The Supreme Court of India has dismissed Sun Pharma’s appeal challenging a Rs 4.65 crore demand notice issued by the National Pharmaceutical Pricing Authority (NPPA). This notice was issued to recover overcharges for the anti-bacterial drug Roscilox, which is based on the Cloxacillin formulation. The demand notice, originally issued in 2005, was aimed at recovering Rs 2,15,62,077 as the overcharged principal amount and Rs 2,49,46,256 as interest for the period from April 1996 to July 2003, due to prices exceeding those set by the Drugs (Price Control) Order, 1995 (DPCO).
Sun Pharma contested the notice in court, claiming that it had previously paid Rs 1.25 crore towards this amount. On August 6, 2014, the Delhi High Court heard the case for the first time and rendered a decision against Sun Pharma. The Delhi High Court’s verdict was maintained by the Supreme Court bench, which included Justices Sanjay Kumar and Augustine George Masih. Sun Pharma’s appeal was deemed without merit in their July 15 ruling.
The NPPA’s demand for the recovery of excess costs was founded, the Supreme Court said, on Paragraph 13 of the DPCO, which gives rise to the right to recover amounts that were overcharged. By contesting the legitimacy of the DPCO’s demand, Sun Pharma’s appeal sought to widen the scope, but the Supreme Court turned down this defense. It noted that Sun Pharma was unable to submit the matter at this time since it had not been sufficiently brought up in its earlier proceedings before the Delhi High Court.
In light of Sun Pharma’s assertion that it was not a manufacturer, importer, or distributor, the primary question in the appeal was whether it was covered by Paragraph 13 of the DPCO. The Supreme Court pointed out that Sun Pharma had acknowledged buying the medication directly from the producer, demonstrating its close relationship with the producer. The Court determined that the DPCO’s definitions of “dealer” and “distributor” are not mutually exclusive, meaning that a distributor may operate as a wholesaler or retailer while still being subject to the DPCO’s regulatory purview.
The goal of the DPCO, Justice Kumar underlined, is to regulate medicine pricing and stop increasing costs from being passed on to customers. He disagreed with Sun Pharma’s assertion that it is only a “dealer,” pointing out that there may be overlap in the responsibilities and definitions under the DPCO. The Court also pointed out that the Delhi High Court had reviewed Sun Pharma’s claims and concluded that the recovery claim was further justifiable because there was a substantial identity overlap and merging with its group firms. To sum up, the Supreme Court confirmed that Sun Pharma’s case lacked adequate legal basis and affirmed the NPPA’s claim for the recovery of overcharges, so bolstering the DPCO’s aims.
SOURCE:
ECONOMIC TIMES
