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NPPA STRUGGLING ON RECOVERY

Ramesh Shankar
Wednesday, February 14, 2024, 08:00 Hrs  [IST]

The National Pharmaceutical Pricing Authority, which was established by the Central government exclusively to monitor and control the prices of drugs in the country, appears to be struggling to curb violations of ceiling prices fixed by it as the pharmaceutical companies have been routinely overcharging a number of life saving drugs. It is very much evident from the fact that over 86 per cent of the total demand raised by the Authority from a large number of pharmaceutical companies on alleged overcharging of prices over the years is yet to be recovered. The NPPA has recently released a data according to which till September, 2023, the NPPA has reported a long list of 2,433 cases of overcharging from the year 1979 to September, 2023 and raised demand for overcharging to the tune of a whopping Rs. 9,900.8 crore. Out of the demand, only Rs. 1,372 crore has been recovered till September, 2023, leaving around Rs. 8,529 crore, which is around 86.15 per cent of the total amount, to be recovered yet. The NPPA is in litigation with the pharmaceutical companies on various forums including cases referred to the district Collectors and contested by the companies in the courts of law involving a total of Rs. 6,100 crore out of the total of Rs. 8,529 crore outstanding. Of the rest of the amount demanded, cases to an amount of around Rs. 230.9 crore are referred to the district Collector and the amount is still to be recovered, while recovery of around Rs. 5.5 crore is pending in connection with the industrial and financial restructuring and official liquidator. The rest of Rs. 2,192.4 crore is related to the overcharging cases under process.

Overcharging of drug prices has been a major issue ever since the first Drug Price Control Order was announced by the government way back in 1979 to make essential drugs available at affordable prices. Violations of the DPCO provisions by way of either circumventions or overcharging by the pharmaceutical companies have been going on in the country with impunity. As the government brought more drugs under DPCO in 1995, monitoring of drug prices became a daunting task for the government. It was under this backdrop, the NPPA was established by the Centre way back in 1997. The NPPA's task of monitoring and controlling the drug prices became manifold when the government added more drugs in the DPCO. NPPA provides ceiling price to all drugs notified under Schedule-I and monitors annual price increase for these and the non-scheduled drugs. It has fixed ceiling prices for 700 scheduled formulations based on the National List of Essential Medicines, 2022 and retail prices for 2,607 non-scheduled formulations under DPCO, 2013 till December 31, 2023. It is clear that the NPPA strives to strike a balance between the interests of the consumers and the pharma industry within the ambit of the DPCOs. Its role as a regulator is to work towards a healthy nation by making medicines accessible and affordable while creating an enabling environment for the Indian pharmaceutical industry to develop into a world leader. Now, what is interesting is the fact that there are no indications when the NPPA will be able to recover such a huge sum of money from a large number of pharmaceutical companies. As the price violation cases are fought in different courts and are in various stages of hearing, it looks difficult to recover such a huge amount by the NPPA from the drug companies even with the price monitoring units in the states. The Centre needs to work out a comprehensive strategy to address the twin issues of continuing ceiling price violations and recovery of huge overcharged amounts. Otherwise, the very purpose for which it has been formed will not be served.

 
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