Grim diagnosis for pharma firms haunted by price bogey

DoP directs NPPA to dig up 37-year-old cases of overpriced drugs

Several pharmaceutical companies are likely to see a blast from the past, with the department of pharmaceuticals (DoP) having directed the National Pharmaceutical Pricing Authority (NPPA) to dig up old cases of overpriced drugs. 
 

The DoP wants a list of pharma companies that magnified drug prices from the year 1979 to 1986. At least Rs 300 crore would be the sum the government had slapped on these companies due to overcharging. This amount was meant to go into the Drug Price Equalisation Account. 
 

The latest demand from the DoP comes at a time when the pharmaceutical industry and the NPPA are at loggerheads over pricing issues. 
 

 

The cases of overcharging, according to the Drugs (Prices Control) Order, or DPCO of 1979, are seen as controversial, with many parties having moved court. That had prevented the government from issuing further notices to companies. Over 100 cases were filed against companies for inflating prices, based on the DPCO of 1979.
 

NPPA believes it wouldn’t make sense to dig out old cases from 1979. An NPPA official remarked, “Consumers have already paid the price. How will it help them if we were to reopen those cases now, 37-odd years later?”
 

The NPPA has also asked the department of pharmaceuticals for adequate manpower, if it is to consider reopening old cases, a source told Business Standard. 
 

The pharmaceutical industry has suggested the system of one-time settlement be used to resolve these cases. The NPPA has already formulated a proposal for one-time settlement for cases where the company has admitted to manipulating drug prices. However, the amount is being contested. 
 

Earlier, during the tenure of Vinay Kohli as secretary of the department of chemicals & fertilizers, the government was mulling a one-time settlement for companies, including GlaxoSmithKline, Lupin, Pfizer, Ranbaxy (now Sun Pharmaceuticals). This is because many companies had got stay orders that didn’t allow the government from retrieving the overcharged amount. 

PRESCRIPTION FOR TROUBLE

• 345 drugs brought under price control as per DPCO 1979
• Industry bodies suggests one-time settlement plan for overcharging cases 

Some companies that faced the heat since 1979

• Aventis (currently Sanofi)
• GlaxoSmithKline
• Ranbaxy (currently Sun Pharma)
• Lupin
• Pfizer

Source: Government of India