The National Pharmaceutical Pricing Authority (NPPA) has, for the first time since it began tracking the alleged misuse of exemption order meant for SSIs by the pharmaceutical majors, succeeded in closing down one such proxy manufacturing unit of a major drug company. The company, M/s N.R.Jet Enterprises Ltd., has lost its SSI registration after it was proved to be a wholly owned /controlled subsidiary of Johnson & Johnson and has been indulging in manufacturing price controlled drugs for J&J by misusing the provisions of Para 8 of Drugs (Price Control) Order 1995 meant exclusively for small scale pharma units.

According to an NPPA press release, the Director of Industries, Maharashtra cancelled the SSI registration granted to the units after verification, initiated after prompts alerts from NPPA recently. NPPA has warned the pharmaceutical majors who are indulged in such practices that the Central Bureau of Investigation (CBI) is also enquiring into the misuse of these provisions. The Para 8 of DPCO exempts SSI units from non-ceiling prices applicable to individual companies. Big pharmaceutical companies are allegedly misusing this exemption provision through their proxy companies registered as SSI units to remain out of the price control net.

The NPPA has stated that under the existing orders of 2nd March, 1995(S.O.134 E), SSI units are exempt from fixation of price under para 8 of Drugs (Prices Control) Order 1995 (DPCO 1995) though they have to follow ceiling prices fixed under para 9 of the order. The exemption, however, is not available to those SSI units that do not satisfy the conditions stipulated in the order of 2nd March 1995. One of the conditions is that it should be an independent unit / company and the exemption is not available to a subsidiary of or owned or controlled in any manner by any other undertaking which is not so exempted from the provisions of the DPCO 1995, the release explains.

NPPA has also highlighted the a general suspicion that many organized sector companies including MNCs are misusing the above exemption order by transferring their known brands of scheduled formulations to their directly or indirectly controlled SSI units thereby attempting to evade price control.