The Department of Pharmaceuticals (DoP) and the National Pharmaceuticals Pricing Authority (NPPA) have been sent back to the drawing board for a solution to the growing burden of court cases initiated by pharmaceutical companies with orders to pay up for allegedly overcharging patients on essential medicines, The Indian Express has learnt.
As per people close to the development, Minister of State for Chemicals & Fertilizers Mansukh L Mandaviya during a meeting last week asked DoP and NPPA to narrow down overcharging-related cases that they have been fighting at court for decades and study whether there is a possibility of the government winning them. If not, the departments have been asked to study whether they need interventions like a one-time settlement to the firms involved.
The departments are expected to work out other viable options of resolving this issue as well and come back with a proposal “at the earliest”, a senior government official said on condition of anonymity.
“The view was that, in the interest of the government, public and exchequer, whether the departments could make some headway in cases pending for a long time,” said the official, adding that the aim was to resolve the issue “expeditiously”.
The official added that DoP and NPPA would have to see, case by case, whether the pending litigation can be expedited in court and other options, including a one-time settlement, might be explored for cases that the government is “convinced” will “drag on for a while”. “The government is losing money in some of these cases which have been pending for decades. DoP and NPPA have been told to work out a solution with the industry for cases that have remained unresolved the longest,” said another official requesting anonymity.
Queries sent to Mandaviya, DoP secretary P Raghavendra Rao and NPPA chairperson Shubhra Singh about this development remained unanswered by press time. As of March 31, the government needed to recover over Rs 5,400 crore from several pharma companies for overcharging patients, with nearly Rs 4,030 crore (around 75 per cent) of this being locked in litigation.
The latest development comes months after DoP reportedly offered to waive interest accrued on total amount that the government wants to recover from drug makers for overcharging patients for essential or life saving medicines. Groups like the Indian Drug Manufacturers Association (IDMA), which represent several pharma firms, had responded to the proposal arguing that the liabilities displayed against various companies suffered from “discrepancies”.
IDMA claimed “wrong” computation of prices of the drugs concerned, “inaccurate” method of computing the overcharging amount “in several instances” and that a “large” number of these cases are “not legally tenable”.
“As such each case has its own merits and demerits and the issues involved in each case is dissimilar, which needs to be sympathetically considered by the concerned authorities. Such issues cannot be settled by the association on behalf of individual companies,” stated IDMA in a letter dated April 22, a copy of which The Indian Express has viewed.