Policy

Overcharging: Govt recovers ₹238.84 crore from pharma firms

Aesha Datta New Delhi | Updated on January 11, 2018 Published on July 25, 2017

Mansukh L Mandaviya, Minister of State for Chemicals and Fertilisers

But amount recovered is only 30% of the demand made by the govt

Minister of State for Chemicals and Fertilisers Mansukh Lal Mandaviya informed the Lok Sabha on Tuesday that ₹238.84 crore had been recovered from pharmaceutical companies till June 30, 2017, for overcharging on essential medicines, the price for which are capped.

The Minister, however, did not mention that the amount recovered from pharmaceutical companies for not complying with the rules under the Drugs Price Control Order, 2013, was less than 30 per cent of the total ₹811.94 crore overcharged amount demanded.

The government has, till date, demanded a total ₹5,777.80 crore from pharma companies for a total 1,664 cases of violation, according to data from the National Pharmaceutical Pricing Authority (NPPA), the nodal body which regulates the prices of both scheduled and non-scheduled medicines. Of this, ₹4,965.86 crore has been demanded for violation of the previous DPCO 1995 and ₹811.94 crore under DPCO 2013.

However, a total of only ₹778.67 crore — or less than 14 per cent of the demand — has been collected till June 30, 2017, from these companies for violating the order and charging prices over and above those fixed by the NPPA.

The Minister, in his written statement to Parliament, said when companies are found selling scheduled formulation at prices higher than the ceiling prices fixed by NPPA, action is taken against such companies under the relevant provisions of DPCO, 2013 and the overcharged amount, along with interest is levied on the company. The government also takes action if a company hikes prices of a medicine by more than 10 per cent vis-a-vis the previous year.

However, despite regular demands being made, the NPPA, under the Ministry of Chemicals and Fertilisers, has had only limited success in actually reclaiming the overcharged amounts from pharmaceutical companies.

Several cases, in which the government has attempted to recover the overcharged amount, are stuck in courts and litigation. The data show that since inception, in 1995 when the first DPCO came into being, the government has never been able to recover more than one-third the demand in any year.

On an average, less than 18 per cent is collected every year.

Published on July 25, 2017
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