The High Court has quashed a decision by the State’s Pharmacy and Poisons Board (PPB) to cancel a pharmaceutical company’s licenses for the manufacture and distribution of 40 lifesaving medicines on claims of counterfeiting, warning that the move risked disrupting access to essential medicines in Kenya.
The court faulted the regulator for acting unlawfully and procedurally unfairly in cancelling the permits of a Kenyan firm, Galaxy Pharmaceuticals, which is locked in a Sh1.4 billion dispute with a former partner from India, India’s Prism Life Sciences Limited, over the sale of pharmaceutical products used in the treatment of various chronic illnesses, including heart diseases, atherosclerosis, and diabetes mellitus.
The court found that PPB went beyond its mandate by intervening in a commercial and trademark dispute while failing to follow due process.
‘The decision to cancel the registration of the products was marred with irregularity because the respondent ventured into the realm of the commercial courts in determining the trademarks dispute, which issue was substantially still in contention for determination at the commercial courts,’ the court said.
The ruling lifts a regulatory cloud that had effectively blocked Galaxy from trading in the affected medicines, even after laboratory tests confirmed the products met required standards.
The legal dispute started after Prism Life Sciences lodged a commercial suit seeking damages of $11. 5 million (Sh1.4 billion) from Galaxy and the PPB as compensation for profits and sales of two years covering 2023 and 2024. Galaxy filed a judicial review case against PPB.
It denied any liability and wanted damages, if any, to be apportioned to the board over alleged failure to discharge its duty as the market watchdog.
The case of Prism related to alleged breach of trust and conspiracy between Galaxy and PPB to deprive it of the ownership of its pharmaceutical products and brands.
The board quarantined the drugs following the brand infringement complaints but later cleared them for compliance, only to proceed with cancellation without giving adequate reasons or a fair hearing.
‘The respondent’s conduct was procedurally unfair, irrational and unlawful,’ the court said while ruling on the judicial review case, adding that the regulator failed to accord the company a proper opportunity to be heard before taking action.
The court further observed that the board relied on shifting and contradictory grounds to justify the cancellation, undermining the integrity of the decision-making process.
At the heart of the dispute is a long-running commercial fallout between Galaxy and Prism over rights to manufacture and distribute dozens of pharmaceutical products used to treat chronic conditions.
The row, already before the Commercial Court, involves claims of trademark ownership, alleged counterfeiting, and breach of distribution agreements.
Despite the parallel proceedings, the board moved to cancel Galaxy’s licences, citing alleged misrepresentation in the registration process.
However, the High Court ruled that such issues fell within the jurisdiction of commercial courts and not a regulatory agency.
The judge warned that the board’s actions created a ‘regulatory stalemate’ by barring Galaxy from importing its own products while allowing third parties to deal in the same medicines.
This, the court said, posed a real risk to the supply chain of essential drugs, with potential consequences for patients relying on the medicines.
Court filings show that the affected products are used to manage conditions such as heart disease, diabetes, and other chronic illnesses, making continuity of supply critical.
Galaxy had argued that the cancellation threatened its operations, jobs, and ability to meet financial obligations, while also disrupting supply to hospitals and pharmacies.
The company told the court that orders had been cancelled and patients risked missing critical medication due to the regulatory impasse.
The Board, on its part, defended its decision, saying it acted within the law and after allowing the company to respond.
It maintained that the registrations were obtained through misrepresentation and that cancellation was necessary to protect public health.
Prism also backed the regulator, alleging that Galaxy had fraudulently acquired rights to the products and distributed substandard drugs.
But the court declined to delve into the merits of those claims, stressing that judicial review is limited to assessing the legality and fairness of administrative actions.
‘The role of this court is not to determine ownership disputes but to examine the decision-making process,’ the judge stated.
She stressed that the constitutional requirement for fair administrative action includes the right to clear reasons and a hearing before adverse decisions are taken.