Union Minister of State for Chemicals and Fertilizers Anupriya Patel informed the Rajya Sabha on July 30 that the government has taken action against pharmaceutical companies for overcharging. The minister reported that Rs 72.73 crore was recovered from defaulting companies in 2023-24.
The recovered amount pertains to excess charges beyond the government-fixed prices for essential drugs. This sum also includes penalties for violations of the Drug Price Control Order (DPCO), which sets the maximum retail price for these drugs.
Despite this recovery, the amount is surprisingly small compared to the actual extent of DPCO violations in the domestic market. The current DPCO covers 384 drugs listed in the National List of Essential Medicines (India NLEM - 2022). These drugs are available in thousands of dosage forms and formulations, both branded and unbranded. The higher prices of branded drugs compared to unbranded ones highlight the lack of price standardisation in the market.
Each year, numerous pharmaceutical companies receive notices from the National Pharmaceutical Pricing Authority (NPPA) for DPCO violations. The amounts claimed in these notices often run into hundreds of crores, but many companies evade payment through legal challenges or other means.
For instance, a major Mumbai-based company was once asked to pay Rs 1500 crore by NPPA in 2010, when the National List of Essential Medicines included only 74 drugs. This was just one of many such cases.
According to the Drug Prices Control Order (DPCO), 2013, ceiling prices for scheduled medicines are revised annually based on the Wholesale Price Index (WPI) and notified by the NPPA on April 1st each year. Both scheduled and non-scheduled drugs are covered under DPCO, 2013.
For non-scheduled formulations (branded or generic), no manufacturer can increase the Maximum Retail Price (MRP) by more than 10% within a 12-month period. However, manufacturers may choose not to increase prices based on market considerations.
Formulations listed in Schedule-I of the DPCO are classified as scheduled, while those not included are non-scheduled. Manufacturers must comply with the Drugs and Cosmetics Act, 1945, including adhering to good manufacturing practices. The NPPA monitors prices for both scheduled and non-scheduled medicines.
(With inputs from ANI)