The National Pharmaceutical Pricing Authority (NPPA) has initiated recovery proceedings against three companies in the last two months for overcharging a cumulative amount of more than Rs 14 crore.

Out of a total of Rs 14.04 crore to be recovered from these companies as much as Rs 13.99 crore has to come from Gujarat-based Cadila Healthcare Ltd (Zydus Cadila). The other two companies are Mercury Laboratories Ltd and Maharashtra-based Colinj Labs Ltd.

The authority has issued circulars to the concerned district collectors to initiate recovery proceedings against the companies. The direction is to recover around Rs 4.53 lakh from Mercury Laboratories and Rs 78711 from the Colinj Labs Ltd.

So far, the authority has issued directives to district collectors to recover around Rs 116.71 crore from 31 companies as per the records till the end of March 2009. However, recovery processes in many of these cases are still pending, as the drug companies have approached court for settlement.

"There are a lot of issues involved in recovery procedures on overcharging cases. We cannot take coercive action in some cases which are awaiting judicial determination. But we have recovered overcharging prices of more than ten times when compared to the last year (2007-08)," said Dr A K Banerjee, chairman, NPPA. In the year 2008-09, the authority has completed recovery procedures for around Rs 45 crore while it was around Rs 4 crore in the previous year.

However, the latest report has omitted details on cases against two companies, the Mumbai-based GSK Pharmaceuticals Ltd (India) and Khandelwal Lab (Pvt) Ltd for Rs 7.53 crore and Rs 2.74 lakh respectively. Including these two cases, the NPPA has issued a list of cases for recovery worth Rs 110 crore in the end of January 2009. The omission points to the possibility that cases against GSK Pharma and Khandelwal Labs has settled successfully, informed the official.

As per the regulations, the NPPA will first direct the concerned pharma company to clarify the reasons for overcharging the price of a particular medicine beyond the government-approved price. The authority will also send a reminder seeking payment of the overcharged prices, in case the company ignore the first letter. The directions to the relevant district collector will be issued if the two letters are not addressed properly by the company.

Once the NPPA has issued the direction, the law enforces the district collector to recover the due payment from the company as land revenue arrears if the overcharged sum is beyond a particular amount and the case has been pending for a long time.