Drug companies including Ranbaxy Laboratories, Dr Reddy’s Laboratories (DRL) and Lupin ( Rakesh Jhunjhunwala is holding LUPIN shares) may have to pay over Rs 1,600 crore as penalties for selling some of scheduled drugs (whose prices are controlled by the government) at a price higher than the prescribed limit.
The National Pharmaceutical Pricing Authority (NPPA) has asked Ranbaxy and DRL to pay a fine of Rs 124.21 crore Rs 31.11 crore respectively for overcharging consumers. The government sets price limit of certain essential drugs including medicines used in the treatment of cancer, asthma, pneumonia, diarrhoea and typhoid.
In a nationwide survey conducted by the NPPA to take stock of ground reality, it has found that companies are overcharging customers for about 500-odd medicines in violation of drug price control norms, an NPPA official told ET. In case of scheduled drugs, companies have to go back to the NPPA for raising prices of medicines. However, companies can raise prices of non-scheduled drugs by 10% in 12 months.
Ranbaxy and DRL did not respond to email queries. The survey has found that both DRL and Ranbaxy are overcharging for Ciprofloxacin-based formulations, Cloxacillin-based formulations (antibiotic used for the treatment of typhoid and pneumonia) and Norfloxacin (antibiotic used for the treatment of urinary tract infection) drugs.
The drug price regulator is issuing notices to pharma companies after finding evidences of overcharging. It asks them to deposit the overcharged amount along with the interest to the government and give explanation for violating pricing norms. Some of the companies challenged NPPA’s decision in the court.
So far, NPPA has recovered Rs 27.81 crore from Ranbaxy and Rs 11.33 crore from DRL. Recently, the NPPA has roped in district collectors to recover the money.
As per Sep 08 share holding pattern, Rakesh jhunjhunwala is holding 1,661,881 and 1,130,254 shares in the name of Jhunjhunwala Rakesh Radheshyam and Jhunjhunwala Rekha Rakesh respectively