare professionals sought the help of NGOs, social workers, and contributions from the public. The Petitioners’ Organizations, moved by these calls for help, sought to acquire the PPEs and N95 masks to provide them to the frontline workers, during the course of which they witnessed rampant black marketing and profiteering in N95 masks. The dearth of N95 respirators has led to a tormenting state of affairs for the frontline corona fighters in our country.
Subsequently, a PIL was filed before the Bombay High Court questioning the State of Maharashtra for its failure to ensure sufficient surgical masks and sanitizers are available at prices not exceeding the MRP of the item.
Course of Action Adopted by Bombay High Court and Central Government
Maharashtra Food and Drug Association (FDA) had sent two letters to fix the sale prices of N95 masks and PPEs while also reporting black marketing of masks in Maharashtra. Bombay HC, while hearing to the above-mentioned PIL, also sought reply from the central government on the letters sent by the State Government FDA.
On May 21, as a reply to Bombay HC, the National Pharmaceutical Pricing Authority (NPPA) issued an official memorandum directing manufacturers/importers/suppliers of N95 masks to maintain parity in prices for non-government procurements and to make available the same at reasonable rates. NPPA also advised the mask suppliers to drop prices voluntarily. A significant decrease of around 47% in the prices was reported by the Press Information Bureau.
The above action duly increased the availability of such protective gears; however, the Memorandum appeared to be full of errors. The memorandum mentions the term “reasonable prices” but fails to explain the ‘reasonable’ or ‘affordable’ prices so that a fair parity can be maintained. The memorandum is also unclear if the N95 masks are to be sold to non-government entities at the same price as the government’s bulk procurement. The NPPA should consider revising its memorandum to enhance clarity on the “reasonable” prices.
NPPA, however, expressed that price capping might “dis-incentivize domestic manufacturing” which could highly impact the current availability of N95 masks. The prices have plummeted since they released the memorandum along with a list of MRPs as submitted by the manufacturers to the Authority.
It is to be noted that Para 20 of Drug (Prices Control) Order, 2013 states that the government should ensure that the MRP should not be increased by more than ten percent of the price preceding 12 months by any manufacturer and if so happens, it should be reduced for the next 12 months to the same level of 10% of MRP. The Bombay HC ordered the NPPA to relook and pass appropriate orders within a fortnight.
Would Price Capping Help?
India is a mixed economy where prices of commodities are primarily decided by their demand and supply, but there are laws that confer a special power on the central government to interfere in the market in the interest of consumer.
The Union Government can exercise its powers under clause (c) of Section 3(2) of the EC Act, 1955 to secure availability of any essential commodity at fair prices for regulating their production, supply, and distribution thereof. The “fair” price differs from commodity to commodity which can be fixed by the Central government only and not by any court.
On March 19, 2020, the government capped the prices of alcohols used in manufacturing hand sanitizers. The Drug Price Control Order (DPCO), 2013 has also been issued under section 3 of the EC Act by the government of India to regulate the prices. Also, the retail prices of hand sanitizers were capped at Rs.100 for a 200 ml bottle. The sanitizers are available at relatively lower prices after its prices were capped.
The price capping of essential commodities such as edible oil, pulses, petroleum products, fertilizers, sanitizers, gloves, masks, etc. has enabled the central and state governments to facilitate the sale and availability of these items and carry out necessary operations against hoarders, profiteers, black marketers and those indulged in contravention of the orders prescribed by the central and state governments.
However, according to basic economics, price capping leads to shortage of the product in the market. Capping the price fixes the rate of return for the manufacturers and they might look for production of commodities without price control. Another opinion is that after the price capping, prices will decrease and therefore, the demand will rise at a high rate, eventually leading to unavailability of products. This is the same as NPPA’s opinion on price capping, which is that it may “dis-incentivize domestic manufacturing.”
Alternatives include controlling the costs of production and reduction of taxes levied on N95 masks. Promotion of more research and development is required to eradicate the existing hindrances in fighting the pandemic. Researchers in Saudi Arabia are developing more efficient N95 masks with replaceable filters and smaller pores ‘Stopdrop’, a PPE face shield developed in Tripura using readily available inexpensive materials such as compressed polyester, straps, and visors, costing only Rs.40 per piece has proven to be effective too.
Black marketing and profiteering on an essential commodity in these trying times is not only illegal, but also raise moral and ethical questions. Enhancing facilities for stricter compliance of government orders and legislation is necessary to maintain the supply of N95 masks. The outbreak is a global pandemic, but the country needs to be aware of what is being done and what more should be done.
Prajwal Suman is a BA.LLB. (Hons.) student at National Law University Odisha in India. his interests include human rights laws, criminal law, constitutional law, and international law.
Richa Pushpam is a BA.LLB.(Hons.) student at Banaras Hindu University in Varanasi, India. Her interests include polity, economics, constitutional law, and policy.
Suggested citation: Prajwal Suman and Richa Pushpam, Price Capping N95 Masks Amidst the COVID-19 Pandemic, JURIST – Student Commentary, June 22, 2020, https://www.jurist.org/commentary/2020/06/Sumam-Pushpam-Price-Capping-N95-Masks/
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