Cipla has received Government order

Cipla has received two fresh notices from the Government demanding a total of Rs 73 crore for alleged over-pricing on two drugs.

The notices, from the National Pharmaceutical Pricing Authority (NPPA), demanded Rs 47.70 crore for respiratory drug Salbutamol and Rs 25.46 crore w for antibiotic Ciprofloxacin, the company said.

These demands are contrary to the orders of the Supreme Court, and the company has received legal advice that the amounts demanded by the Government are not tenable and sustainable, the company added.

Ongoing litigation

Cipla has been litigating over the NPPA’s notices on five of its drugs, including the aforementioned two, for about 10 years now. And the over-charge amount claimed by the Government from Cipla has crossed Rs 1,000 crore.

The other drugs from Cipla under the scanner for alleged over-charging include respiratory drug Theophylline, cephalosporin-antibiotic Cefadroxil and antibiotic Norfloxacin.

Cipla has in the past challenged the inclusion of the drugs within the ambit of price control.

When the issue first came up, Cipla had contested it in the Bombay High Court. The issue then went to the Supreme Court, when the Centre appealed against the Bombay High Court order.

The apex court, however, returned the issue to the Bombay High Court to be examined against the principles laid down by the Centre. But it had also permitted the Centre to recover 50 per cent of the amount that it had claimed as an over-charge amount.

Allahabad HC ruling

Subsequently, in separate proceedings, the Allahabad High Court ruled that the prices fixed by the Government on the said medicines were illegal.

This was further contested by the Government and on an appeal filed by it against this ruling, the Supreme Court stayed the judgment of the Allahabad High Court.

However, the Supreme Court had directed that no coercive action be taken against Cipla till the appeal is finally decided, the company had said in earlier statements.

Cipla shares dropped on Tuesday when the company announced the fresh notices from the Government, but recovered to end marginally up at Rs 370.