Government Offers Interest Waiver If Pharma Companies Agree To Pay Rs 3,500 Crore, Drop All 666 LawsuitsAn assortment of medical drugs lying on a table. (PublicDomainFiles/Petr Kratochvil)

To bring to an end legal tussles pending since decades, the central government has agreed to offer pharma companies a one-time interest waiver of Rs 1,325 crore on the outstanding amount of Rs 4,827 crore if they drop lawsuits challenging the price control orders, reports Mint.

In essence, drug makers like Sun Pharma, Lupin Ltd and Pfizer Ltd among others will have to shell out Rs 3,501 crore for selling their products at prices higher than those notified under various Drug Prices Control Orders (DPCOs).

By law prices of all medicines mentioned in the National List of Essential Medicines (NLEM) prepared by the health ministry are regulated by National Pharmaceutical Pricing Authority (NPPA). Companies are prohibited from selling drugs at prices higher than those decided by NPPA.

Till date, the Department of Pharmaceuticals (DoP) has filed 666 cases against erring pharma companies, asking them to disgorge excess profits made from charging higher prices on their products since 1997. The companies, however, have challenged these orders in the courts.

However, some health activists are protesting against the government's settlement offer.

"The DoP's offer for a one-time settlement is unlawful and goes against the objectives of the price control regulations. The DPCOs (Drug Prices Control Orders) have been issued under the Essential Commodities Act, 1955. There are no provisions that allow for condonation; therefore any waiving of the interest is in contravention of the law," said Malini Aisola, co-convener of All India Drug Action Network

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