New Delhi
The National Pharmaceutical Pricing Authority (NPPA) is thinking of taking a crack at settling disputes with drug makers such as Cipla over penalties for allegedly charging too much for medicines. According to data from India’s drug pricing watchdog, outstanding dues on this count from scores of companies exceed Rs 4,551 crore and have piled up over the past two decades. Most of this is tied up in litigation as companies have challenged the penalties, taking issue with the fixing of new prices or assessment methodology for upward rate revisions for products already listed in the Drug Price Control Order, 1995. In the face of restraining orders passed by various high courts and the Supreme Court, NPPA may seek “one-time settlements” to resolve the disputes, said people aware of the matter, as the rate of recovery has been low. Of the 1,389 cases, NPPA has realised around Rs 385 crore, according to data on its website, for cases spanning nearly two decades, between August1997 and February 2016.The proposal is being reviewed by senior officials in the department of pharmaceuticals, said an official. NPPA will need to seek approvals from the finance ministry and the departments of corporate and legal affairs if the proposal is to go forward.The government is most likely examining the finer modalities for the recovery of dues, like grant of a staggered period for payments and waiver of interest component in full or part, on a case-by-case basis. But it is too early to talk about it, said an executive who did not want to be named as the matter is at a sensitive stage. Most leading drug companies have disputed the NPPA notices that are sent when it detects such cases. Cipla topped the list with dues of Rs 1,768.51 crore inclusive of interest, according to the company’s FY15 annual report. The company said in the report that it has been legally advised based on several high court decisions and considering the totality of facts and circumstances that these demand notices may not be enforceable. The company has been locked in battles with the NPPA at the Allahabad, Bombay and Karnataka high courts. In 2013, the Supreme Court transferred Cipla’s Bombay High Court petition to itself. The apex court had earlier restrained the government from taking coercive action against the company. Based on the legal advice cited above, the company has told shareholders it doesn’t deem any financial provision to be necessary. In response to ET’s questions about the moves for a one-time settlement, Cipla said the matter was sub-judice and it cannot disclose the latest figures involved. “We have not been approached by the NPPA for any settlement,” an official said. At last count, the NPPA had brought 628 formulations under price controls, which covered roughly 13% of the Indian pharmaceutical market. The government agency is in the process of fixing price ceiling as per the National List of Essential Medicines, 2015, which includes 376 medicines covering 799 formulations under 30 therapeutic categories.
