In a first of its kind initiative against the small scale sector drug manufacturers, the National Pharmaceutical Pricing Authority (NPPA) is learnt to be in the process of issuing show cause notices, through the respective state drug authorities, to over 50 manufacturers in south India for overpricing some fast moving drugs in violation of the DPCO, 95.

Industry sources fear that NPPA is in the process of scanning other drugs as well and may spread the dragnet to other states, which will invariably affect all SSI manufacturers in the country.

The action is aimed at units manufacturing of Ibuprufen and Paracetamol, Amoxyillin with Cloxacillin, Ranitidine and its combinations and Ranitidine. At least 10 manufacturers in Chennai, besides many in other parts of south India, have received the show cause notices with an ultimatum to respond within seven days to file details of manufacturing, marketing, price of each batch, batch numbers etc. related to these drugs, applicable since 1995 when the DPCO came into force.

By this, these SSI manufacturers may be forced to repay crores of rupees, overcharged by them. The list includes a few manufacturers who are currently not even manufacturing these combinations.

Interestingly, sources in Chennai noted that the Tamil Nadu Pharmaceutical manufacturers Association (TNPMA) obtained a stay order from the Madras High Court in 1999 to exempt SSI manufacturers from filing price list with NPPA under Section (8) of the Drugs and Cosmetics Act. The SSIs also approached the Central Health Ministry in 1999 to exempt SSIs from adhering to DPCO order as regulated drug prices are governed by the leader drug prices manufactured by multinationals. However, the government has not heeded to their demands.

"Suppose a multinational makes 10 lakh capsules of Vitamin B complex at a price of Rs.2000 including the manufacturing and lab test costs, a SSI unit makes only 2000 capsules at the same expenses, because the multinationals have advantages related to volume production and bulk raw material purchase. It is injustice when the government mandates SSIs to sell at the same price of the leader brand. Therefore, some SSIs are forced to put higher prices for survival," said Kanthilal Jain of Farm India.

SSI sources fear this is only the beginning of what is to come. "So far NPPA was not seriously pursuing this issue. This could be because it was sympathetic to the practical difficulties of SSIs in adhering with the DPCO prices. For the time being NPPA has chosen only fast moving and readily available drugs. Soon it will extend the net to other drugs and manufacturers as well," alerts Ananda Raj of Agpa Pharmaceuticals.

According to Sitharaman of Safeline Pharmaceuticals, the DPCO itself has provisions to exempt SSIs and the NPPA should help the sector. The Section 25 of DPCO says 'Government may having regard to the fact that factors mentioned in Sub Para 2; subject to such condition as it may specified by an order in the official gazatte to exempt any manufacturer from the operation of all or any provision of this order and subject to factors like number of workers employed, amount of capital, range or group or type and sales turnover" notes Sitharaman.

It is learnt that the various SSI organizations are planning to strongly oppose the NPPA move. The Federation of the Pharmaceutical Manufacturers Association of South India and the Confederation of Indian Pharmaceutical Industry (CIPI) are planning to debate the future course of action in its forthcoming meeting within a fortnight, it is learnt.