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

The Supreme Court on Monday called for a broader examination of drug pricing in the country, questioning why the Centre’s proposed regulation of trade margins was limited to cancer medicines and urging it to consider excessive markups across the pharmaceutical market, including medical devices.

A bench of Justices Vikram Nath and Sandeep Mehta took note of the Centre’s decision to impose a 30 per cent cap on trade margins for specified cancer drugs but sought to know why similar scrutiny could not extend to other medicines.

'Why only cancer drugs?'

“This relates to only cancer drugs. What about the overall?” asked the bench.

Solicitor General Tushar Mehta told the bench that the Union government would notify a list of cancer drugs to which the proposed trade margin cap would apply.

The list would be periodically updated to include additional anti-cancer medicines in accordance with market developments and public health considerations, excluding inexpensive drugs, he said.

The bench, however, questioned the limited scope of the measure and cited instances of substantial differences between the prices at which medicines and medical devices were sold to retailers and their maximum retail prices (MRP).

“A drip line for saline, MRP is ₹11, and it is selling for ₹270,” the bench observed, highlighting the disparity in pricing.

SC flags price of cardiac stent

The apex court also referred to an Indian-made cardiac stent with a Price to Retailer (PTR) of ₹5,000 but an MRP of ₹25,000.

“If you put a cap of 16 per cent, you will reduce (medical) interventions by three-fourths. Doctors cause interventions to be done because the margins are so high,” remarked the bench.

Solicitor General responded that cardiac stents were already subject to price caps.

The bench further cited the pricing of Azithromycin, referring to an MRP of ₹78.29 and a figure of ₹2,850 for PTS, and asked the government to explain how such pricing served the interests of patients.

Appearing for the Centre, Additional Solicitor General Aishwarya Bhati submitted that drug price regulation must strike a balance between affordability, availability and market considerations.

She said that excessive government intervention could disrupt market dynamics and adversely affect the availability of medicines, arguing that the government could not regulate the entire pharmaceutical ecosystem.

“We don’t want to control the entire ecosystem of drugs,” Bhati submitted.

“Why can’t you control the entire range of drugs?” the bench asked.

Bhati said India already had some of the lowest medicine prices globally and cautioned that excessive intervention could harm market dynamics and affect availability.

The bench, however, stressed the need to examine whether existing pricing mechanisms adequately protected patients from excessive markups, particularly where large differences existed between procurement prices and MRPs.

The apex court was hearing a plea seeking regulation of the initial prices of non-scheduled medicines and price caps on medical devices. It has posted the matter for further hearing on October 27.

'Broad daylight dacoity with the patients'

Earlier, the top court had expressed concern over steep markups on life-saving medicines, citing cases where drugs bought for around ₹2,700 were sold at an MRP of ₹27,000.

“That’s broad daylight dacoity with the patients,” the bench had remarked.

It had asked the Centre why a uniform 16 per cent cap could not be imposed on the MRP of medicines and medical devices over their price to retailers.

The petition has contended that a large majority of medicines fall outside the scheduled category and are therefore not subject to ceiling prices, allowing manufacturers greater flexibility in fixing MRPs.

The plea sought mandatory generic prescriptions, regulation of the initial prices of non-scheduled medicines and price caps on medical devices.

Petitioner Kishan Chand Jain submitted that around 82 per cent of medicines fall outside the scheduled category under the Drug Price Control Order (DPCO), 2013, and manufacturers are not subject to upfront price fixation for such drugs.