The Supreme Court has affirmed the demand notice issued by the National Pharmaceutical Pricing Authority (NPPA) against Sun Pharma, involving a penalty of Rs 4.65 crore for the overpricing of its antibacterial drug, Roscilox. This decision comes after Sun Pharma contested the notices dating back to 2005, which called for the company to reimburse Rs 2,15,62,077 as the principal amount overcharged between April 1996 and July 2003, in addition to interest amounting to Rs 2,49,46,256.
Sun Pharma had already contributed Rs 1.25 crore towards the settlement of this demand. The ruling was upheld by a bench of Justice Sanjay Kumar and Justice Augustine George Masih, echoing the Delhi High Court’s verdict from August 6, 2014, which had previously dismissed the pharmaceutical giant’s claims.
The Supreme Court’s judgment articulated that the appeal was “devoid of merit,” leading to the dismissal of Sun Pharma’s plea and the vacation of the status quo order from November 10, 2014. The court’s deliberations highlighted that Sun Pharma’s challenges regarding the validity of the demand under the Drugs (Price Control) Order, 1995 (DPCO) were unfounded, particularly since these issues were not appropriately raised during earlier proceedings at the Delhi High Court.
The bench clarified that the primary contention revolved around whether Sun Pharma fell under the purview of Paragraph 13 of the DPCO, which grants the authority to recover overcharged amounts. Despite Sun Pharma’s assertions that it was neither a manufacturer nor a distributor, the court noted the company had admitted to purchasing the drug directly from the manufacturer, thereby establishing a direct link.
The justices elaborated on the definitions within the DPCO, indicating that the roles of ‘distributor’ and ‘dealer’ are not mutually exclusive, and that Sun Pharma’s dual role in the market did not exempt it from the regulations under Paragraph 13.
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Justice Kumar, in his written judgment, emphasized the imperative nature of DPCO’s provisions aimed at controlling drug prices to ensure affordability for the general populace. He criticized Sun Pharma for its inconsistent representations and lack of substantial evidence regarding its status, which precluded a reclassification as merely a ‘dealer’.
