Black markets
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This article is written by Raslin Saluja, from KIIT School of Law, Bhubaneswar. This article analyses the laws in place for the regulation of the black markets and the measures as taken by the governments in their capacity.

Introduction

With the onset of the pandemic, various industries of the country have suffered immensely. But one such sector that has been continuously in unrest, during these unprecedented times and has been tested the most, is India’s healthcare system. While the rest of the country was under lockdown, the healthcare sector with its doctors, professionals, and all the other members of the medical fraternity from nurses to staff have been on their toes day and night to serve the patients.

With thousands of people being infected at the same time, the pandemic has had a very deep impact on the uneven distribution of healthcare supplies and services. The institutional shortage of beds in the hospitals, the required equipment, medicines, and other supplies, deficiency in manpower, overworked doctors and nurses have only aggravated the problems that were already being faced. 

Thus there exists an unmatched shortage of these supplies such as medicines, oxygen cylinders, their refilling, and the beds, which in turn has led to hoarding and increased prices of the supplies with black marketing of such utilities. This has shown a new low accord of humanity where countless people are dying daily and some people have managed to make this into a profit-making opportunity for themselves. Thus, in this article, we explore how the country is dealing with this situation and suggest what can be done to further regulate it.

Mishaps due to the black marketing

While on the one hand organizations such as Hemkunt Foundation, Khalsa Aid, MissionOxygenIndia, UdayFoundation, etc have been working tirelessly and filling the gap of the demand and supply chain of these essentials that too at free or very minimal cost, many miscreants have taken the advantage of the situation into making money-making opportunities. On one hand, people have gone out of their way to help others by personally verifying and forming lists of useful helpline numbers, using social media to amplify the requests while on the other hand many have tried to cheat and extract money by unfair means. As the cases were rising, so did the demand for medical supplies and equipment.

Since many doctors were recommending getting the Remdesivir injection, all the city hospitals and medicine shops were facing an acute shortage. The situation was the same in almost all the states, just more severe in some of them. This led to various cases of hoarding and black marketing. The issue was not just limited to a few states. While people were desperate to arrange the supplies for their loved ones, the black market was thriving selling at skyrocketing prices to helpless people. According to a report by Reuters, Central Drugs Standard Control Organisation (CDSCO) which is India’s drug regulator along with several state governments expressed similar concerns for hoarding and black-marketing. In some instances, the essentials were supplied at even 10x the MRP.

Large queues of people were found in Gujarat and Madhya Pradesh in the circulating social media posts for buying the drug. Many were agitated for not getting them and blocked the roads in Indore for some time. While in another story of Hyderabad, wherein a bank clerk was infected and had to be admitted to the hospital, her family had to pay Rs 43,000 to get Remdesivir through the black market since none of the pharmacists had any stock left. 

Cases beyond count

A similar instance was observed in Indore, wherein a 45-year-old taxi driver paid Rs 60,000 to get a 30-liter oxygen cylinder for his wife, which was 3x the cost as compared to normal times. In a media report, the president of a renowned hospital in Bengaluru revealed that to meet the shortage of oxygen, they had to rely on the black market to get adequate supply for their patients. Despite informing the drug controller who made desperate attempts to arrange the required cylinders but still failed, the hospitals were then compelled to reach out to the black market.

Another case involved the arrest of Delhi’s renowned businessman who was accused of hoarding oxygen concentrators and selling them at high prices. Around 524 of such concentrators were recovered during a raid at his three restaurants located in Khan Market. Even in Surat, a duplicate Remdesivir manufacturing racket was busted where the accused had been involved in filling empty vials with glucose and salt mixed water and then applied the name stickers to make the bottles look original. The police managed to recover 3,371 vials of duplicate injection, Rs 90.27 lakh in cash, and about 63,168 empty vials from a rented farmhouse where the accused operated. 

In Maharastra’s Parbhani district, a medical store owner was arrested for selling Remdesivir’s single vial at an inflated price of Rs.6000, whereas its MRP is fixed at Rs.4800. The police had received a complaint earlier and hence they laid a trap at the said store catching the accused red-handed. While the Food and Drug Administration carried out a raid in another area of the same district and found the selling of vials without receipts, which led to the cancellation of licenses of such stores. While in certain states, private hospitals were overcharging for treatments and protective kits. 

The Kerala High Court observed that hospitals were looting the patients in the name of treatment. They found unconscionable billings and proceeded to intervene in the matter. Even similar issues and approaches were taken by the Bombay and Delhi High Courts. Thus, there are numerous such cases to which there is no end. The more one reads about it the more one understands the sad state of affairs and experiences feelings of disgust.

 

The legal regime and the need to regulate

Though the Indian legal regime has evolved over the years to match the pace of society and has faced incredible duress over the years, it still does not deal with the term ‘black marketing’ specifically. Sure certain legislations indirectly control and regulate the production, demand, and supply in the market such as The Essential Commodities Act of 1955 and the Drug and Cosmetic Act of 1940 dealing with medical devices, but they do not recognize the term black marketing explicitly. 

In the 29th Law Commission Report of 1966, there were certain suggestions made regarding incorporating offenses of socio-economic nature in the Indian Penal Code such as profiteering, black marketing, and hoarding, as a separate chapter. It also noted that the phenomenon of black marketing only occurs after the prices are first decided by the government. Following similar lines, hoarding would only happen when there is an uneven gap created between demand and supply. Similarly, provisions under the Prevention of Black-marketing and Maintenance of Supplies of Essential Commodities Act, 1980, The National Security Act of 1980 empower the central government to take required measures and order proper punishment but they still fail to provide a specific definition to black marketing.

