National Pharmaceutical Pricing Authority has commenced a countrywide survey of drug prices to ascertain the extend of overcharging and price violations indulged in by the pharmaceutical companies. The survey, started a few months ago, was initiated on receiving complaints of overcharging of several essential drugs from certain patient groups. It has initially covered 12 cities across the country and found that pharma companies are selling 52 per cent of the brands surveyed either at higher prices than fixed by the NPPA or without its approval. Brands of several leading companies are covered by the survey. Overcharging was noticed in case of 187 brands so far while 116 products were found to be sold at prices not approved by NPPA. In some cases, it was found that the companies have launched combination products containing one scheduled drug with a decontrolled drug to claim exemption from price control. In cases where price violations were noticed, NPPA is expected to issue notices to the concerned companies shortly and start the recovery process. NPPA's detection of these violations comes after it started monitoring prices of non-scheduled formulations on a regular basis a few months ago. Under the monitoring programme, if the price hikes of non scheduled formulations are found to exceed 10 per cent in a 12 months period, they are short listed for action. The manufacturers are then asked to furnish reasons for the price hikes and directed to bring down the prices if such hikes are found unreasonable.

For several years after the last DPCO was notified in 1995, NPPA has been rather ineffective in monitoring prices of both controlled and decontrolled products and in taking timely actions against price violations. Now, with an enforcement wing and with the support of the state drug departments in providing market information, NPPA looks sufficiently empowered to carry out its price fixing orders. Although price discipline is most wanted in pharmaceutical industry, that is what has been missing in this sector for several years. 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 or excessive profiteering in a product, patients might have been already fleeced for several months. In fact, price violations and subsequent court cases have been going on for several years involving most of the top companies like Cipla, Ranbaxy, Dr. Reddy's, Wockhardt, etc. And the claim on Cipla is so far the largest. 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.