Supreme Court questions Centre over huge gap between medicine MRP and retailer prices

New Delhi: The Supreme Court on Tuesday questioned the Centre over the wide gap between the maximum retail price (MRP) of medicines and the price at which retailers purchase them, asking whether the government could justify what it described as “loot” and whether pharmaceutical manufacturers should be allowed to “run amok”.

A Bench of Justices Vikram Nath and Sandeep Mehta criticised the functioning of the National Pharmaceutical Pricing Authority (NPPA), describing it as seemingly “totally defunct”, and questioned why the drug pricing system appeared to favour manufacturers over patients.

The court reserved its verdict on two petitions concerning drug pricing, including pleas for stricter controls to ensure medicines remain affordable.

During the hearing, the Centre referred to its decision to cap the trade margin on anti-cancer drugs at 30 per cent of their maximum retail price. The Bench, however, questioned why a uniform trade margin of 16 per cent could not be introduced for all medicines.

“The government policy is that entire ecosystem is not to be controlled,” Additional Solicitor General Aishwarya Bhati, appearing for the Centre, told the Bench.

The judges pointed to a medicine with a price to retailer (PTR) of Rs 15 but an MRP of Rs 250, questioning the justification for such a substantial difference.

“Can you show any justification for this loot,” the Bench asked, adding that the government was allowing the practice to continue under its watch.

When Bhati referred to the need for regulatory control, the court asked, “Should it be allowed to run amok?”

The law officer argued that medicine prices in India were among the lowest in the world. However, the Bench questioned why the pricing system appeared to work in favour of pharmaceutical manufacturers.

“Why is the entire system working to help these people (manufacturers),” the judges asked.

The court also cited a recent case involving the wife of a medical distributor who was admitted to hospital for cancer treatment. It said the hospital charged Rs 1.30 lakh for an injection that was available to the distributor for Rs 11,000.

“It seems that the public at large is living in some day dream that some day they will be benefitted by the NPPA,” the Bench observed.

The NPPA was established as an independent regulator to oversee drug prices and ensure that medicines remain available and accessible at affordable rates.

Questioning the substantial mark-ups in medicine prices, the Bench said there was a difference of 300 per cent, 400 per cent or more between the MRP and PTR in some cases. It sought an explanation for the disparity and asked where the additional money was going.

Bhati referred to the Centre's affidavit, which maintained that India's pharmaceutical market was competitive, with several companies operating in each drug segment and medicine prices among the lowest globally.

The Bench, however, said patients lacked the bargaining power to challenge high prices and were left with little choice but to pay for essential medicines.

“We wish every medicine is considered as generic medicine,” the judges said.

The court also questioned why the Centre had taken so long to cap trade margins on anti-cancer drugs at 30 per cent of the MRP, observing that the government had acted only after the Bench began raising questions.

“Only after we started putting questions, the government has woken up and now you are saying we have done this,” the Bench told Bhati.

When the law officer referred to the pharmaceutical industry's growth, the judges stressed that commercial interests could not take precedence over patients' welfare.

“You are talking about commerce and economic policy. Don't weigh patients against commerce,” the Bench said.

“When we talk of patients and their lives, can we look at it with a capitalist view?” it asked.

During an earlier hearing on October 12, the Supreme Court had said the Centre's response on capping trade margins on anti-cancer drugs at 30 per cent of the MRP was “hardly anything to be happy about”. It had also questioned why similar caps could not be imposed on other medicines.

The Centre had defended its decision, stating that the measure was expected to save patients approximately Rs 2,500 crore annually. The government had come under criticism from the court over steep mark-ups on cancer drugs charged by hospitals.

The Bench had also highlighted the price difference in intravenous saline, noting that a drip sold for Rs 270 in the market had an actual cost of Rs 11.

One of the petitions before the court sought directions to make drug formulations more affordable by preventing the alleged unethical overpricing of essential medicines by pharmaceutical companies and retailers. It also called for stricter enforcement of the Drugs (Prices Control) Order, 2013, to prevent violations of price-fixing rules and disproportionate profits through unfair trade practices.

The other petition sought disciplinary action against medical practitioners who fail to prescribe generic medicines to patients.

PTI