Hoarding is defined as the act of accumulating essential goods or stocks that are for sale intending to corner them to create an artificial scarcity in the market and then raise their selling prices. This definition is in accordance with Section 2(b) of The Prevention of Hoarding and Profiteering Bill, 2010. As of the present times, very recently public interest litigation (PIL) has been filed before the Delhi High Court which led the court to issue a notice to the Union Health Ministry and Delhi Government seeking to set up fast track courts. These courts would deal exclusively with the matters of hoarding and black marketing of the medical supplies. 

Due to widespread cases of hoarding and black marketing, the Indian administration has struggled to make ends meet. There have been incidents of manufacturing and selling fake sanitizers and masks, or the creation of artificial scarcity of medical supplies and oxygen. A report stated over 300 FIRs have so far been registered regarding these instances. While a few get to the public eye, most of this news gets lost in myriad ways. The laws of the Epidemic Diseases Act, 1897 used for dealing with the pandemic, has provisions that allow the authorities to take special measures which in turn will let the government take appropriate measures to manage the demand and supply of these essential medical supplies. This Act is in line with the primary legislation that has been put to use namely the National Disaster Management Act, 2005.

Thus, it is the need of the hour, for the government both at the Central and the State level to take proactive steps in curbing these unethical practices from the market. A lot of damage has already been done but a lot of it can be prevented too. Many people have lost their lives due to the lack of these resources or their inability to pay such high prices. Appropriate orders and directions need to be issued for fixing the MRP rates of all essential medicinal supplies and equipment that are in demand. All such issues need to be identified and recognized at the market level and need to be dealt with separately in different circulars. There needs to be strict action and monitoring at the ground level. Severe penalties and punishment also need to be given under relevant acts to create a deterrent value of committing such malpractices.

Measures taken

Due to the increasing severe concerns across the nations regarding the various malpractices of hoarding and black marketing of medical supplies, various governments at the state level took it upon themselves to fight this unethical conduct.

The Centre also acted under the Disaster Management Act, 2005 to mandate medicine price regulator National Pharmaceutical Pricing Authority (NPPA) to closely supervise and regulate the price fixation of protective masks, and other supplies to keep black-marketing and hoarding in check. Following the directions, NPPA ordered all state governments and union territories to ensure necessary steps are taken to maintain sufficient availability of surgical and protective masks, hand sanitizers, and gloves at prices not higher than MRPs printed on the pack size. The respective states are also required to supervise the production and circulation chain by the relevant manufacturers, importers, and retailers to ensure no profiteering happens at any level. 

As for the Odisha government, they formed a high-level committee. A state-level committee of three members, headed by the Additional Director General of Police of the Crime Branch has the duty to strictly monitor the circulation of medical supplies in the market and take possible preventive measures to ensure the ending of this malpractice. The committee has Drugs Controller as its convenor and other such members whose rank will not be below the joint secretary of the Health and Family Welfare department. They have to keep strict scrutiny and supervision over the district-wise position of the State for the availability of these necessary supplies. They also have to ensure that regular checkups, raids and search and seizure are conducted with full coordination and cooperation from various agencies as and when required.

Pune faced an acute shortage of Remdesivir and oxygen despite receiving double the amount of doses that were required. Looking into the matter, the state health minister stated that they are planning to shut down industries that consume maximum oxygen and that the district administration would be on duty to investigate and monitor any indiscriminate drug use which is creating the disparity. They also were planning to fix the prices of the drug between Rs1100 and 1400. The hospitals were instructed to buy only the required amount and maintain a register of the patients to ensure they get their required doses. All such unused vials should be duly returned to the patient’s relative and the hospital should not hoard them. Many hospitals were also directed to provide the injections directly to the patient instead of their family members or relatives.

Even the Kerala government took cognizance of the matter and the Chairman of the State Executive Committee of the Kerala State Disaster Management Authority, the Chief Secretary issued the orders to the entities holding industrial cylinders to hand over the supplies to the District Collector, Chairman DDMA or any other person so authorized. It will be their duty to maintain the supply chain and provide the cylinders for medical use. All the middlemen involved and the end-users will have to report the stock to the government. All major medical oxygen storage facilities will have an appointed executive magistrate to supervise such distribution of supplies. For efficient management and smooth transportation, a green corridor shall be provided where quick delivery of the oxygen cylinders.

The government strictly warned that action will be taken against such malpractices happening in this critical time and the accused will be punished under the Disaster Management Act and the Kerala Epidemic Diseases Ordinance, 2020. Further action will be initiated by the DDMAs, Police, Department of Industries, Health, and PESO against those who do not comply with the orders as stated above.

The Supreme Court also formed a twelve-member task force to look after the oxygen supply across the country. The task force will assess and recommend the need and distribution of oxygen throughout India. In a recent case of Bram Health Care Private Ltd. V. Union of India, the Delhi High Court directed that all the medicinal supplies and equipment are to be sold at either MRP or below the MRP, but none above it. They also observed, considering the dire need for oxygen and the black marketing surrounding it, that it was time to fix the MRP of the oxygen concentrator and other such relevant equipment necessary for the treatment of covid. Certain other directions were issued regarding the overcharging of ambulance services and other important services.

Conclusion

Though the above mentioned were just a few instances, we see that slowly, the Courts and the respective governments have started taking necessary actions that are required to combat the evil of hoarding and black marketing. There are certainly other ways to deal with them like having contingency plans to cater to different potential demand scenarios. To continue to work closely with the suppliers in order to diversify the base. To take a more responsible role and manage panic buying. All these elements when put together with stringent monitoring and application of relevant laws will surely help in providing efficient results.

References


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