Supreme Court Questions Centre on Soaring Medicine Prices, Demands Broader Controls
In a significant push for consumer protection, the Supreme Court of India has questioned the Centre over its inconsistent approach to regulating drug prices. While acknowledging the government’s recent decision to cap trade margins on anti-cancer medications at 30% of the Maximum Retail Price (MRP), the bench of Justices Vikram Nath and Sandeep Mehta demanded to know why this protection is not being extended to the entire spectrum of non-patented drugs and medical consumables.
Challenging the “Great Divide” in Pricing
During the proceedings, the apex court expressed dissatisfaction with the current regulatory framework, which leaves the vast majority of essential medicines subject to market forces that result in exorbitant costs for patients. The bench pointed out that while the government has intervened in specific categories, millions of citizens remain vulnerable to “sky-high” pricing across various everyday treatments.
To illustrate the severity of the issue, the court presented striking examples of the disconnect between acquisition costs and final retail prices. For instance, the judges noted that a cardiac stent manufactured in India might cost a retailer Rs 5,000, yet it is sold to patients for Rs 25,000. Similarly, the court highlighted that saline drip lines, which cost retailers roughly Rs 11, often carry an MRP of Rs 270. Even common antibiotics like Azithromycin are marked up significantly, with the Price to Stockist (PTS) being a fraction of the final consumer price.
“There is a great divide. Why can’t you control the entire range of drugs?” the bench asked, challenging the government to provide a single justification for the status quo that benefits the patient.
The Government’s Stance and Hospital Malpractices
Representing the Centre, Solicitor General Tushar Mehta and Additional Solicitor General (ASG) Aishwarya Bhati argued that excessive government intervention could destabilize the pharmaceutical market. The ASG suggested that higher margins are sometimes necessary to incentivize retailers, particularly in rural areas, to ensure the availability and accessibility of medications. She noted that India’s drug market is highly competitive and generally offers some of the lowest prices globally.
However, the government’s own affidavit presented to the court painted a concerning picture of the hospital sector. The submission admitted that profit margins on medical consumables in hospitals frequently range between 100% and 1,000%. The affidavit further acknowledged that hospitals often prioritize purchasing consumables with high MRPs to maximize margins, a practice that exploits patients who possess limited information and minimal bargaining power during health crises.
Moving Toward Uniform Regulation
The Supreme Court criticized the reliance on arguments that prioritize market availability over patient affordability. The bench suggested that the government implement a uniform rule, such as limiting the MRP to no more than 16% above the price paid to the retailer, to prevent the current pattern of overcharging.
While the court maintained that its intention is to “strengthen the hands of the government,” it made it clear that the current piecemeal approach to price control is insufficient to protect the public from systemic price gouging. The case has been adjourned until October 27, leaving the Centre to reflect on the court’s demand for a comprehensive policy that ensures essential, non-patented medications remain within the reach of every citizen.
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