Cipla loses battle in Supreme Court Over Drug Price Overcharging

New Delhi, Oct 2016

In a major setback for drug major Cipla, the Indian Supreme Court on has ruled in favour of the Indian government in a case involving overpricing of certain medicines by the company.

The case has ramifications for other drug companies involved in similar price-related challenges. There are demand notices of over Rs 1750 crore against Cipla on this count but it is clear how much the liability of the company will ultimately be.

The Indian Apex Court's ruling follows an appeal filed against Cipla and others by the Indian government arising from an earlier judgment by the Allahabad High Court. The other petitions filed in the Bombay High Court on completely separate grounds relating to alleged overcharging are pending and are still subject to the interim stay granted by the Supreme Court.

The cases involve alleged overcharging on certain medicines under the Drugs (Prices Control) Order (DPCO) 1995.  It is understood that there are multiple cases on alleged overcharging against Cipla and other local and foreign companies in different courts in the country.

There is an ongoing case that involves the conversion and packaging costs that are mandated to be revised every year under the DPCO.

In an overcharging-related case, Cipla has till date received demand notices to the tune of Rs 1,768 crore from the National Pharmaceutical Pricing Authority. Earlier this year, though, the apex court had directed Cipla to pay Rs 175 crore to the government in this case. Drugtodayonline