Last week, Bombay High Court came out with a significant judgement in one of the many cases of overcharging of drugs by pharmaceutical companies pending in various courts over the last 10 years. The High Court ordered Johnson & Johnson and one of its subsidiary companies to deposit nearly Rs 35 crore with National Pharmaceutical Pricing Authority for overpricing a controlled drug under the Drug Price Control Order, 1995. The NPPA had fixed a maximum selling price of Rs 16.24 for 40 tablets of Raricap-40, a haematinic drug, of J&J in August 1996 but the company had refused to comply with the order and has been selling the product at its own price of Rs 24.57. On March 31,1997, the company stopped manufacturing the drug and transferred production to one of its subsidiary companies namely NR Jet and continued selling at the company's own price. Subsequently, NPPA had issued a show cause notice for over pricing of the drug and recovery of the excess amount with interest in October 2002. Although the company has been fighting the case since then the High Court finally pronounced its verdict in favour of NPPA as it found that the company has no valid ground for violation of the order. J&J has an option of moving Supreme Court but it is quite unlikely that HC order will be reversed. One of the most prominent cases of price violation of controlled drugs still pending in the court is that of Cipla. As per the NPPA calculations, Cipla has to pay as much as Rs 991 crore for overcharging controlled drugs ciprofloxacin, norfloxacin and other drugs. A few major companies which are also fighting price violations cases in courts are Ranbaxy, Dr. Reddy's, Sun Pharma, Cadila Pharma and Wockhardt. Since its inception in 1997, NPPA has raised a total demand of Rs 1427.37 crore for recovery from pharma companies towards overcharging of drugs in 425 cases as on July 31, 2007. It has recovered just Rs 100.43 crore so far from these defaulting companies.
Although there are just 74 drugs and their formulations under the DPCO 1995, manufacture and marketing of drugs like chloroquin phosphate, penicillin G, doxycycline, vitamin A and many others have been discontinued subsequently by pharmaceutical companies stating lower profitability. At the same time a number of new drugs were approved by Drug Controller General of India for marketing in the country during these 12 years. Many of them are widely prescribed and used by common man for diseases such as cardiovascular problems, cancer, diabetes and cholesterol. All of these drugs are outside price control. Thus, in all there are 500 or more drugs which are currently outside price control. NPPA has been monitoring price violations of controlled drugs ever since DPCO, 1995 was notified. Detection of overcharging and unfair trade practices have been a tough job and a slow process for NPPA as it did not have a state wise or region wise price monitoring machinery. By the time, NPPA finds a price violation of a product, patients might have been already fleeced for several months. The Union chemicals ministry has decided to set up a Price Enforcement Wing within NPPA to have an early detection of overcharging and circumvention of DPCO provisions. Establishing exclusive operating arms within NPPA is definitely a positive measure. What is essentially required is speedy judicial action against the offenders. Most of the pending price violation cases in various courts in the country are more than 10 years old.