The Supreme Court on Monday questioned why the Centre could not extend its 30 per cent trade margin cap on anti-cancer drugs to all medicines, calling the government's response inadequate and asking it to work out a broader price-control mechanism by October 27.
A bench of Justices Vikram Nath and Sandeep Mehta said the existing measures did little to benefit patients, pointing to the wide gap between the cost of medicines and the prices charged to consumers.
“There is hardly anything to be happy about. There is actually nothing for the benefit of the patients,” the bench observed after Solicitor General Tushar Mehta told the court that capping trade margins on anti-cancer drugs at 30 per cent of the maximum retail price (MRP) was expected to save patients around Rs 2,500 crore annually.
The court cited the example of a saline drip that costs around Rs 11 but is sold for Rs 270, questioning how such steep markups could be permitted.
“We understand that there are transportation costs, raw material cost, R&D cost and all other ancillary costs, but all these are included in the MRP. What is the logic behind allowing them to sell 400 times the actual cost? How can you allow this?” the bench asked.
Justice Nath said the court failed to understand why the government could cap trade margins on anti-cancer drugs but not bring all medicines under a similar regime.
Justice Sandeep Mehta also cited the example of an India-made cardiac stent costing around Rs 5,000 but being sold by hospitals for more than Rs 25,000. He also pointed to the price difference between the antibiotic Azithromycin and its actual cost.
The Centre argued that medicine prices in India were among the lowest globally and that higher trade margins helped ensure the availability of medicines in remote areas.
The bench, however, said ensuring access to medicines was the government's responsibility. It stressed that the key issue was deciding which medicines should fall under the price-control regime of the Drugs (Prices Control) Order (DPCO).
“If the DPCO-approved medicines do not reach customers, then it is the duty of the government to ensure it reaches the patient,” the bench said.
The court asked the Centre to work out the modalities for capping medicine prices and posted the matter for further hearing on October 27. It said it wanted to strengthen the government's efforts to regulate prices.
“Whatever you have to do, do it by October 27,” the bench told the solicitor general.
In a 551-page affidavit, the Centre outlined the existing framework for regulating medicine prices. It said the National List of Essential Medicines (NLEM), prepared by the Ministry of Health and Family Welfare, was last updated in 2022 and covers 388 drugs and more than 900 formulations.
Under the DPCO, 2013, the ceiling price of scheduled formulations is calculated using the average price to retailers of qualifying brands and generic versions with at least a one per cent share of the medicine's total market turnover, with a 16 per cent margin added to the average. The Centre said ceiling prices had been fixed for 935 formulations.
For medicines outside the scheduled list, manufacturers can set their initial launch prices, subject to competition and monitoring by the National Pharmaceutical Pricing Authority (NPPA). The NPPA ensures that manufacturers do not increase the MRP of non-scheduled formulations by more than 10 per cent over the preceding 12 months.
On September 29, the Supreme Court had described steep markups on cancer drugs by hospitals as “carnage” and advocated a uniform 16 per cent margin on all medicines. It had also asked the Centre to examine the practice of hospitals requiring patients to buy medicines from their in-house pharmacies.
The court is hearing petitions concerning medicine price regulation, generic prescriptions and price controls on medical devices under the DPCO, 2013.
(With the inputs from PTI)
