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Supreme Court judgement blows Cipla for overpricing, slaps Rs 1700 cr fine

Supreme Court judgement blows Cipla for overpricing, slaps Rs 1700 cr fine

Mumbai: In a blow to Mumbai based pharma giant CIPLA, the Supreme Court has upheld the government’s stand to penalize the company under Drug (Price Control), Order 1995 mentioning alleged overpricing in its certain medicines. The court has ruled the judgement penalising the pharma firm with Rs 1,768.51 crore fine.

On Friday, Cipla which is promoted by YK Hamied, informed stock exchanges that, “The Supreme Court has decided in favor of Union of India in an appeal filed against Cipla Ltd and others arising out of the judgment of the Allahabad High Court.”

The case is of alleged overpricing by Cipla Ltd, where the authority that regulates drug pricing in India and oversees the assessment of market prices at regular intervals, the National Pharmaceutical Pricing Authority (NPPA), had fined the company in 2003 for overpricing malpractice implemented on its certain drugs.

However, the company challenged the order of NPPA which levied fine on it in the High Courts of Bombay, Allahabad and Karnataka. The ruling of the Bombay and Allahabad courts came in favor of the company, as it was spared from giving the fine.

Later NPPA,  again challenged the respective courts’ judgement favoring the company, in the Supreme Court.

The case further was transferred to the Bombay high Court on July 22, 2016 for the interpretation of drug policy, by the Supreme Court and is still pending with the court. Other than this, the apex court had also directed orders to the company to deposit 50% of the fine to the court that estimates to around Rs 175.07 crore, before moving to the Bombay high Court. The amount had to be submitted within six weeks from passing the order, reports VC Circle.

One of the Senior executives of Cipla, told the daily that the firm as well as other pharmaceutical companies, which are battling similar grounds of fine in Bombay high Court have supported the argument by saying that seven bulk drugs are falsely included in the DPCO.

He added that if the ruling goes in favor of NPPA, then the authorities might include more drugs in the same list.

Asserting justification in its latest annual report, Cipla said, “In earlier Supreme Court order, the court has already restrained the government from taking any coercive action against the company.”

The report also read, “The company has been legally advised that on the merits of the cases that there is very little likelihood of these demands crystallizing. Hence, no provision is considered necessary in respect of the notices of the demand received by the company up to date aggregating to Rs 1768.51 crore.”

There are more than Rs. 3,500 crore claimed by NPPA by filing similar case of overcharging on other pharmaceutical companies which are still stuck in courts.


Source: with inputs
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