NPPA alleges overcharging for cancer drug Tagrisso: AstraZeneca moves Delhi HC against Rs 157 crore demand notice

The notice of demand was issued by the National Pharmaceutical Pricing Authority ('NPPA') on June 25th, 2021, under the provisions of the Drugs (Price Control) Order, 2013 (DPCO, 2013) for Tagrisso tablets containing Osimertinib 80 mg formulation.

The demand notice was issued pursuant to the NPPA notification S.O No. 1041 (E) dated 27th February 2019 whereby the Government put a cap on the trade margin of 42 anti‐cancer medicines at the first point of sale of the product.

Also Read: NPPA Caps Trade Margins To 30 Percent For 42 Cancer Drugs

The Osimertinib Film-coated Tablet is marketed under the brand name of Tagrisso 80mg. Osimertinib is used to treat locally advanced or metastatic non-small-cell lung cancer (NSCLC) when the cancer has the specific T790M mutation in the gene coding for the epidermal growth factor receptor.

Medical Dialogues Team had earlier reported that NPPA had issued a Show Cause Notice directing the firm to furnish CA certified data for the sale of the said formulation within 15 days of receipt of this order, failing which a demand notice would be issued based on market data available to NPPA.

Following this, AstraZeneca had moved to the Delhi High Court where NPPA had been directed by the Delhi High Court to reconsider and issue a fresh order to AstraZeneca over the cancer drug Osimertinib (Tagrisso 80mg), adding that the Authority should not file any demands against the drug maker until it issues a new order.

In the prior lawsuit, AstraZeneca had submitted Osimertinib (Tagrisso 80mg tablet) is a patented product qualifying for exemption for five years from the date of commencement of its commercial marketing in India. Therefore, Para 32 (i) of DPCO, 2013 stipulates that the provisions of the above-said order shall not apply to a manufacturer producing a new drug patented under the Indian Patent Act, 1970 for a period of five years from the date of commencement of its commercial marketing by the manufacturer in the country.

Further, in the same hearing, AstraZeneca had claimed that it has a product patent covering the molecule OSIMERTINIB (TAGRISSO) and the same is valid for twenty years, i.e. up to 24.07.2032, making the Show Cause Notice dated 14.10.2020 and the impugned order dated 13.01.2021 thus illegal and to be quashed.

Now, in continuation, National Pharmaceutical Pricing Authority ('NPPA'), on 25th June 2021, issued a notice of demand alleging that the Company is in violation of notification S.O No. 1041 (E) dated 27th February 2019, and has overcharged Rs. 157,38,85,007/ (Rupees One hundred fifty seven crore thirty eighty five thousand and seven only) between 8th March 2019 and 31st March 2019, in respect of Tagrisso (Osimertinib) 80 mg tablets.

Consequently, the company has been ordered to deposit an amount of Rs. 157,38,85,007/‐ within 30 days from the date of the notice. In addition, it is further stated in the said notice of demand that the company is also liable to pay interest, calculated up to the date of actual payment as per the applicable provisions of the DPCO, 2013 read with the Essential Commodities Act, 1955.

In response to the NPPA's demand notice, AstraZeneca in its filing said,

"The Company strongly believes that the NPPA has not adequately considered several submissions made in support of the Company's contentions, including the fact that Osimertinib is a patented drug and, as such, the DPCO, 2013 and the said notification dated 27th February 2019 are not applicable to Osimertinib as comprehended under Para 32 of the DPCO, 2013."

Further, AstraZeneca stated that the company has carried out a thorough evaluation of the matter and is of the firm view that it has followed all applicable laws related to the pricing of its product, including the said notification S.O No. 1041 (E) dated 27th February 2019 and that the above demand from the NPPA is grossly erroneous and legally unsustainable.

In addition, the company also mentioned that the company is committed to providing the best access to its drugs through its patient assistance programs, which directly benefit patients who pay out‐of‐pocket by helping them access drugs free of cost if enrolled successfully in such programmes. The NPPA's order may have industry-wide implications for patient assistance programs and, consequently, the affordability of medicines for out‐of‐pocket patients, it added.

Furthermore, the firm noted that the notice penalises the company for supplying at a lower rate to government institutions via tenders as compared to MRP and yet, for purposes of accounting, erroneously includes the MRP and not the amount actually realized.

Considering the above, the company has now file a Writ Petition before the High Court of Delhi challenging the demand notice.