NPPA To Issue Reminder To Companies Related To Overcharging Before Taking Further Action

New Delhi: The National Pharmaceutical Pricing Authority (NPPA) has decided to make provisions to issue a reminder to the manufacturers or marketers of drugs in connection to overcharging, in cases where the next step is taken by the Authority after two years or more from issuance of show cause notice, demand notice or referring to the District Collector.

In such cases, the company will be provided with three week’s time to respond to the reminder.

The provision will be incorporated into the existing internal guidelines issued on October 7, 2016, regarding identification and initiating action for recovery in cases of overcharging under the Drugs Prices Control Order (DPCO).

A recent meeting of the Authority discussed the proposal for issuance of one reminder to be incorporated in the existing internal guidelines and agreed to the proposal in respect of certain cases.

According to this, a reminder would be issued if the cases where show cause notice (SCN) (with quantification) needs to be issued “based on examination of the company’s earlier reply wherein overcharging was denied and the said reply was submitted at least two years prior to the month and year in which it is being processed to next stage/step as per internal guidelines dated October 7, 2016”.

A reminder should also be issued in cases where Demand Notice needs to be issued based on examination of the company’s earlier reply wherein overcharging was denied and the said reply was submitted at least two years prior to the month and year in which it is being processed to the next stage/step as per internal guidelines.

In cases which are to be referred to the District Collector based on examination of the company’s earlier reply wherein overcharging was denied and the said reply was submitted at least two years prior to the month and year in which it is being processed to next stage/step as per internal guidelines, the Authority will now issue a reminder to the manufacturer or marketing firm.

“Three week’s time will be given to the company to respond, from the date of issue of this reminder,” it said.

According to the internal guidelines, the DPCO empowers the government to recover the due amount accrued due to charging of prices higher than those fixed or notified by the government under the provisions of the Order, along with interest of 15 per cent thereon from the date of overcharging, from the manufacturers.

In case any manufacturer is found to be not complying with the provisions of the DPCO, action is initiated by the NPPA for recovery of overcharged amount along with interest and with or without penalty as arrears of land revenue in accordance with provisions under Essential Commodities Act, 1955.

The guidelines were issued for the NPPA to follow in order to rationalise and expedite the monitoring, enforcement and recovery process in overcharging cases, and make it time bound and more transparent in implementation.

It stipulates certain timeframe for the procedures to be followed by the overcharging division, including for examining the reply from the pharmaceutical company on preliminary notices, issuance of show cause notice, timeline for the manufacturers to show cause based on the SCN, timeline for the Authority to wait for the response and send reminder, among others.

As reported earlier, till September, 2023, the drug price watchdog has reported a total of 2,433 cases of overcharging from the year 1979 to September, 2023 and raised demand for overcharging to the tune of Rs. 9,900.8 crore, including interest whenever updated. Out of the demand, around Rs. 1,371.9 crore has been collected till September, 2023, leaving around Rs. 8,528.9 crore, which is around 86.15 per cent of the total amount, as amount yet to be recovered.

The Authority is in litigation with the companies on various forums including cases referred to collector and contested by the companies in the court of law is a total of Rs. 6,100.2 crore out of the total of Rs. 8,528.9 crore outstanding out of the demand raised.

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