Written by Jalaj Agarwal [i] and Promita Sinha [ii] under the guidance of Mr. Sanjay Kumar [Partner & Head - Pharma & Life Sciences Practice at King Stubb & Kasiva, Advocates & Attorneys]
Final Year students, Symbiosis Law School, Pune
Disclaimer: Please note that the views expressed below represent the opinions of the article's author. The following does not necessarily represent the views of Law & Order.
As the second wave of the COVID-19 pandemic tightens its grip over the global community, India finds itself facing challenging battles in this unending war against the novel coronavirus. Being a pulmonary and respiratory tract affecting virus, COVID-19 brought with it an unprecedented demand for ‘medical oxygen’. Oxygen in air is a naturally occurring critical element for the existence of life. The same when in highly pure form and fit for human-usage is termed as ‘medical oxygen’. India, with its overall capacity to produce 7000 metric tonnes (MT) of Oxygen, still finds itself in scarcity as the World Health Organisation (WHO) estimates 15% of COVID-19 infected patients requiring medical oxygen for respiratory difficulties and silent hypoxia. From manufacturing to transportation, Governmental directives to judicial orders, this article shall highlight the measures India is taking to face the oxygen crisis as the country gasps for breath.
Manufacturing and Supply of Medical oxygen
Medical oxygen is made by separating the oxygen from other gases and impurities found in air by repeated steps of compression, filtration and purification. In India, there are broadly three sources for obtaining oxygen (i) Air separation units, (ii) Pressure swing absorption plants, and (iii) oxygen concentrators.
Some of the main oxygen manufacturers in India are Inox Air Products, Linde India, Atul Oxygen Company and all these units have stopped the production of nitrogen and argon gas and have diverted all resources for oxygen production only.
Manufacturers produce liquid oxygen of 99.5% purity and store in jumbo tankers and transport to distributors in cryogenic tankers at a specific temperature. At distributor level, a process of regasification is followed to convert the oxygen into gaseous form and fill it in jumbo and dura cylinders. These cylinders are distributed to small suppliers or hospitals.
The supply of oxygen in India is monitored by the Empowered Group II (EG II), which was formed in March 2020 under the Ministry of Home Affairs (MHA). According to it, the state governments have to appeal to the Central Government for allocation and supply of oxygen.
The MHA recently, in exercise of powers conferred under section 10(2)(1) and section 65 of the Disaster Management Act, issued an order dated 25th April, 2021, prohibiting the supply of oxygen for industrial purposes without any exceptions, thereby directing the use of liquid oxygen for medical purposes only.
Regulation of medical oxygen under Drug laws
Medical oxygen in India is regarded as a drug. The production of Oxygen 93 % USP, by a hospital or Medical Institute for their captive consumption is under Schedule K Rule 123 of Drugs and Cosmetics Rules 1945 whereby it is exempted from licensing provisions of Chapter IV and only a manufacturing license is required. Recently, the Supreme Court in the case of State of Andhra Pradesh v M/s Linde India Ltd. held that Medical oxygen IP is well within the scope of section 3(b)(i) of the Drugs and Cosmetics Act, 1940.
Medical oxygen is included as an anesthetic agent inhalation (Medical Gas) under Section 1 of Schedule I of the Drug Price (Control) Order 2013. The Drug Controller General of India is responsible for approval of licenses of specified categories of drugs, including manufacturing of medical Oxygen as per Drugs and Cosmetic Act, 1940 and Gas Cylinder Rules, 2004 under which filling, ownership, transport, and import of such gases is regulated.
Transportation of medical oxygen
The pandemic unfolded a larger crisis for the supply of oxygen – storage and transportation. In its cryogenic fluid state at -180 degree Celsius, Liquid Medical Oxygen (LMO) requires special storage facilities in cryogenic liquid cylinders, dewar or cryogenic storage tanks. The Petroleum and Explosives Safety Organisation under the Ministry of Commerce and Industry took note of the gravity of the situation and issued a circular for converting all industrial use gas cylinders to Medical Oxygen cylinders.
The Ministry of Road Transport and Highways (MoRTH) has exempted vehicles enabling supply of oxygen from the requirement of permits as per the Motor Vehicles Act, 1988 by a notification dated September 30, 2020.
Additionally, the MoRTH along with the Department of Promotion of Industry and Internal Trade under the guidance of EG-II has mapped the targeted supply of imported cryogenic tankers and LMO to areas of acute need.
