Broad Daylight Dacoity on Drug Prices: Supreme Court Asks Centre Why Medicine Prices Cannot Be Capped At 16% Above Retail Cost

The Supreme Court on Tuesday pulled up the Union Government over astronomical markups on lifesaving drugs, asking why the Maximum Retail Price (MRP) of all medicines and medical devices cannot be restricted to a uniform 16% above the Price to Retailer (PTR).

A bench comprising Justice Vikram Nath and Justice Sandeep Mehta raised sharp questions while hearing public interest litigation challenging drug pricing loopholes under the Drugs (Prices Control) Order (DPCO), 2013. The judges noted that extreme price inflated margins on non-scheduled formulations place an unbearable burden on common citizens and drain public funds.

Drastic Price Disparities Exposed in Court

Justice Sandeep Mehta highlighted severe pricing gaps during the proceedings, citing an example of a critical cancer drug selling at an MRP of nearly ₹27,000 despite having a retailer price of around ₹3,000.

The court pointed out that corporate hospitals frequently force patients to purchase medicines through in-house pharmacies at maximum retail prices. When patients receive treatments funded by public health programmes like Ayushman Bharat, these inflated prices mean taxpayers ultimately foot the bill.

The bench questioned why any essential medical product should remain exempt from strict price controls under the Essential Commodities Act. "Every medical device, every medicine is covered under the Essential Commodities Act. If it is an essential item, can it be left out of the DPCO?" the bench asked.

Loophole in Drug Price Controls

Under the current DPCO regulations, ceiling prices apply strictly to scheduled medicines, which account for a small fraction of the domestic pharmaceutical market. The vast majority estimated at over 80% of non-scheduled formulations by both volume and value allow pharmaceutical manufacturers to set initial retail prices with minimal restraint, provided annual price hikes do not exceed 10%.

Petitioners, including advocate Kishan Chand Jain and Dr Sanjay Kulshresthra, argued before the bench that this regulatory framework enables manufacturers and distributors to fix artificially high MRPs. Families are routinely forced to liquidate assets or sell household jewellery to afford ongoing treatments, while government insurance schemes face massive drainage due to inflated reimbursement claims.

Centre Promises Balanced Regulatory Solution

Appearing for the Union Government, Solicitor General Tushar Mehta acknowledged the gravity of the pricing disparity and assured the bench that the Centre would work toward a resolution. He noted that pharmaceutical manufacturers themselves often do not capture the bulk of these retail markups, as middle distribution networks and institutional buyers absorb much of the margin.

The government submitted that finding an effective legal balance remains essential to protect consumers without destabilising the supply chain.

The Supreme Court scheduled the matter for further hearing on October 12. The latest observations build upon harsh remarks made by the same bench last week, when the court described massive retail price markups as "broad daylight dacoity" and "carnage" inflicted upon helpless patients due to regulatory inaction.