Supreme Court questions government over medicine overpricing

The Supreme Court questioned the Centre’s failure to bring all medicines under price control. It focused on the unusually wide gap between the price to retailer and the maximum retail price. The bench asked why commercial and investment concerns should outweigh patients’ lives, especially for essential medicines.

The court highlighted an anti-cancer drug that a distributor offered to procure directly from its manufacturer for ₹1,100. A private hospital charged ₹1.30 lakh for the same medicine for his wife’s treatment. The example showed how large margins can arise between supply cost and the amount paid by patients.

The Centre defended regulation that protects investment and competition. It said drug prices in India are globally among the cheapest and that non-scheduled medicines are calibrated. The court reserved its order after questioning the policy and the government’s response to parliamentary reports on drug pricing.

The maximum retail price, or MRP, is the highest price printed for a medicine’s sale to the consumer. The price to retailer, or PTR, is the amount charged when the retailer obtains the medicine from the distributor or supplier. These figures show the price before and at the retail end of the chain.

The trade margin is the amount left between the medicine’s supply price and its selling price for traders and sellers. It may be shared among distributors, retailers, hospitals, or other intermediaries. A large gap can make a medicine much more expensive for patients, even when the manufacturer’s or distributor’s price is far lower.

The Supreme Court questioned this gap because patients usually cannot negotiate hospital medicine prices. It cited a drug available for ₹1,100 but sold by a private hospital for ₹1.30 lakh. The article does not provide a single formula for calculating every margin.

The government’s proposed measure targets 137 anti-cancer drugs. It would cap their trade margins at 30% of the maximum retail price. The aim is to reduce the amount added as medicines move through the supply chain and reach patients.

The Centre estimated that the measure could save patients around ₹2,500 crore annually. The scale matters because anti-cancer treatment can involve costly medicines, and patients often have little power to reject prices charged by hospitals. The Supreme Court nevertheless noted that the decision came only after its intervention.

The proposal does not place every medicine under the same rule. The court asked why the government could not take control over all medicines or bring more products under trade-margin limits. It even referred to a possible 16% margin for heavily priced drugs. The government said complete control could harm investment and competition.

Scheduled medicines are medicines included in the category governed by the Drug Price Control Order, or DPCO. Their prices or trade margins can therefore be subject to the controls created under that order. Non-scheduled medicines are outside that scheduled category, so they do not receive the same form of direct DPCO control described in the article.

This distinction matters because leaving a medicine outside the scheduled list can allow a wider gap between its supply price and selling price. The Supreme Court asked what stops the government from bringing more medicines under control and what rationale supports excluding some medicines from the scheduled category.

The Centre said it calibrates prices of non-scheduled medicines. It also said generic drugs are available through PM Jan Aushadhi Kendras. The article does not describe the exact calibration formula. It states that medicines are regulated as essential commodities under Section 3 of the Essential Commodities Act, 1955, with the DPCO issued under that authority.

When sellers add very large margins to essential medicines, patients face sharply higher treatment bills. The burden is especially serious because medicines may be necessary, leaving patients unable to delay, switch, or negotiate. The Supreme Court said patients had no bargaining power and were forced to bear high prices.

The court cited a distributor who could procure an anti-cancer drug directly from the manufacturer for ₹1,100. A private hospital charged ₹1.30 lakh for that medicine for his wife’s treatment. The gap illustrates how pricing through hospitals and intermediaries can turn an affordable supply price into an extreme patient expense.

High prices can make treatment harder to afford and may shift money from patients to sellers. The Centre proposed a 30% trade-margin cap on 137 anti-cancer drugs, with projected annual savings of ₹2,500 crore. The court is considering broader controls, while the government warns that complete control may affect investment and competition.

The government regulates medicine prices through the Essential Commodities Act and the DPCO. It decides which medicines are scheduled, limits some trade margins, calibrates non-scheduled prices, and promotes generic access through PM Jan Aushadhi Kendras. Pharmaceutical companies produce medicines and seek conditions that protect investment and competition.

Distributors and retailers move medicines through the supply chain and add trade margins. Hospitals purchase or procure medicines and may charge patients for them. The article gives a stark example: a distributor offered to procure a drug for ₹1,100, while a private hospital charged ₹1.30 lakh. Private hospitals argued that the health sector became important because the state was not up to the mark.

The Supreme Court reviews the policy through petitions challenging high prices. It questioned the Centre, cited parliamentary committee reports, and reserved its order. Its intervention prompted the Centre’s proposed cap on 137 anti-cancer drugs. The final balance between controls, access, investment, and competition remains under consideration.

Essential medicines affect citizens’ health and lives, so governments regulate them to prevent prices from becoming unaffordable. Patients often cannot choose whether to buy treatment or negotiate its price. The Supreme Court therefore said medicine pricing should be treated as a matter concerning citizens’ lives, not only commerce.

The government uses the Essential Commodities Act and DPCO to regulate medicines. It proposed capping trade margins on 137 anti-cancer drugs at 30% of MRP, potentially saving ₹2,500 crore annually. The court’s example of a ₹1,100 drug sold for ₹1.30 lakh showed why stronger oversight is being considered.

At the same time, the Centre said complete control cannot be the solution. It argued that policy should protect pharmaceutical investment and competition, while claiming Indian drug prices are globally among the cheapest. The policy challenge is to limit excessive margins and preserve supply, innovation, and competitive markets without leaving patients exposed.