Cipla to pay for overcharging drugs

MUMBAI: The government has served notices to Cipla, asking the company to pay Rs 193.65 crore, inclusive of interest, for overcharging of five drugs between August 2003 and March 2006. The domestic pharma major had already received in April 2007 notices from the National Pharmaceutical Pricing Authority (NPPA) demanding Rs 748.27 crore along with interest for allegedly overcharging the same five drugs till April ‘03.

“These notices are contrary to the orders of the Supreme Court of India, and we believe that the entire amount demanded by the government are not tenable and sustainable,” Cipla’s CEO Amar Lulla told SundayET. In December 2003, Cipla had received notices from the NPPA to pay an amount of Rs 76.75 crore, being 50% on account of alleged overcharging in respect of three drugs for the period from July 2000 till July 2003.

The company had challenged the inclusion of the drugs Salbutamol, Theophylline, Ciprofloxacin and Norfloxacin within the ambit of price control. The Bombay High Court had ruled in favour of Cipla, holding that the drugs were outside the ambit of price control. However, the Supreme Court, responding to an appeal, had remanded the matter to the Bombay High Court for further examination.

The Supreme Court had also permitted the government to recover 50% of the amount they claimed to have been overcharged. The government had subsequently sent notices to Cipla asking the company to pay Rs 103.08 crore. Cipla had, however, not paid the same in view of the interim orders obtained in different proceedings from the Karnataka High Court and the Allahabad High Court.