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Drug makers listed for overcharging

Price regulator issues showcause notices to firms

Sushmi Dey  |  New Delhi 

Major drug makers such as Aventis Pharma, Ind-Swift, Aurobindo Pharma and Ipca Laboratories have been listed for overcharging while selling some essential medicines. The drug price regulator, National Pharmaceutical Pricing Authority (NPPA), has issued showcause notices to all these, an official told Business Standard.

According to the NPPA list for the current year, reviewed by Business Standard, Aventis Pharma, the Indian arm of Sanofi-Aventis, overcharged consumers for Avil (25 mg and 50 mg) and Combiflam. While the latter is commonly used as a painkiller and to reduce fever, Avil is an antihistamine used to treat allergic conditions such as hay fever.

When approached, Sanofi-Aventis said: “We do not have any comments to share.”

Besides, notices have been sent to Ind-swift for overcharging for Provita, Neurovit; Aurobindo Pharma for Z Plus; and Z Clox and Ipca Labs for Normax TZ.

The list has a total of 37 cases of overcharging by drug makers. From January 1 to October 4, NPPA raised Rs 130 crore from these for overcharging. The regulatory authority conducts surveys on a regular basis to keep a check on malpractices.

It also maintains a grievance redressal cell, where consumers can file complaints against an undue price increase. Consumers can also file a complaint online on its website.

“We have conducted surveys and collected samples from the market. We also often get complaints,” the NPPA official said . According to the official, a company is given three weeks to reply to the notice, failing which NPPA initiates action against it.

When a company does not respond to the notice, or doesn’t pay penalty, the regulator refers the case to the state district administration, for recovering the excess amount. “We refer such overcharging cases to district collectors administering the regions where have assets. The authority recovers the amount as land revenue arrears,” the official said.

However, also do approach the judiciary to fight such allegations. According to an industry official, these are cases when the company feels the claims are untenable.

NPPA directly controls the prices of 74 bulk drugs, and all formulations or medicines containing one or more of these bulk drugs, based on the cost-plus formula. Pharmaceutical are not allowed to increase prices of such medicines on their own.

To raise prices, they have to approach the regulator. For all the other medicines, companies are allowed to raise prices of their products by only up to 10 per cent annually; for any increase beyond that drug makers are required to seek permission from NPPA.

However, drug pricing in the country might soon change. Following a strict directive from the Supreme Court (SC) to bring all essential drugs under price control, the government might soon place the new pricing policy in Cabinet, bringing 348 medicine formulations under the purview of price control. However, the mechanism for capping prices of these medicines is currently hanging fire. Though the group of ministers say prices should be capped at the weighted average of all drugs with more than one per cent market share, the SC, in its last hearing, asked the government not to tinker with the existing pricing mechanism.

First Published: Wed, October 10 2012. 00:46 IST