SC to government: Cap prices of non-patented medicines

The core issue is whether price controls should cover the whole range of non-patented medicines and hospital consumables. The court said restricting controls to selected anti-cancer medicines leaves patients exposed to excessive prices elsewhere. It asked the government to protect patients across the market.

The bench suggested a uniform rule: the maximum retail price, or MRP, should be no more than 16% above the price to the retailer, or PTR. It cited an Indian cardiac stent with a PTR of Rs 5,000 and an MRP of Rs 25,000. A saline drip line reportedly cost retailers Rs 11 but had an MRP near Rs 270.

The government did not give one patient-focused justification for excluding other medicines. The court said its intervention was intended to strengthen the government’s efforts. The case was adjourned to October 27, so the broader proposal remained under consideration.

MRP means maximum retail price, the highest listed price at which a medicine is sold to a patient. PTR means price to the retailer, the amount charged to the retailer. PTS means price to the stockist, the amount charged earlier in the distribution chain. These terms show how a product’s price can rise before reaching the patient.

The article gives stark examples. An Indian cardiac stent had a PTR of Rs 5,000 but an MRP of Rs 25,000. A saline drip line cost the retailer Rs 11 while its MRP was around Rs 270. Azithromycin had an MRP of Rs 78.29 and a PTS of Rs 28.5.

These gaps matter because patients often pay the MRP, while having little bargaining power or knowledge of alternatives. The government’s affidavit said hospitals may choose products with high trade margins and sell them at MRP, worsening the burden.

The government’s affidavit described very large margins in the supply of hospital consumables. It said margins of 100% to 1,000% or more were prevalent. This means the amount added above the earlier purchase price could be several times that price.

The affidavit gave a separate range for anti-cancer medicines. Hospitals reportedly bought products from manufacturers offering the highest trade margin and then sold them to patients at MRP. In those cases, margins were described as ranging from 170% to 700% or more.

These figures matter because patients have limited bargaining power in hospitals. They may know little about drug substitutes or prices, while hospitals decide which products to purchase. The government therefore acknowledged that competition among manufacturers had not prevented all malpractices and that regulation was needed.

The government introduced a targeted measure after concerns about very high prices for anti-cancer medicines. It decided to cap trade margins on those drugs at 30% of the maximum retail price. The Supreme Court appreciated the decision, but questioned why similar protection should not cover other medicines and consumables.

The court pointed to a wider pricing problem. It cited a cardiac stent whose PTR was Rs 5,000 and MRP was Rs 25,000. It also cited a saline drip line priced at Rs 11 for the retailer but around Rs 270 at MRP. These examples suggested that excessive gaps extended beyond cancer treatment.

The article does not provide a patient-focused reason for the limited scope. Government officials argued generally that wider intervention might affect availability and markets. The court asked for a justification and suggested controlling all non-patented medicines instead.

A uniform 16% limit would restrict how far the MRP could rise above the price paid by the retailer. That could directly reduce the listed price patients face when buying non-patented medicines and consumables. It would also make extreme price differences harder to sustain.

The article shows why this could matter. A cardiac stent with a PTR of Rs 5,000 had an MRP of Rs 25,000. A saline drip line costing the retailer Rs 11 had an MRP around Rs 270. Under a narrow gap rule, such differences would be substantially reduced, provided the rule covered those products and was enforced.

The exact savings cannot be calculated from the article because the proposed rule’s application and enforcement were not settled. The government warned that intervention could affect availability. The Supreme Court’s proposal therefore opened a broader policy debate rather than announcing a final nationwide rule.

The government’s concern is that medicine distribution does not work equally everywhere. Rural areas may have lower sales, fewer customers, and weaker commercial returns. Retailers may therefore need larger margins to earn enough income to keep operating and serving local patients.

The government argued that removing those margins could harm access and availability. If a rural retailer cannot cover costs or earn a livelihood, the area might have fewer sellers or less reliable supplies. The assistant solicitor general also said the Indian drug market is competitive and already has some of the lowest prices in the world.

The government warned that too much intervention could make the market suffer. The court, however, said these explanations did not answer the patient’s problem of paying high prices. The debate is therefore about balancing affordability for patients with continued supply, particularly in lower-sales areas.

A patent is a legal right that gives an inventor or patent holder exclusive control over an invention for a limited period. For a medicine, that protection can limit who may produce or sell the patented product. The source article does not define patents, so this explanation uses established general knowledge.

Once patent protection does not prevent other manufacturers from entering, more companies may be able to offer the same medicine or comparable versions. That can create stronger price competition. It can also make government price regulation more practical because the product is not protected by the same exclusive legal position.

The article connects this issue to the Supreme Court’s request to control all non-patented medicines. It also notes that India has many pharmaceutical companies in each drug segment. The government called the market competitive, while the court focused on whether patients were still paying excessive prices.