Regulator going to charge pharma companies with over-pricing

India’s pharma giants are famous for producing many low cost drugs for the developing world (an example is the provision of the life-saving anti-HIV cocktail of drugs that can increase the life expectancy of AIDS afflicted patients; the cocktail was pretty expensive, but when manufactured by Cipla, the cost had been drastically reduced making it affordable to larger sections of a poor country). At the same time, big pharma (whether it be domestic or foreign companies) are always on the lookout for making a fast buck. Some of the past practices over the world include extending the life of a patent by a very minor change, or by charging a higher price for the product if this was a monopoly. In India, the regulator has started threatening the pharma companies that have been involved in charging excessively for their drugs:

Pharma majors like Cipla, Ranbaxy and US Vitamin (India) may have to cough up over Rs 1,563 crore for overcharging customers on price-controlled medicines. Through a nation-wide survey done over a year, National Pharmaceutical Pricing Authority (NPPA) has found that pharma companies were overcharging or selling without price approval more than 530 items used for various ailments including cancer and asthma. Several antibiotics and pain-killers are part of the list of medicines listed out by the survey which found overcharging in case of 350 products and sale without price approval in case of the remaining 180. The findings of the survey were based on 850 samples collected from 19 cities.

The companies accused of violating price control norms were asked to deposit the overcharged amount with the government and explain the price hikes effected by them. Companies cannot raise prices of scheduled drugs (prices are controlled by the government in these case) beyond 10% every year. Meanwhile, NPPA has roped in district administrations to recover the overcharged amount from drug makers.

Many of these companies have gone to court or will go to court to appeal against these orders; but prima facie this seems to be a valid case. It is for the courts to decide whether these companies were indeed over-charging; however if companies were indeed doing this and consumers had to pay extra, then this is a welcome step that will help consumers struggling with the charges of medical treatment.

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