Novartis is playing a version of "The Price Is Right" with India's National Pharmaceutical Pricing Authority. The NPPA has fined Novartis ($NVS) the equivalent of $49 million for overpricing its popular pain drug Voveran, and Novartis has responded by challenging the NPPA's authority to do so. The fine is just the latest move in an escalating battle between drugmakers and the NPPA over how far it can go in controlling their ability to price drugs.
Novartis confirmed the Rs 300 crore fine to the Business Standard, but a spokesperson said, "However the basis of the demand itself has been challenged by us before the Delhi High Court."
The newspaper said Novartis, along with GlaxoSmithKline ($GSK) and India's Cipla, all took the matter to one of India's courts in July 2013 after the NPPA added 348 drugs to its list of essential drugs and placed price caps on them. It said the authority then gave the drugmakers only 45 days to reprice and restock shelves. The Business Standard, citing IMS Health data, said that Novartis' Voveran is one of the top 10 best-selling drugs in India, but that since last year its growth has slowed by 14.5%.
Rather than be quelled by the litigation, this spring the NPPA established guidelines that said it had the power to set prices of drugs that are not on the national list of essential medicines. It followed up in July by adding three dozen drugs to the essential medicines list and setting price caps on about 110 drugs that were not on the list.
Some drugmakers again took the matter to court, but the effects of the moves were immediate for at least one drugmaker. Sanofi ($SNY) saw its shares take a 10% hit because of concerns that it would suffer from the NPPA's move to cap the prices of a number of heart and diabetes drugs. One analyst predicted that Sanofi could see its sales in India fall off by 9.5% and its profits by 30%.
The moves last year predated the recent election of Prime Minister Narendra Modi, whose government has shown signs of taking a less aggressive approach toward drug prices. Last month the NPPA announced that it had lost the authority to unilaterally add drugs to those that will be capped--the authority it had outlined for itself months earlier. Reuters reported at the time that no reason was given for why the government reined in the NPPA, but that the move came after the Organization of Pharmaceutical Producers of India filed lawsuits challenging the moves.
According to the Business Standard, two Delhi High Court judges recently told the drugmakers to meet with the NPPA and the government and work out its issues before an October 30 hearing date because they were "tired of hearing it."
- here's the Business Standard story