₹27,000 MRP for a ₹2,700 cancer drug puts hospital pricing under Supreme Court scrutiny

The Supreme Court has questioned the sharp price gap between the procurement cost and retail price of medicines at private hospitals, citing a cancer drug supplied to retailers for ₹2,700 but carrying an MRP of ₹27,000.

A bench of Justices Vikram Nath and Sandeep Mehta raised concerns over steep mark-ups on medicines while hearing petitions concerning drug pricing, generic prescriptions and medical devices under the Drugs (Prices Control) Order, 2013.

The court questioned why the 16% retailer margin used in the pricing framework for controlled medicines could not be applied more broadly. It asked the Centre to examine the issue and respond before the next hearing on October 12, 2026.

The ₹2,700-to-₹27,000 cancer medicine example became a central point of the hearing. The court questioned how such a large gap between the price to retailer and the MRP could arise and who ultimately benefits from it.

Focus on hospital pharmacies

The bench also raised concerns over allegations that some corporate hospitals require admitted patients to purchase medicines from their own or designated pharmacies.

The court said such practices could place an additional financial burden on patients and taxpayers, particularly where treatment is reimbursed through government healthcare schemes. The Centre has been asked to examine the issue.

The court's suggestion does not currently amount to a nationwide 16% price cap. It has asked the Centre to consider whether the margin used for certain controlled medicines could be applied more widely.

India's drug-pricing system distinguishes between scheduled medicines, which are subject to price controls, and non-scheduled medicines, which have greater pricing flexibility subject to existing rules.

Potential impact on hospitals

The possibility of wider regulation has drawn attention from investors because pharmacy operations contribute to hospital revenues and margins. Market analysts have published varying estimates of the possible financial effect if medicine margins were restricted, with the actual impact depending on the final regulatory framework and how hospitals adjust their pricing and operations.

Hospital stocks also came under pressure after the court's observations, reflecting investor concerns about possible regulatory changes.

What happens next

The Centre is expected to respond to the Supreme Court's questions before the matter comes up again on October 12. Until then, the 16% figure remains a proposal being examined by the court rather than an implemented universal cap.

The hearing brings together three separate issues: medicine pricing, hospital pharmacy practices and the financial burden of healthcare.

The key regulatory question is whether the existing distinction between price-controlled and non-scheduled medicines should continue in its current form. A wider margin restriction could affect the way hospitals and other healthcare providers recover pharmacy-related costs, but its eventual impact would depend on the scope and design of any government policy.

The case is also significant because it involves government-funded healthcare. If medicines are reimbursed at inflated prices under public schemes, the pricing structure can have implications beyond individual patients and extend to public expenditure.

The next hearing on October 12 is therefore important for determining what response the Centre gives to the court's questions and whether any broader regulatory proposal emerges.