Drugmakers, such as Dr Reddy’s Laboratories, Wyeth, GlaxoSmithKline (GSK) Pharmaceuticals and Alkem Laboratories, may now have to face state officials for failing to pay up penalties for overpricing.
The central government is working jointly with states for recovering the amount overcharged by such companies on medicines from consumers. The drug price regulator, National Pharmaceutical Pricing Authority (NPPA), has referred 39 overcharging cases to various states for recovering the excess amount from these companies. These cases are referred on the basis of pendency of the case and the quantum of overcharging, an NPPA official said.
“We have decided to refer these cases in order to ensure that companies come under pressure from the state machinery to pay up the overcharged amount. The cases forwarded to states are the ones where the NPPA has not received any response from the company despite repeated reminders,” the official said.
So far, the pricing authority has imposed a fine of around Rs 1,700 crore on companies. However, out of this, NPPA could recover only Rs 150 crore till October 2008. The latest move is significant as this would ensure that NPPA’s overcharging notices reach their logical conclusion.
Involving the state machinery would enable the pricing authority to recover the overcharged amount along with the interest from companies which so far have managed to ignore NPPA’s notices for overcharging. The regulator has directed several state governments to initiate recovery of more than Rs 110 crore from 30 companies.
According to an NPPA notification, multinational firms GSK Pharmaceuticals and Wyeth are facing a penalty of Rs 7.53 crore and Rs 4.38 crore, respectively, in Maharashtra. The Hyderabad-based Dr Reddy’s is facing two cases on recovery in Andhra Pradesh. Alkem Laboratories is also facing two overcharging cases in Maharashtra.
However, GSK claims that it has already paid the amount and there are no more overcharging dues against the company. “We have honoured the Supreme Court’s order and the amount has already been paid to the NPPA,” a GSK spokesman said.
Wyeth said that it has not received any communication from NPPA in this regard. An email query sent to Dr Reddy’s and Alkem remain unanswered.
The drug price regulator issues notices to pharmaceutical companies whenever evidence of overcharging is found. The companies accused of violating price control norms were asked to deposit the overcharged amount with the government and explain the price hikes affected by them.