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Drug Price Control: Why the Supreme Court Is Active

Symbolic illustration of medicines and drug price regulation
Original symbolic image: pcsmantra.com

Why in the News

A Supreme Court bench of Justice Vikram Nath and Justice Sandeep Mehta has been continuously hearing the matter of heavy markups in the prices of medicines. According to reports, on 29 September 2026 the bench asked why there should not be a uniform rule limiting MRP to 16% above the price to retailer (PTR); according to reports, in earlier hearings the bench had called markups of up to 1,000% on some medicines "daylight robbery". On 12 October 2026 the Centre stated that a 30% trade-margin cap will be applied to non-scheduled cancer drugs - patented and non-patented both; the bench asked why this relief only up to cancer drugs, and not to other essential medicines and medical products. The next hearing is on 27 October 2026.

Definition box - essential terms

  • DPCO 2013: the Drugs (Prices Control) Order - issued under the Essential Commodities Act; it fixes the maximum price of scheduled medicines.
  • NPPA: the National Pharmaceutical Pricing Authority - the body implementing price control.
  • PTR/MRP: the price to retailer and the maximum retail price - the difference between them is the markup/trade margin.
  • Scheduled/non-scheduled medicines: the ceiling price of medicines listed in Schedule-I of the DPCO (linked to the NLEM) is fixed; the initial price of non-scheduled medicines is set by the manufacturer, with the annual increase limited to about 10%.
  • Trade-margin rationalisation (TMR): the policy of capping the total margin of the distribution chain (wholesale + retail).

The existing mechanism of control

According to the Centre's affidavit (551 pages), the ceiling price of medicines in DPCO Schedule-I is fixed thus: the simple average of the PTR of brands/generics with at least 1% market share + a 16% margin. Ceiling prices of 935 formulations have been fixed so far. On non-scheduled medicines, competition and the annual increase limit are the main checks - according to the petitioners, about 80% of the market (in both number and value) is non-scheduled.

The court's concern and the Centre's response

  • The bench's oral observations (according to reports): a cancer medicine's PTR about ₹3,000 and MRP about ₹27,000; a cardiac stent made in India for ₹5,000 in hospitals for more than ₹25,000; a saline line with an MRP of ₹11 sold for ₹270. The bench said - "this is just the tip of the iceberg" and that delivering DPCO-approved medicines to the patient is the government's responsibility.
  • The Centre's proposal: an expert committee under the chairmanship of the DGHS will identify cancer drugs, the NPPA will issue a notification; from TMR, a 20-70% cut in the MRP of cancer drugs and an estimated annual saving of ₹2,500 crore. The 2019 example: with a 30% TMR on 42 non-scheduled cancer drugs, 526 brands became cheaper, an annual saving of about ₹984 crore.
  • The Centre's objection: a uniform cap can make lower-priced medicines unviable for retailers; availability in rural areas can be affected - "balance in pricing" is necessary.
  • The petitioners' argument: corporate hospitals push purchases through in-house pharmacies; the burden of inflated prices in schemes such as Ayushman Bharat falls ultimately on taxpayers; if every essential commodity comes under the Essential Commodities Act, why are these outside the DPCO?

Legal-policy issues

  1. Coverage of the Essential Commodities Act versus the DPCO's list: the law treats all medicines as essential commodities, but control is limited to the listed medicines.
  2. Generic versus branded generic: the high prices of branded generics weaken the purpose of price control.
  3. Availability versus affordability: excessive control carries the risk of reduced supply-chain incentives - the Centre's main counter-argument.

Conclusion

The 27 October hearing can give the next indication of whether the trade-margin cap moves beyond cancer drugs - no decision is predetermined. The hearings have made three things clear: there is no effective check on markups in the non-scheduled market; the 2019 TMR experiment is a policy precedent; and the responsibility for access to the patient is ultimately the government's.

Practice Question (150 words, 10 marks)

"The balance of affordability and availability in drug price control is the core challenge of India's pharmaceutical policy." Comment in the light of the DPCO mechanism and recent judicial intervention. (150 words, 10 marks)

Main sources

(The bench's oral comments are reporting-based; not direct quotations from the order text.)

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