Business
Today: New Delhi: Saturday, October 27, 2012.
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.
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