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Drug firms overcharged Rs 2,700 cr

Less than 10 per cent of money is recovered by National Pharmaceutical Pricing Authority.

Written by Abantika Ghosh |
August 14, 2013 1:13:23 am

Pharmaceutical companies have overcharged customers a total of more than Rs 2,700 crore of which Cipla alone owes the government approximately Rs 1,700 crore. Less than 10 per cent of the money has been recovered by National Pharmaceutical Pricing Authority and Department of Pharmaceuticals with the big pharmas dragging the government to court and not paying up,citing the sub-judice status of the cases.

The Department of Pharmaceuticals in its reply to a question in the Lok Sabha Tuesday gave out details of the money that the companies owe the government in 125 separate cases of overcharging pending in the Supreme Court and lower courts. The NPPA has recovered about Rs 198 crore so far,most of it from smaller companies.

Cases of overcharging start either on complaints by consumers,which are not very frequent,or when the NPPA detects a marked-up MRP on samples it lifts from market.

Last year,a survey by the Corporate Affairs Ministry found that despite NPPA pricing regulations that seals the profit margin of drug companies at 100 per cent over the cost of production (COP),mark-ups of 200-500 per cent were detected in 21 common drugs,the highest being 1,122 per cent for a drug manufactures by Glaxo Smithkline.

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According to the figures,the Centre’s dues from individual drugs that have been sold for a higher price include a Rs 553 crore over recovery from a Salbutamol formulation (asthma drug),Rs 357 crore for a second generation antibiotic Ciprofloxacin and Rs 453 crore from a norfloxacin-based drug — all from Cipla.

The firm has not the money back to the government. It’s spokesperson refused to talk about it saying the matter was sub-judice.

Some of the other companies facing allegations of overcharging adding up to several crores and with nil recovery include Claris Life Science that overcharged to the tune of Rs 104 crore for its Eye V Fluid,Okasa Pharma which sold Norfloxacin at higher prices and raised Rs 93.22 crore,Cadila Healthcare that overcharged a total of Rs 17 crore on asthma medication Deriphyllin,and Ranbaxy that earned Rs 61 crore extra from the sale of Ciprofloxacin by violating price lists.

The parliamentary standing committee on chemicals and fertlisers in its 29th report had noted with some concern the dismal recovery by NPPA of its overcharging dues and urged NPPA to vigorously pursue the litigations. The government,in its reply,said the recovery of overcharged money has been adversely affected by orders passed by various High Courts and the Supreme Court. In some cases companies have challenged the very drug control order on which the cases of overcharging against them were founded.

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