Expressing discontent over the process and pace of collection of overcharged amounts from defaulting companies, a Parliamentary panel has asked the National Pharmaceutical Pricing Authority (NPPA) to device mechanism to monitor prices of non-scheduled formulations before introduction and adopt alternate tools like arbitration to mitigate litigation cases.

“The mechanism to first allow the pharma companies to fix the price and recover the enhanced price if the same was found arbitrarily high was not a sound proposition enunciated by the NPPA. In the whole process the consumer was put at a disadvantageous position and he dos not get the benefit of recovery of overcharged amounts. The Committee, therefore, recommends that a mechanism for proactively monitoring the prices of drugs should be devised by NPPA before the introduction of drugs in the market. Besides, these alternate dispute resolution method like arbitration should be adopted also to mitigate the litigation cases,” the panel attached to Chemicals Ministry said.

In its earlier recommendation, the panel had asked the NPPA to 'vigorously pursue' the cases of overcharging. According to figures submitted till the end of last year, the NPPA was able to recover only an amount of Rs. 233.99 crore against the total demand notices of Rs. 2577.44 crore and an amount of Rs. 2267.75 crore was under litigation and thus locked up in courts.

In its reply, the Department of Pharmaceuticals (DoP) said the recovery of the overcharged amount had been adversely affected due to orders passed by High Courts and the Supreme Court in cases filed by the pharmaceutical companies challenging the price fixation.

“Inclusion of some bulk drugs under price control (schedule 1 of DPCO’95) has also been challenged by the a few pharma companies. In some cases, the High Courts and Supreme Court have restrained the Govt./NPPA to recover the overcharged amount or directed the companies to make part payment of the overcharged amount until the matter is finally decided by them. This has led to an increase in the long outstanding overcharged amount alongwith interest thereon from the companies. In some cases, the Hon’ble Courts have also directed not to take coercive action for recovery of amount,” the department said.

The Department also said it was defending all the cases under litigation through central agency and department of legal affairs. “Urgent applications for vacation of interim orders and also for early hearing/disposal of the case are also filed in various courts. Further, matters are pursued with the District Collectors for initiating action for early recovery of the outstanding dues from the pharma companies. Besides, the Pharma companies are also insisted through regular follow up to pay the demanded amount,” the department said.

However, the panel in its latest report, expressed displeasure on the reply and the process. “The Committee strongly feel that the above situation would not have arisen in the first place if a mechanism for proactively monitoring the prices of drugs had been devised by the NPPA before the introduction of drugs in the market and had ensured that the prices of drugs were not arbitrarily fixed by the pharma companies,” the committee said.