New Delhi : The Indian pharma industry has once again started advocating for the pending Special One Time Settlement (SOTS) Scheme in order to resolve litigations arising from the implementation of various Drugs (Prices Control) Order (DPCO) introduced in 1979, 1987, 1995, and 2013.
“There is an urgent need to settle all such cases to ensure that the focus of the industry remains firmly on growing the industry. Over the years, the DPCO, which governs the pricing of essential medicines in India, has been a source of numerous legal disputes, many of which have been pending in courts for over a decade,” according to industry sources.
Companies have faced cases for alleged contraventions under the Essential Commodities (EC) Act, 1955, which underpins the enforcement of DPCO. Among the most common offenses are non-compliance with provisions like failing to exhibit price lists and refusing to sell medicines to dealers without sufficient reason.
In an attempt to resolve these disputes, a SOTS Scheme had been proposed in the past. The Scheme required litigants to withdraw their cases against the National Pharmaceutical Pricing Authority (NPPA), pay the principal amount in full, and in return, the cases would not be pursued further. However, this initiative failed to gain traction, leaving the industry mired in ongoing legal wrangles.
Cases pertaining to contravention of provisions of DPCO are filed under EC Act 1955 Sections (3 and 10 read with 7(1)(a)(ii). Cases under Para 18 of DPCO 1995 and Para 28 of DPCO 2013 have been filed against companies for issues like ‘Not exhibiting price list in Form V’ and ‘Refusal to sell to a dealer any drug without good and sufficient reason’. Such cases drag on for decades. Many stockists who lack the infrastructure for pharmaceutical distribution threaten to drag companies to court under these clauses if their application for stockist ship is declined.
The Indian Drug Manufacturers’ Association (IDMA) has also recommended an SOTS to the Government through compounding of alleged offences for all court cases, including over-charging and charges for any other alleged offenses or lapses, pending in the courts under DPCO 1979, 1987, 1995 and 2013. Once settled, there should be no subsequent demand in any period with respect to the legal cases settled under the SOTS.
The SOTS should also include cases charged under EC Act 1995 on which DPCO 1995 and 2013 have been enacted. Cases under Para 18 of DPCO 1995 and Para 28 of DPCO 2013 should be decriminalized and made compoundable. A reasonable financial penalty should be levied if the charge is proved and the matter settled within a year of the alleged offence.
