Despite the National Pharmaceutical Pricing Authority (NPPA) imposing fines on pharmaceutical companies several times for
overpricing of drugs in the last 17 years, these firms are unrelenting and continue to charge high prices from consumers.
According to the Right To Information (RTI) reply to the query on drug overpricing, NPPA has
fined several drug firms, including big players like Cipla, Ranbaxy and Dr Reddy's Laboratories, as many as 871 times. The total fine of all pharma companies adds up to around Rs 2,575 crore till September. However, NPPA has recovered only Rs 235 crore.
Cipla , for instance, has to pay a fine of Rs 1,700 crore-the highest among the listed companies. According to the RTI reply, Cipla has not paid a single penny so far. Similarly, Ranbaxy has to pay Rs 128 crore as a fine out of which the company has paid only about Rs 27 crore. Dr Reddy's Laboratories has a penalty of Rs 34 crore but it has only paid about Rs 12 crore.
The actual
figures of drug overpricing are not known as NPPA does not have a list of drugs or pharmaceutical companies operating in the country. The prices of scheduled bulk drugs and formulations are controlled by NPPA under the Drugs (Price Control) Order (DPCO), 1995. The maximum retail price (MRP) of a scheduled drug formulation is fixed after adding statutory duties such as excise duty and valueadded tax (VAT) to the price determined under the order.
According to the RTI reply, "In the case of indigenously manufactured scheduled formulation, the Maximum Allowable Postmanufacturing Expenses to cover all costs incurred by a maker from the stage of ex-factory cost to retailing and includes trade margin and margin for the manufacturer shall not exceed 100 per cent as per DPCO, 1995.
In the case of an imported scheduled formulation, such margin to cover selling and distribution expenses shall not exceed 50 per cent over cost of formulation." No firm is allowed to sell any scheduled drugs and formulations at a price higher than the one fixed by the pricing authority.
NPPA can take an action for overcharging based on the report from State Drug Controllers, people's complaints, verification of price list, and suo-moto purchase of samples from market.
"In case, a company is found selling the drugs or formulations at a price higher than the prices fixed by NPPA and government, NPPA initiates action by issuing preliminary notices to pharma companies seeking requisite information and details from them to examine the matter further under DPCO, 1995, read with Essential Commodities Act, 1995. In confirmed cases of overcharging, demand notices are issued to the defaulting pharma companies for depositing the overcharged amount with the government," said the RTI reply.
The NPPA in the last 17 years has not been able to recover even half of the amount of penalty imposed on drug companies.
Courtesy: Mail Today
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