A bench of Justices Vikram Nath and Sandeep Mehta criticised the government’s approach to medicine price regulation, observing that the National Pharmaceutical Pricing Authority (NPPA) appeared “totally defunct”.
New Delhi: The Supreme Court on Tuesday questioned the Centre over the huge gap between the maximum retail price (MRP) of medicines and their procurement costs, asking why the pricing system appeared to favour pharmaceutical manufacturers over patients.
A bench of Justices Vikram Nath and Sandeep Mehta criticised the government’s approach to medicine price regulation, observing that the National Pharmaceutical Pricing Authority (NPPA) appeared “totally defunct”.
“Why is the entire system working to help these people (manufacturers)?” the bench asked while hearing petitions seeking stronger regulation of medicine prices and medical devices.
Responding to Additional Solicitor General Aishwarya Bhati, who told the court that India had some of the lowest medicine prices globally, the bench said affordability must also be assessed in the context of the country’s low per capita income.
“Don’t weigh patients against commerce,” Justice Mehta observed, questioning the delay in capping profit margins on cancer medicines.
The bench expressed concern over the Centre’s failure to explain the wide disparity between procurement prices and amounts charged to patients. It questioned how a price increase from Rs 11,000 to Rs 1.3 lakh could be justified as calibration.
Citing another example, the court questioned the pricing of a medical drip line procured by retailers for Rs 15 but sold for Rs 250, asking what purpose the Drugs (Prices Control) Order served if such markups continued.
Senior advocate Mukul Rohatgi, appearing for hospitals, argued that private healthcare institutions had to maintain round-the-clock infrastructure and could not always depend on patients to procure medicines externally, partly because of concerns over spurious drugs.
The bench rejected the justification, saying hospitals should find other ways to meet their operating costs rather than impose excessive markups on medicines.
“You are a commercial hospital. You charge for everything. But why should medicine be quoted at 100, 200 times?” the bench asked, also questioning the role of corporate discounts offered by pharmaceutical manufacturers.
The court remarked that hospitals could not justify steep medicine markups by citing operational expenses, observing that they could not survive through “dacoity”.
The bench reserved its order on petitions seeking regulation of the initial prices of non-scheduled medicines, mandatory generic prescriptions and price caps on medical devices.
The petitioners argued that a large proportion of medicines fall outside the scheduled category under the Drugs (Prices Control) Order, 2013, allowing manufacturers greater flexibility in fixing their initial maximum retail prices.
The case raises broader questions about the effectiveness of existing price controls and the need for greater transparency across the pharmaceutical supply chain.