British drugs giant GlaxoSmithKline has been forced to pay a £10 million fine for overcharging on some of its medicines in India.
India’s Supreme Court in New Delhi ordered GSK to pay 712 million rupees (£10 million) to the Government to end a 30-year-old dispute over the pricing of drugs for skin problems and fungal infections.
The ruling is a humiliating defeat for GSK after its chief executive Andrew Witty made the South Asian country a key plank of its future growth plans, where it employs 3,500 people in the country and holds a 5 per cent share of the drugs market. India’s pharmaceutical industry is growing by 13 per cent per year.
The dispute between GSK and the Indian Government is over the pricing of betamethasone, a corticosteroid cream for the treatment of eczema and psoriasis, dates back to the late 1970s when India introduced new rules designed to fix the price of certain drugs to ensure they were available to the nation’s poor.
But GSK rejected the rules, arguing that the prices for some drugs set by the Government were too low and did not take into account the cost of manufacturing them in bulk.
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GSK had defeated the Government in a high court battle on the issue in 1991, but an appeal had gone all the way to the country’s Supreme Court whose decision was finally handed down this week.
Justice RV Raveendran and HL Dattu overturned the 1991 ruling on the drugs, which were sold under the Betnovate and Betneseol brands, in favour of the Indian Government.
“We allow this appeal and set aside the order passed by the High Court and thereby the demands raised by the Central Government,” the judges said.
It added that the central Government had the right to insist that drug manufacturers sell drugs in India at whatever price they chose.
A spokeswoman for GSK in London declined to comment.