Price control of Medical Oxygen under National Pharmaceutical Pricing Authority (“NPPA”)
The price of medical oxygen was never controlled, but with increased demands, shortage and hoarding of oxygen during the pandemic, the (NPPA) stepped up and capped its price.
NPPA, through its order dated 25th September capped the maximum price of liquid medical oxygen (LMO) as Rs. 15.22 per cubic meter and Oxygen inhalation (Medicinal gas) in cylinder as Rs. 25.71 per cubic meter, exclusive of GST, for a period of six months.
The NPPA recently, vide order dated 31st March 2021, further extended the maximum prices of liquid medical oxygen and oxygen inhalation (medicinal gas) in cylinder as set by its earlier order dated 25th September 2020, till 30th September 2021 or until further orders whichever is earlier to ensure availability of Medical Oxygen for COVID-19 management.
Black marketing of medical oxygen and its regulation
In order to curb hoarding and black marketing, restrictions are imposed on the buying and selling of Oxygen. The NPPA has written a letter on 18th September 2020, to all state drug controllers to be vigilant and take strong action to prevent black-marketing, hoarding and profiteering of Medical Oxygen which is a scheduled drug under Drugs (Prices Control) Order (DPCO) 2013.
Recent orders on medical oxygen by various Courts
The Supreme Court in the ongoing Suo moto case in relation to supply of oxygen, directed the central government to take immediate steps to ensure adequate supply of oxygen is provided to the state governments. On 3rd May, it further stated that the Central Government shall, in collaboration with the states, prepare a buffer stock of oxygen for emergency purposes and decentralize the location of the emergency stocks.
The High Courts of Gujarat and Madhya Pradesh took suo moto cognizance of the dearth of medical oxygen and directed the Central and State governments to amplify production of liquid oxygen, re-route it for medical purposes and facilitate nation-wide transportation. Recently, the Delhi High Court rebuked the Delhi Government for delayed transportation and further, directed the Central Government to facilitate unobstructed passage and safety of tankers of oxygen. The High Court directed that non-compliance of its order would call for an action of contempt and penal action under the Disaster Management Act and the Indian Penal Code.
Import of medical oxygen
In view of the unprecedented demand for medical oxygen in the country, the government of India has taken various steps to import medical oxygen in the country.
The Government of India, through its order dated 30th April 2021 amended its foreign trade policy to allow the import of oxygen concentrators for personal use through e-commerce portals, post or courier services till 31st July 2021. Customs clearance will thus be granted for such imports by treating them on par with “gifts”. The Finance ministry also reduced the GST rate applicable on such oxygen concentrators from 28% to 12%.
The government had earlier through its order dated 28th April 2021, also allowed faster customs clearance on import of critical-care medical equipment, such as nebulisers, oxygen concentrators, oxygen canister, cryogenic cylinders and oxygen generators, for up to three months amid the unprecedented surge in COVID infections and rising number of patients requiring hospitalization.
The Ministry of Ports, Shipping and Waterways also issued an order dated 25th April 2021, directing most major ports in the country to waive off all charges for ships carrying oxygen. The charges that will be waived include vessel-related charges, storage charges and other related taxes.
The government of India has also earlier placed an order of 10,000 oxygen concentrators from the United States. Moreover, to address the shortage of oxygen tankers in the country, the Union Government has also imported 20 cryogenic tankers of 10 MT and 20 MT capacity to facilitate the transport of oxygen in the country.
Guidelines on medical oxygen manufacturing plants
The Central Drug Standard Control Organization (CDSCO) on the proposal of All India Industrial Gas Manufacturer Association (AIIGMA) on 7th April 2020 issued an order to grant license for manufacturing medical oxygen within 24 hours of receiving the application, to those who already have industrial oxygen plants established in the country.
Stepping up, the Government of India has also recently announced that it will set up 551 pressure swing adsorption oxygen generation plants inside public health facilities in the country with the PM-Cares fund.
Further the Government has also taken steps to convert Nitrogen generating plants into oxygen plants to boost the availability of oxygen in the country.
India is facing one of its worst humanitarian crisis with a depravity of medical resources. Scarcity of medical oxygen, huge deficit in its supply, and obstacles in its transportation, have rendered this crisis worse. As a gesture of reciprocity for its benevolence last year, India is receiving foreign aid in the form of cryogenic oxygen containers, concentrators and oxygen cylinders from countries such as the USA, France, Taiwan, among others.
Efforts are being taken by the Government of India and other regulatory authorities to meet the growing need of medical oxygen as a panacea in this fight against COVID-19. However, it is pertinent to take immediate and effective steps to ensure that medical oxygen can be made available to every patient in need across the country.
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