NPPA doubles recovery from drug firms in FY14

Around Rs 40 crore has been recovered this fiscal

It has been a good year for the National Pharmaceutical Pricing Authority (NPPA) as far as recoveries from drug firms goes in matters of overcharging customers. The pricing regulator has more than doubled the amount recovered from pharma companies to Rs 40 crore during 2013-14 from Rs 14.97 crore the year before.

A K Saha, director, overcharging, NPPA informed, "During the April 2013 to March 2014 fiscal, we have recovered an amount of Rs 40 crore from drug firms in the matters of overcharging. Several cases are pending in litigation. Cumulatively, till date there would be around 1,000 such cases that have been registered."

The NPPA, which comes under the department of pharmaceuticals, ministry of chemicals and fertilisers, fixes the prices of essential medicines according to the Drug Price Control Order (DPCO), and as per norms, pharmaceutical firms cannot raise prices of these drugs on their own. They have to approach the NPPA before raising prices. According to the earlier DPCO, the NPPA directly controlled the prices of 74 bulk drugs and of all formulations which contain either one or more of these bulk drugs.

However, according to the new DPCO 2013, prices of 348 essential formulations have come under pricing control.

If any company is found charging an amount for a drug that is higher than the ceiling price fixed by the regulator, it is sent a notice for recovery of the overcharged amount.

As per a release by the Ministry of Chemicals and Fertilisers in December 2013, "Since inception of NPPA (August, 1997) till November, 2013, there are 1,001 overcharging cases where demand notices have been issued to pharmaceuticals companies amounting to Rs 3,161.68 crore for selling medicines at prices higher than the price fixed by NPPA/Government under DPCO, 1995. Out of the total demand, Rs 260.40 crore has been recovered till 30.11.2013 leaving behind a balance of Rs 2,901.28 crore, which is under dispute in courts."

Recoveries for overcharging by the NPPA, however, had hit a slow lane in the last few years. The NPPA had recovered Rs 17.26 crore during 2010-11, and could only recover Rs 10.69 crore during 2011-12. This was far below the amounts recovered in the previous years, Rs 51.41 crore in 2008-09, and Rs 35.41 crore in 2009-10 respectively.

Meanwhile, prices of essential medicines, are likely to be in for another round of change, as the NPPA has sought data from the pharma firms to revalidate the data used by the it to cap prices of essential drugs.

The department of pharmaceuticals asked the NPPA to revalidate the data after several pharma firms complained that while the NPPA had used data from leading healthcare data management firm IMS Health, the data, however did not reflect the real prices as it did not capture all brands.