Spurred by intensive efforts like defending the court cases and issue of revenue attachment notices, the recovery of overcharging amount by the National Pharmaceutical Pricing Authority (NPPA) from defaulting companies has picked up momentum this year, after a sluggish phase in the last few years.
In the first eight months of this year, the total recovered amount stood at Rs.19.17 crore whereas the total recovery during 2012-13 was Rs.14.97 crore. After Rs.51.41 crore collected during 2008-09 and Rs.35.41 crore during 2009-10, the recovery had gone slow. During 2010-11, the total amount stood at Rs.17.26 crore and it further went down to Rs.10.69 crore during 2011-12, according to the latest figures released by the NPPA.
Since the inception of the price regulator which keeps a tab on increase of prices in non-scheduled drugs beyond the permissible annual limit of 10 per cent, the total recovered amount is Rs.253.54 crore till August 30, 2013.
According to the statistics till the end of July, the NPPA sent notices to the companies in 970 cases for a total recovery of Rs.2902.22 crore. The recovered amount till the end of July was Rs.253.43 crore.
As part of intensifying the recovery efforts, the NPPA had started referring the pending cases to district magistrates for attachment of the properties of the defaulters. However, it also ran into resistance with the companies going to the court to check such measures.
The Department of Pharmaceuticals (DoP) sometime back told a probing Parliamentary panel that 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 along with 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.
However, the panel asked the DoP 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 as in the whole process the consumer was put at a disadvantageous position such he would not have the benefit of recovery of overcharged amount,” the panel said.
Continuing the same trend for years, Cipla stayed on as the biggest defaulter accounting for more than half of the total arrears due from the entire industry. Most of the cases were dragged to the courts by the company, thus delaying the payments. The list also has all major companies like Cadila, Ranbaxy, Dr Reddy’s Lab, Pfizer, GlaxoSmithKline, Sun Pharma, Nicholas Piramal, IPCA Lab, and Merck.