The Supreme Court has questioned the wide gap between the price at which medicines are sold to retailers and the amount ultimately paid by patients, particularly in the case of expensive essential and cancer medicines.
A Bench of Justices Vikram Nath and Sandeep Mehta asked the Centre whether the maximum retail price (MRP) of essential medicines could be restricted to a 16 per cent margin over the price to retailer (PTR), in line with the pricing mechanism under the Drugs (Prices Control) Order, 2013 (DPCO).
Under the DPCO, a 16 per cent retailer margin is factored into the calculation of ceiling prices for scheduled medicines. However, scheduled drugs constitute only a portion of the medicines available in the market. Non-scheduled medicines are outside the direct ceiling-price mechanism and can have their prices increased by up to 10 per cent annually.
Court flags large PTR-MRP gap
During the hearing, the Bench highlighted the difference between the PTR and MRP of medicines. Justice Sandeep Mehta referred to a cancer drug with a PTR of around ₹2,700 but an MRP of nearly ₹27,000, questioning the basis for such a substantial difference.
The Bench also examined whether the existing distinction between scheduled and non-scheduled medicines adequately addresses affordability concerns, and whether medicines outside the essential-drug category should remain beyond price-control mechanisms.
The court further raised concerns over medicines sold through corporate hospital pharmacies. It noted that patients receiving treatment under government-funded schemes may have to purchase medicines through hospital pharmacies, with the resulting costs eventually being borne through public funds.
Centre calls for balance in pricing policy
Solicitor General Tushar Mehta, representing the Centre, acknowledged the concerns raised by the court but said any intervention would need to balance the interests of patients, hospitals, retailers and pharmaceutical companies.
The discussion also comes against the backdrop of a May 21 order by the Competition Commission of India involving 12 private hospitals in Delhi, which held that hospitals can sell medical products up to the MRP notified by manufacturers.
Industry representatives, meanwhile, have argued that the difference between PTR and MRP does not directly represent pharmaceutical companies’ profits. They said the final price can include costs and margins associated with distributors, stockists, retailers and hospital pharmacies, along with factors such as storage, transportation, credit, discounts and product expiries.
For cancer medicines, industry executives also pointed to additional costs associated with cold-chain storage, specialised handling and hospital-based administration, particularly for injectable and biologic therapies.
The Supreme Court’s observations have brought renewed focus on how medicine prices are determined across the supply chain and whether greater transparency and regulation of trade margins could improve affordability for patients.
