What Is the Micro Labs Dolo-650 Scam? | Why Are the Makers in Trouble?

Kinnary Nensee Kinnary Nensee
Aug 27, 2022 5 min read
What Is the Micro Labs Dolo-650 Scam? | Why Are the Makers in Trouble?

There may be very few people in India not familiar with the paracetamol tablet Dolo-650. The tablet was termed the ‘Magic Pill’ and was widely used to combat fever, especially, during the Covid-19 pandemic. It was nicknamed “Covid – Pandemic’s Favourite Snack” and has recorded a sale of INR 500 crore selling more than 350 crore tablets, starting from March 2020.

Micro Labs Ltd is a Bangalore-based pharmaceutical company that produces the famed drug and other generic medicines and drugs for cardiology, diabetology, anti-infectives and ophthalmology. Founded in 1973 by the late Mr G. C. Surana, Micro Labs is a privately held company now under the leadership of his sons – Mr Dilip Surana and Mr Anand Surana.

Recently, though, this 49 year old Indian MNC has been in the grips of an emerging controversy.

The Alleged Scam of Dolo-650
Micro Labs' Response to the Charges
The Effects of the Scam

Dolo-650 | Everything about the 'Magic Pill' of the Covid-19 Pandemic

The Alleged Scam of Dolo-650

Earlier this year, the Income Tax Department accused the manufacturer of Dolo-650, Micro Labs of tax cheating and evading and put the company under income tax scrutiny.

In the latest development, The Central Board for Direct Taxes (CBDT) has levelled an accusation that the makers of Dolo-650 are guilty of distributing free gifts worth INR 1000 crores to doctors for prescribing this tablet. This was pointed out by Advocate Sanjay Parikh who appeared on behalf of the Federation of Medical and Sales Representatives Association of India. Advocate Parikh further elaborated stating that it is “an irrational dose combination” to ensure higher profits are earned by the company. He also filed a rejoinder stating that he would like to bring more facts to the knowledge of the court. The court approved his request and the judges have given him a week’s time to bring forth all the facts.

Supreme Court Bench of Judges D.Y. Chandrachud and AS Bopanna heard the plea and Justice D.Y. Chandrachud described it as a ‘severe issue’.

He said – “What you are saying is not music to my ears. This is exactly the drug that I had when I had Covid recently. This is a serious issue and we will look into it.”

The Bench of Judges posted the matter for further hearing on September 29, 2022, and asked Additional Solicitor General K.M. Nataraj to file his response in 10 days.


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Micro Labs' Response to the Charges

Micro Labs Profit Growth from 2017 to 2021
Micro Labs Profit Growth from 2017 to 2021

The company spokesperson has responded by clarifying that the amount referred to, is actually reflecting the total sales and marketing expenses incurred for its Indian business in the last five years. He went on to assert that Micro Labs maintained uninterrupted supplies during the pandemic keeping the price constant as per government regulation. This was despite the rising costs of raw materials. Doctors across the country were able to successfully manage patients suffering from covid with an economical option like Dolo-650 and sparing the public from expensive drugs.

The company’s spokesperson stated - "To think of distribution of freebies worth thousands of crores is thus highly preposterous. The medication has been prescribed by doctors due to its quality, effectiveness and speedy relief from fever and on the trust built over three decades. We are fully cooperating with the authorities to provide all the necessary information and explanation for their due consideration.”

Mr Dilip Surana, the Chairman and Managing Director at Micro Labs has also given his input during an interview. He stated that Dolo-650 was designed only after detailed discussions with doctors and realising the gap that existed in managing fever as the relief provided by Paracetamol 500 mg was not adequate. The drug was launched in 1993 as the answer to the aforementioned gap. He further went on to say that the medicine was never directly advertised to the people and hence its rise to fame during the pandemic was unexpected. However, he clarified, that Dolo 650 has always been the number one medicine prescribed in its category in India, since its inception.

Mr Surana claimed that Dolo-650 helped in the promotion of the vaccination drive by addressing public doubts through posters put up at all vaccination centres throughout the country. Doctors also prescribed the tablet for any complaints of fever or body pains as a result of the vaccine. This popularized the brand at the grassroot level.


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The Effects of the Scam

An NGO has asked the Supreme Court to hold pharmaceutical companies accountable for giving incentives to doctors to prescribe their medicines.

In March, the Supreme Court agreed to examine a plea seeking the direction of the central government in framing a Uniform Code of Pharmaceutical Marketing Practices. This would help in curbing unethical practices of pharma companies and ensure an effective monitoring system, encourage transparency, and accountability and have severe consequences for violations.

Advocate Parikh clarified in the Supreme Court that he has been pursuing this issue with the government since 2009 and until the government frames a regulation code, he asked the court to lay down certain guidelines.

The plea filed by Advocate Aparna Bhat stated that the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations of 2002 must prescribe a Code of Conduct for Doctors to regulate their relationship with pharmaceutical companies and the allied health sector. It must specifically prohibit acceptance of gifts and entertainment, travel facility, hospitality, and cash or monetary grants by medical practitioners. The plea continued stating that even though termed as ‘sales promotion’, these are direct/indirect advantages that are offered to doctors in exchange for an increase in drug sales. This unethical drug promotion can adversely influence a doctor’s prescription thereby endangering human lives.

Conclusion

Micro labs is into the manufacturing and marketing of various pharmaceutical products and APIs (Active Pharmaceutical Ingredients) other than Dolo 650. These include Lubrex, Diapride, Vildapride, Arbitel, Avas, and more. However, recently, the company has been put under income tax scrutiny for tax cheating and evading. It will be compelling to watch how this allegation against Micro Labs, the maker of Dolo-650 develops as time goes by.

FAQs

What is paracetamol Dolo-650 used for?

Dolo-650 is a medicine commonly used to relieve fever, back pains, common colds, muscle aches, sore throat, and nerve pains.

Why is Dolo-650 manufacturer Micro labs in trouble?

The Income Tax Department had accused the manufacturer of Dolo-650, Micro Labs of tax cheating and evading and put the company under income tax scrutiny. The makers of Dolo-650 are charged for the accusation of distributing freebies worth INR 1000 crores to doctors for prescribing this tablet.

Who manufactures Dolo-650?

Micro Labs Limited, an Indian pharmaceutical company is the manufacturer of Dolo-650.

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