The National Pharmaceutical Pricing Authority is taking one more step towards recovering the outstanding overcharged amounts on medicines from the pharmaceutical companies. Last week it issued some ‘internal guidelines’ to speed up the process of recovery. The guidelines say that the recovery process of the overcharged amounts with a 15 per cent interest will be completed within three months. The NPPA has been struggling to curb violations of ceiling prices fixed by it but with not much success as the companies have been routinely overcharging a number of life saving drugs. Till now, the NPPA has been able to recover less than eight per cent of the overcharged amounts from the companies. As of June this year, the Authority has been able to recover just Rs. 387 crore, against a total outstanding amount of over Rs. 4,950 crore. A sum of Rs. 3,720 crore is stuck in various courts on account of litigations for the last 20 years. As per a NPPA document, since its inception in August 1997, the price monitoring authority had issued 1,138 notices to various companies for overcharging several hundreds of drugs marketed in the country.
Under the DPCO 2013, the NPPA is empowered to fix prices of scheduled drugs included in the National List of Essential Medicines (NLEM) 2011. The NLEM is prepared and reviewed periodically by the Union health ministry. NPPA fixes the ceiling prices of more than 800 essential drug formulations and in case of other medicines, manufacturers are allowed to increase prices by 10 per cent annually. Recovery notices are sent by NPPA only when the violations of price fixing orders are detected. NPPA has been finding it difficult to ensure ground-level compliance of its orders on ceiling prices for both essential and non-essential medicines ever since it was set up. Being a Central body with no effective network of inspectors in States and Union Territories to monitor price violations, drug companies have been flouting DPCO until violations are noticed. NPPA has been trying hard to detect cases of major violations by seeking support from drug control administrations. Last year, the Authority made an attempt to involve the state governments in curbing price violations and requested the state drug control administrations to set up their own price monitoring cells. This did not work out with no cooperation from most of the state governments. Last June, NPPA announced that it was planning to set up Price Monitoring Units in seven states for better compliance of price fixing orders. These state-level units were to come up in Gujarat, Maharashtra, Odisha, Haryana, Kerala, Assam and Manipur. What is the progress of this plan is not known. To what extend the new guidelines of NPPA are going to help it in its pursuit is something to be seen. The Centre needs to work out a comprehensive strategy to address the twin issues of continuing violations of price fixing orders and the recovery of huge overcharged amounts to make the existence of NPPA relevant.