The National Pharmaceutical Pricing Authority (NPPA) has been able to recover only 13.5 per cent of the estimated overcharged amount and its interest it has asked for from the defaulting pharmaceutical companies till date. Of the notices issued by NPPA, the ones that account for about 74 per cent of the total estimated overcharged amount have been challenged in the courts resulting in pending recovery. As per the figures available with pharmabiz.com, upto November 30, 2004 the estimated overcharged amount and its interest was a staggering Rs 59303.971 lakhs while the recovered amount was just Rs 8031.192 lakhs!
Though the estimated overcharged amount often gets reduced after clarifications from the concerned company, the major reason for this apparent disparity has been the increasing number of court cases where NPPA decisions have got stuck by the court injunctions.
Of the 246 notices NPPA has issued over the years, about 50 cases of overcharging involving pharmaceutical majors like Ranbaxy Laboratories, Cipla Limited, Dr Reddys Laboratories, Cadila Pharmaceuticals, Nicholas Piramal (I) Ltd, Sun Pharma Ltd, Kopran Ltd, Wockhardt Ltd, Glaxo India Ltd, IPCA Lab Limited, Okasa Pharma Ltd, Lyka Labs Ltd, Oscar Labs etc have been stuck due to pending court cases. The pending recoveries from these companies alone come to Rs 44005.079 lakhs. In other words, recovery notices for about 74 per cent of the estimated overcharged amount have been challenged in the court, thereby leaving little room for NPPA to recover. Whatever recoveries have come, are from small players, who have found it economical to clear the dues than to fight it out.
In the case of Cipla Ltd alone, the pending recovery due to court stay is to the tune of Rs 35958 lakh on account the various notices issued over overcharging scheduled formulations like Salbutamol based formulations (Rs 7962 lakh + Rs 5416 lakh), Cloxacillin based formulation (Rs 944 lakh), Ciprofloxacin based formulations (Rs 4217 lakh + Rs 4791.163 lakh) and Norfloxacin formulations (Rs 7484 lakh + Rs 5144 lakh).
In the case of Okasa Ltd it is Rs 3717 lakhs for overcharging Cloxacillin formulations (Rs 182 lakh + Rs 474 lakh + Rs 2385 lakh), Theophylline formulations (Rs 91.62 lakh + Rs 117.89 lakh) and Cefadroxyl formulations (Rs 467 lakhs). Ranbaxy has not responded to NPPA notices for recovery of Rs 564 lakhs overcharged on Cloxacillin (Rs 199 lakh + Rs 15.99 lakh) and Norfloxacin (Rs 161.61 lakh + Rs 188 lakhs) based formulations due to court stay. In the case of Nicholas Piramal, the amount is Rs 182 lakh on account of Ciprofloxacin (Rs 159 lakh + Rs 1.4 lakh) and Norfloxacin (Rs 22.46 lakh) overcharging. Interestingly, the court cases have been of help to NPPA as well. A good portion of the recovered amount came to government exchequer due to court directives. An example is the recent instance of Ranbaxy and Dr. Reddy's paying Rs 2347 lakhs and Rs 11.43 lakhs respectively on account of partial payment of the estimated overcharged amount on Ciprofloxacin formulations. The amount was recovered as per the court order.