The National Pharmaceutical Pricing Authority’s (NPPA) record of recovering extra amounts charged by pharmaceutical companies, over and above the government-fixed maximum retail price of select drugs, continues to be abysmal. Thanks to an eight-year-old litigation it has with drug major Cipla Ltd.
About 65 per cent (Rs 1,555 crore) of the total overcharged amount of Rs 2,357 crore, demanded by NPPA from drug companies so far, has to be recovered from Cipla alone. The amount includes the unpaid amount and interest component added up to July 31.
The NPPA figures are higher than Rs 1,230.28 crore, the amount disclosed by Cipla as the aggregate demand (inclusive of interest) sought by the medicine price regulator from the company. This is part of the company’s quarterly disclosures to the stock exchanges, and is based on the demand notices issued by NPPA for the July 1995 – April 2009 period.
Cipla had stated that it has been contesting the demand notices issued by NPPA since 2003 in various courts. The matter had reached the Supreme Court from where it was re-directed to the Bombay High Court for interpreting the Drug Policy on the basis of the directions and principles laid down by the court. It had also restrained the government from taking coercive action against Cipla.
There are 15 separate demand notices issued by NPPA against Cipla for alleged overcharging of drugs such as Ciprofloxacin, Salbutamol, Cloxacillin and Norfloxacin.
Most of the leading firms such as Pfizer, Cadila, Dr Reddys’, Ranbaxy etc also figure in the NPPA list of companies that were served notices for recovering overcharged amounts.
NPPA has so far issued 812 price recovery notices to over 200 drug firms during the last 14 years. In nearly 600 cases, the companies have complied with the NPPA directives and cleared their dues. The agency recovered Rs 211 crore till July 31.