Lok Sabha Question No. 1772 (UNSTARRED), answered on 2016-03-08
Subject: Action against Pharmaceutical Companies for Over Charging
Ministry: CHEMICALS AND FERTILIZERS
Asked by: ANIL SHIROLE

## GOVERNMENT OF INDIA MINISTRY OF CHEMICALS AND FERTILIZERS DEPARTMENT OF PHARMACEUTICALS

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## LOK SABHA

UNSTARRED QUESTION NO.1772

TO BE ANSWERED ON 8 st  March, 2016

## Action against Pharmaceutical Companies for Over Charging.

## 1772. SHRI ANIL SHIROLE:

## Will the Minister of CHEMICALS AND FERTILIZERS be pleased to state:

- (a) whether  pharmaceutical  companies  have  been  overcharging  the  price  controlled medicines for the last one year;
- (b) if  so,  the  details  thereof  and  the  action  taken  against  such  companies  by  the Government, company-wise;
- (c) the  details  of  pharmaceutical  companies  against  whom  cases  of  overcharging  are pending at present;
- (d) the companies which have been issued notices by the National Pharmaceutical Pricing Authority (NPPA) till date, to pay the amount overcharged and the steps taken to expedite recovery from the pharmaceutical companies; and
- (e) whether the NPPA has issued any guidelines recently to address the issue?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY CHEMICALS    & FERTILIZERS (SHRI HANSRAJ GANGARAM AHIR)

OF

(a) & (b): Yes, Madam. Some of the companies have been found overcharging the prices in  case  of  controlled  medicines.    NPPA  has  issued  demand  notices  to  pharmaceutical companies for recovery of overcharged amount alongwith interest thereon for violation under various  provisions  of  DPCO,  1995  and  DPCO,  2013  read  with  Section  7A  of  Essential Commodities Act, 1955 during the last financial year and the current year upto 29.02.2016 as under:-

|                           | Demand Notice issued (Rs. in crore)   | Demand Notice issued (Rs. in crore)   | Demand Notice issued (Rs. in crore)   |
|---------------------------|---------------------------------------|---------------------------------------|---------------------------------------|
| Year                      | DPCO, 1995                            | DPCO, 2013                            | Total                                 |
| 2014-15                   | 536.27                                | 54.07                                 | 590.34                                |
| 2015-16 (Till 29.02.2016) | 905.98                                | 20.33                                 | 926.31                                |

The  year-wise  list  of  these  overcharging  cases  (updated  upto  29.02.2016)  has  been uploaded on the website of NPPA i.e. www.nppaindia.nic.in.

- (c): Since inception of NPPA, there are 1389 cases as on 29.02.2016 (1250 cases under DPCO 1995 & 139 cases under DPCO 2013)  where demand notices  have  been  issued  by NPPA to Pharmaceutical companies.  The status of these cases is annexed.
- (d): Action  for  recovery  of  the  overcharged  amount  is  taken  as  per  the  provisions  of DPCO,  1995  and  DPCO,  2013.  However,  in  many  of  the  cases,  the  demands  raised  for overcharging have been challenged in courts. As on 29.02.2016, Rs.3698.32 crore representing  about  82%  of  the  total  outstanding  amount  is  under  litigation  in  various  High Courts and the Supreme Court. NPPA is actively pursuing these court cases and where the demand raised by NPPA has not been challenged in the court and the concerned company does not deposit the amount of demand, the matter is referred to the respective Collector for recovery of the overcharged amount as arrears of land revenue under Essential Commodities Act, 1955.
- (e): NPPA has not issued any new guidelines recently to address the issue.  However, the guidelines issued during October, 2012 and amendment in October, 2013 are being followed in such cases.

## Status of the Overcharging Cases

## Annexure

(Rs. in Crore)

|   Sl.N o. | Particulars                                                                                                                                                                                                                     |   DPCO 1995 |   DPCO 2013 |   Cumulative (Aug, 97 to 29.02.2016) |
|-----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------|-------------|--------------------------------------|
|         1 | No. of cases                                                                                                                                                                                                                    |     1250    |      139    |                              1389    |
|         2 | Overcharged amount demanded including interest whenever updated                                                                                                                                                                 |     4861.52 |       74.4  |                              4935.92 |
|         3 | Total amount realised                                                                                                                                                                                                           |      316.31 |       68.6  |                               384.91 |
|         4 | Amount outstanding (2-3)                                                                                                                                                                                                        |     4545.21 |        5.8  |                              4551.01 |
|         5 | Cases under Litigation including Cases referred to collector but contested by the companies in the court of law and in r/o Cipla Ltd. & its associate , where no coercive action can be initiated as per order of Supreme Court |     3673.36 |       24.96 |                              3698.32 |
|         6 | Cases referred to collector & amount still to be recovered                                                                                                                                                                      |       67.85 |        0.01 |                                67.86 |
|         7 | Pending with BIFR/ Official Liquidator                                                                                                                                                                                          |        5.41 |        0    |                                 5.41 |
|         8 | Amount pending relating to the overcharging cases under process (4-(5+6+7)                                                                                                                                                      |      798.59 |      -19.17 |                               779.42 |

Further, the demand raised in 37 overcharging cases under DPCO, 2013 amounting to Rs. 145.11 crore against the petitioner companies have been treated as show cause notices in pursuance of order dated 24.11.2015 passed by the Hon'ble High Court of Delhi in various writ petitions filed by them.

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