The Hindu Business Line : Cipla readying response to Govt's notice

Mumbai April 14 Drug maker Cipla has received a fresh notice from the Government asking it to pay Rs 748.27 crore for allegedly over-charging on five medicines.

The Mumbai-based drug maker, however, contends that the Government notice violates an order from the Supreme Court.

"We are in the process of responding to the notice saying that it violates court orders," said Mr Amar Lulla, Cipla's Chief Executive Officer. The company had legally contested the Centre's previous orders on over-charging, saying that the medicines in question were not under price-control. It is a grey area and the medicines did not meet the criteria under which drugs are brought under price control, Mr Lulla told Business Line. The National Pharmaceutical Pricing Authority had in the past demanded Rs 180.37 crore, or 50 per cent of Rs 360.75 crore which it alleged was the amount overcharged for by Cipla from various periods of time till July 2003. The drugs under the scanner included Salbutamol, Theophylline, Ciprofloxacin and Norfloxacin.

Another notice

On Friday, Cipla told the Bombay Stock Exchange that it had received another notice from the Government demanding the entire 100 per cent of the contested amount along with interest aggregating to Rs 748.27 crore. "These notices are contrary to the orders of the Supreme Court and the company has received legal advice that the notices of the Government are not tenable and sustainable," the company said. When the issue first came up, Cipla had filed a petition at the Bombay High Court. It had received a shot in the arm, when the Court said that the mentioned drugs were outside the ambit of price control.

The Centre, however, went in appeal and the Supreme Court sent the matter back to the Bombay High Court for further detailed examination in light of the principles laid down by the Apex Court.

The apex court had also permitted the Government to recover 50 per cent of the amount that it had claimed was overcharged. And the Centre had sent notices to Cipla demanding Rs 180.37 crore or half the original amount it had charged the company for alleged over-charging.

Subsequently, in separate proceedings the Allahabad High Court had ruled that the prices fixed by the Government on the said medicines were illegal and void, the company said. This was further contested by the Government and on an appeal filed by the Government against this ruling, the Supreme Court stayed the judgment of the Allahabad High Court.

However, the Supreme Court had directed that no coercive action be taken against Cipla till the appeal is finally decided, the company maintained.

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