'Why only cancer drugs?': SC questions Centre on trade margin cap, seeks wider price regulation

The Supreme Court has asked the Centre to broaden its review of pharmaceutical pricing. The immediate issue is a proposed 30 per cent trade-margin cap for specified cancer medicines. The bench questioned why similar scrutiny should not cover other medicines and medical devices. It wants to know whether current rules adequately protect patients from excessive markups.

The bench cited striking examples. A saline drip line had an MRP of ₹11 but was reportedly selling for ₹270. An Indian-made cardiac stent had a price to retailer of ₹5,000 and an MRP of ₹25,000. The court also questioned Azithromycin pricing, citing an MRP of ₹78.29 and PTS of ₹2,850.

The Centre said regulation must balance affordability, availability and market conditions. The petition seeks controls on initial prices of non-scheduled medicines and caps on medical devices. The matter will next be heard on October 27.

A trade-margin cap sets a ceiling on the markup added as a medicine moves through the trade chain. It is intended to stop distributors and retailers from making unusually large gains between their purchase price and the medicine’s selling price. The proposed cap discussed by the court is 30 per cent for specified cancer drugs.

For example, if the relevant base price were ₹100, a 30 per cent margin would permit ₹30 to be added, producing ₹130 before taxes or other charges. The exact calculation depends on how the government defines the base and applies the cap. The article does not give the final formula.

The Centre would notify the covered cancer-drug list and update it periodically. The list would exclude inexpensive drugs. The court is asking whether the same principle should extend across the wider pharmaceutical market and to devices.

The proposed measure is initially limited to selected cancer medicines rather than the entire market. The Solicitor General said the government would notify the list and periodically add medicines as market developments and public-health considerations changed. Inexpensive drugs would be excluded. This indicates a targeted approach rather than an immediate universal cap.

The Centre also argued that drug regulation must balance affordability with availability and market conditions. Additional Solicitor General Aishwarya Bhati said excessive intervention could disrupt market dynamics and harm medicine availability. She said the government could not regulate the entire pharmaceutical ecosystem.

The Supreme Court was not satisfied with that narrow explanation. It asked why the government could not examine the overall range of medicines, especially where procurement prices and MRPs differed sharply. It also raised medical devices, showing that the broader question concerns excessive markups across healthcare products.

The gap can be very large, according to examples placed before the Supreme Court. An Indian-made cardiac stent reportedly had a price to retailer of ₹5,000 and an MRP of ₹25,000. That makes the MRP five times the retailer price. The court also cited medicines bought for around ₹2,700 and sold at an MRP of ₹27,000.

A saline drip line provided an even more unusual example in the hearing: its MRP was stated as ₹11, while it was selling for ₹270. The bench also referred to Azithromycin with an MRP of ₹78.29 and a PTS figure of ₹2,850. These figures were cited to question how such pricing serves patients.

The examples do not establish that every medicine or device has such a gap. They show why the court wants existing pricing mechanisms examined. Cardiac stents already have price caps, the Centre said, but the court continues to question broader markup controls.

Excessive markups can place essential treatment beyond patients’ reach. The Supreme Court highlighted cases where medicines bought for around ₹2,700 were sold at an MRP of ₹27,000, calling such pricing “broad daylight dacoity with the patients.” Large gaps can undermine affordability, especially for life-saving treatment and devices.

The bench also linked high margins to treatment decisions. It remarked that doctors may cause interventions because the margins are so high, and suggested that a uniform 16 per cent cap could reduce medical interventions by three-fourths. That was the court’s observation during the hearing, not a measured outcome established in the article.

The Centre presented a competing concern. It said excessive intervention could disrupt market dynamics and harm availability. The policy challenge is therefore to reduce unjustified markups without making medicines harder to supply. The court is examining whether current protections achieve that balance.

Under the distinction described in the article, scheduled medicines are subject to ceiling prices under the Drug Price Control Order, or DPCO. Non-scheduled medicines fall outside that scheduled category and are not subject to upfront price fixation in the same way. This difference affects how much flexibility manufacturers have when setting initial prices and MRPs.

The petition argues that around 82 per cent of medicines are outside the scheduled category under the DPCO, 2013. Manufacturers therefore have greater freedom in fixing MRPs for those products. The plea seeks regulation of initial prices for non-scheduled medicines, along with mandatory generic prescriptions and medical-device price caps.

The distinction is central to the case because it may leave most medicines outside ceiling-price controls. The Centre says India already has some of the lowest medicine prices globally and warns against disrupting availability. The Supreme Court is examining whether that system sufficiently protects patients from excessive markups.

These terms describe different points in the supply chain. The procurement price is what a buyer pays to obtain a medicine or device. The price to retailer, or PTR, is the amount at which the product reaches a retailer. The maximum retail price, or MRP, is the highest displayed price at which it may be sold to the patient. The final patient price is what the patient actually pays.

A product can therefore move from a low procurement cost to a higher PTR and then to an MRP. The difference between those figures reflects trade margins and other permitted additions. The article cited a cardiac stent with a ₹5,000 PTR and a ₹25,000 MRP, illustrating how wide the gap can become.

These terms matter because the petition seeks controls on such gaps. The court also cited a saline line with an ₹11 MRP and ₹270 selling price, although the article does not explain that apparent mismatch. It seeks stronger protection against excessive markups.