NPPA sees 12-fold rise in penalties for overcharging from drug companies

NEW DELHI: A streamlined administrative setup and close coordination with state agencies have helped India’s drug price monitoring authority to

register a 12-fold increase in collections of penalty from pharma companies for selling medicines at prices higher than approved rates.

The National Pharmaceutical Pricing Authority (NPPA) collected Rs 56.5 crore in 2008-09 by way of penalties, up from Rs 4.5 crore in 2007-08. “We are closely monitoring prices of medicines and proactively pursuing recovery of overcharged amount from companies,” said NPPA chairman Dr AK Banerjee. “The earlier practice was to send reminders to defaulting drug manufacturers which were largely ignored. Now, a notice is followed by just one reminder.

If a company fails to respond, we refer the case to district collectors,” he said. The Supreme Court has directed drug companies to first deposit 50% of the overcharged amounts with the NPPA before contesting its decision in the court.

Meanwhile, the pricing authority has also intensified its effort to book pharma companies indulging in overcharging. It has booked 41 cases involving penalty amount of over Rs 116 crore. “These cases have been referred to respective district collectors,” an NPPA official, who didn’t wish to be named, said.

While the regulator is in the process of recovering around Rs 103 crore, a huge amount is stuck in various court cases. “There are cases where companies go to court to contest the issue. While the case is sub-judice, we cannot do much to recover the amount,” he said.

NPPA also scans retail prices of essential medicines to save consumers from paying unreasonable prices. NPPA, which was set up in 1999, has fixed prices of 8,231 drugs. But it revised prices of 5,674 medicines in last five years.
NPPA directly controls prices of 74 bulk drugs and all formulations containing any of these bulk drugs. Companies have to approach NPPA for raising prices of such medicines. However, they can raise prices of non-scheduled drugs by 10% in 12 months. Around one-fourth of the Rs 35,000-crore domestic pharmaceutical market is under price control.