IMPLEMENT SOTS SCHEME

Overcharging of drug prices has been a major issue ever since the first Drug Price Control Order (DPCO) was announced by the government way back in 1979 to make essential drugs available at affordable prices to the common man. Violations of the DPCO provisions by way of either circumventions or overcharging by the pharmaceutical companies have been going on with impunity as there was no exclusive agency to track these violations.  It was under this backdrop, the government formed an exclusive agency, the National Pharmaceutical Pricing Authority (NPPA), exclusively to monitor and control the prices of drugs in the country. But, violation of the DPCO by the pharmaceutical companies continued unabated, as our country is 'famous' for violation of rules rather than its compliance. This has resulted in hundreds of court cases being fought by the NPPA in various courts to recover thousands of crores from different pharma companies. The number will tell the real story. As of September 30, 2025, the NPPA has to recover almost 85 per cent of the amount it demanded from the pharma companies on alleged overcharging of drug prices. The total overcharged amount demanded by the NPPA, including interest, under the DPCO till September 30, 2025 is Rs. 10,013.3 crore, of which an amount of Rs. 8,526.1 crore is outstanding. The amount still under litigation including cases referred to the District Collector and contested by the companies in the court, is around Rs. 5,938.7 crore, while Rs. 1,487.1 crore out of the total overcharged amount demanded has been realised till the end of September, 2025. It is true that the outstanding amount has come down from the Rs. 8,579.1 crore reported in September, 2024, and the amount under litigation has witnessed a marginal decline from Rs. 6,076.4 crore in September, 2024 to Rs. 5,938.7 crore at the end of September, 2025.

In fact, in the year 2021, the NPPA had come out with a proposal of Special One-Time Settlement (SOTS) scheme to pharmaceutical companies for the settlement of overcharging cases which are pending in various courts in the country. The scheme required litigants to withdraw their cases against the NPPA, pay the principal amount in full, and in return, the cases would not be pursued further. The scheme was to cover all active court cases in any court of law in the country, as on specified date, relating to overcharging under the provisions of DPCO 1979, 1987, 1995 and 2013. The SOTS scheme was exactly on the lines of ‘Vivad se Vishwas’ scheme for the settlement of disputed income tax dues which was a huge success. Unfortunately, the SOTS initiative failed to gain traction, leaving the industry mired in ongoing legal wrangles. Now, the Indian pharma industry has once again started advocating for the SOTS scheme in order to resolve the litigations arising from the implementation of various DPCOs. Under this scheme, the industry wanted compounding of alleged offences for all court cases, including over-charging and charges for any other alleged offenses or lapses, pending in the courts under DPCOs. The industry wanted the SOTS scheme to include cases charged under EC Act 1995 on which DPCO 1995 and 2013 have been enacted. Cases under Para 18 of DPCO 1995 and Para 28 of DPCO 2013 should be decriminalized and made compoundable. A reasonable financial penalty should be levied if the charge is proved and the matter settled within a year of the alleged offence. Of course, there is an urgent need to settle all such cases to ensure that the focus of the industry remains firmly on growth.  The NPPA should give a serious thought to it.