Pharmaceutical units migrated to Himachal Pradesh, Uttaranchal and Jammu & Kashmir, three excise free zones in the country, are blatantly violating the ceiling prices fixed by NPPA and are also engaged in overcharging drugs outside DPCO. NPPA and the Union ministry of chemicals and fertilizers are mute spectators to this large scale fleecing of consumers with support of pharma trade.

What is striking is the sharp difference in the prices of controlled drugs stocked in pharmacies in Punjab, Haryana and Delhi and in other parts of the country. The pharmacies of these neighbouring states, in particular, have almost stopped stocking of drugs produced by states which have no excise free status, an industry source said.
A 10-tablet strip of norfloxacin 400 mg manufactured by Cipla in Solan in Himachal is being sold at a MRP of Rs.46.63 whereas the Delhi based Pam pharmaceuticals sells the same drug at Rs.17.50. A strip of Atovastatin 10 mg of Cipla has a MRP of Rs.75 as against a price of Rs.24 for the same formulation of FDC in Mumbai.

Another life saving drug, Losarten 25 mg made by Blue Cross plant in Nashik is sold at Rs.10 for a strip, whereas, the same drug is sold by Cipla at Rs. 24 from its Solan plant. Similarly a 10 tablets strip of doxycycline 100 mg marketed by Ind Swift from its Parwanoo plant in Himachal has a MRP of Rs. 35 as against Rs. 9.16 for a strip of same drug sold by Delhi based Pam Pharmaceuticals.

A combination of Amlodipine 5 mg + Atenolol 50 mg, manufactured by Lupin at Haridwar in Uttaranchal has a MRP of Rs.29 for a strip of ten but the same combination manufactured by Blue Cross from its Nashik plant is sold at Rs.10.

The sources said that the units in excise free states have a clear advantage of nil excise over units located in other states where 16 percent excise is levied on MRP. Still they are fixing higher MRP than the units in other states and are passing a large part of that high retail price as margin to retail chemists. This is what is motivating most of the retail chemists in Punjab, Haryana and Delhi to mainly stock drugs made in Himachal and Uttaranchal. Only those drugs, which are not made in excise free zones, are being sourced from other states by the chemists.

Increasing preference of retail chemists for drugs made in excise free states has already forced several units located in Punjab and Delhi either to shift to the excise free states or to close down. Availability of drugs made in Himachal, Uttaranchal and J&K are currently confined to northern states but are likely to spread to western and southern states soon.
Although the Central government introduced MRP based excise levy on pharmaceuticals to maximize revenue collection, a substantial drop in excise revenue is likely from the pharmaceutical industry from this year as almost 50 to 60 percent of the country's pharmaceutical production is being shifted to these three excise free states, the sources pointed out.

CIPI, representing small scale drug units in the country already alerted the Central government about impending closure of most of the 5500 units if the government fails to rectify the excise anomaly. It has suggested that the Centre should reduce the excise duty to 8 percent on pharmaceuticals so that the flight of pharma units to excise free zone could be checked and the imbalance in the growth of this sector could be corrected before it is too late. But the government is yet to act on this representation, it added.