Domestic pharmaceutical companies that have taken the litigation route to successfully block the National Pharmaceutical Pricing Authority (NPPA) from recovering over 90 per cent of the overcharged amount of Rs 1,552.2 crore may soon find the strategy less attractive.
Instances of courts asking the companies to pay half of what is demanded by the NPPA in the first hearing of the case are on the rise. The pricing regulator raises the demands if it finds that the companies are charging more than the price fixed by it.
In a recent intervention, the Bombay High Court asked multinational firm Johnson and Johnson to deposit Rs 15 crore.
Similarly, the Hyderabad High Court asked Dr Reddy’s to remit Rs 3 crore, half the amount sought by the NPPA.
According to experts, the companies can expect to get back this money only if the cases are decided in their favour. The Supreme Court and the Delhi High Court have also issued such directives in the past.
This is impacting the pending recovery statistics of the NPPA. During the April-July period, the regulator recovered Rs 18.7 crore (including from J&J and Dr Reddy’s). The recovery figures are impressive as the NPPA had raised demands worth just Rs 23.66 crore during the period. During 2007-08, the NPPA recovered Rs 4.51 crore.
In this fiscal, the regulator is known to have issued 170 demand notices. While the companies are in the process of replying to the regulator’s queries in some cases, the NPPA has calculated the quantum of overcharged amount in 35 cases.
