New Delhi: Pharmaceutical companies owe the government more than Rs 8,500 crore for allegedly overcharging patients for medicines, with most of the money stuck in court cases, prompting a Parliamentary Standing Committee to recommend that the National Pharmaceutical Pricing Authority (NPPA) set up a dedicated legal cell to speed up litigation.
These dues arise when companies sell medicines above the maximum price allowed by the government. Under the law, they have to return the overcharged amount along with interest.
In its 33rd report on the functioning of the NPPA, tabled in Parliament Thursday, the committee said that as of 30 September 2025, Rs 8,526.10 crore, out of a total demand of Rs 10,013.30 crore, about 85 percent, was still unpaid.
The NPPA is the government body that fixes ceiling prices for essential medicines and monitors medicine prices in the country.
The committee found that Rs 5,944.16 crore, nearly 70 percent of the pending amount, is locked in cases before High Courts and the Supreme Court. Of the 345 court cases, 280 have been pending for six to more than 20 years.
The panel, which examined the Department of Pharmaceuticals under the Ministry of Chemicals and Fertilisers, asked the department and the NPPA to take “urgent measures” to speed up these long-pending cases.
It also pointed out that another Rs 2,581.94 crore remains unpaid in cases that are not yet before the courts. These include cases sent to district collectors for recovery and cases where companies have challenged the demand notices.
The committee recommended setting up a fast-track system to resolve such disputes before they reach the courts.
Committee wants dedicated legal team
The committee also noted that the NPPA currently depends on lawyers hired on contract to fight these cases.
Given the large number of pending cases and the amount of money involved, it recommended creating a dedicated legal cell within the NPPA.
“The Committee, taking into account the magnitude of pending litigation cases and corresponding overcharging demand amount, recommends that the Department may examine the feasibility of creation of a dedicated legal cell within NPPA for effective and timely disposal of the litigation cases,” the report said.
The report also noted that companies have challenged demand notices in 436 cases involving Rs 2,358.20 crore.
According to the department, companies have disputed whether they violated pricing rules, how the overcharged amount was calculated, whether certain medicines fall under price control, how trade margins should be counted and how interest should be calculated.
While the department told the committee that companies were not exploiting loopholes, the panel said the repeated nature of these disputes showed the need for clearer rules to reduce litigation.
Panel raises concerns over medicine pricing
The committee also raised broader concerns about how medicine prices are regulated in India.
It noted that non-scheduled medicines, which are not under direct price control, account for around 82 percent of the pharmaceutical market. For these medicines, companies are free to decide the launch price, while the NPPA only limits how much prices can be increased every year.
The panel said this could allow companies to introduce new medicines at high prices and asked the department to review the current system.
It also questioned the lack of public participation in fixing the prices of new medicines. Between December 2022 and November 2025, the NPPA uploaded 1,426 draft price proposals for public comments but received only about 30 responses, most of them from pharmaceutical companies.
The committee further pointed to gaps in the market data used by the NPPA. It said Pharmarack, the third-party vendor NPPA relies on to track medicine prices, does not capture data from hospitals, doctors who dispense medicines directly, Jan Aushadhi stores, trade generics or online pharmacies.
It asked the department to widen data collection so medicine prices are tracked more accurately, especially in rural areas.
The report also highlighted staff shortages in the NPPA. It said 15 of the regulator’s 48 sanctioned posts are vacant and urged the department to fill these vacancies quickly while also approving a proposal to create 59 additional posts.
(Edited by Sugita Katyal)
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