{"id":127232,"date":"2026-10-03T11:41:16","date_gmt":"2026-10-03T06:11:16","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=127232"},"modified":"2026-10-03T11:41:16","modified_gmt":"2026-10-03T06:11:16","slug":"medicine-pricing-in-india","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/medicine-pricing-in-india\/","title":{"rendered":"Medicine Pricing in India: Why the Supreme Court Is Concerned"},"content":{"rendered":"<h2><b>Medicine Pricing Latest News<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The Supreme Court described the markup between a medicine&#8217;s price to retailers and its printed MRP as &#8220;carnage,&#8221; calling it akin to &#8220;broad daylight dacoity with patients.&#8221;\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">A bench of Justices Vikram Nath and Sandeep Mehta, hearing petitions on medicine pricing, asked the Centre why the 16% retailer margin under the <\/span><b>Drugs (Prices Control) Order (DPCO), 2013<\/b><span style=\"font-weight: 400;\"> should not apply to all essential medicines.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The triggering example: An essential cancer drug supplied to retailers for \u20b92,700 carries an MRP of nearly \u20b927,000 \u2014 ten times the supply price.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The bench remarked: &#8220;<\/span><i><span style=\"font-weight: 400;\">If this is not extortion, then what is it? It is very surprising that the authorities who are supposed to take a decision on this are absolutely silent.&#8221;<\/span><\/i><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The petitions seek regulation of drug prices, generic prescriptions, medical devices, and stricter enforcement of price controls to prevent disproportionate profit margins across the drug supply chain.<\/span><\/li>\n<\/ul>\n<h2><b>The Legal Framework<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><a href=\"https:\/\/vajiramandravi.com\/current-affairs\/essential-commodities-act-1955\/\" target=\"_blank\"><b>Essential Commodities Act, 1955<\/b><\/a><span style=\"font-weight: 400;\"> gives the Centre power over essential goods, including medicines.<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><b>Section 3(1):<\/b><span style=\"font-weight: 400;\"> Allows regulation of production, supply, and distribution &#8220;for maintaining or increasing supplies&#8230; or for securing their equitable distribution and availability at fair price.&#8221;<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><b>Section 3(2)(c):<\/b><span style=\"font-weight: 400;\"> Allows issuing orders to control commodity prices.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The <\/span><b>DPCO<\/b><span style=\"font-weight: 400;\"> is such an order (under Section 3(2)(c) of the act) \u2014 the primary framework governing medicine prices in India.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">It authorises the <\/span><b><a href=\"https:\/\/vajiramandravi.com\/current-affairs\/national-pharmaceutical-pricing-authority-nppa\/\" target=\"_blank\">National Pharmaceutical Pricing Authority (NPPA<\/a>)<\/b><span style=\"font-weight: 400;\">, set up in 1997 under the Department of Pharmaceuticals, to:<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Fix and revise ceiling prices of scheduled formulations.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Set retail prices for new drugs.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Monitor overcharging and enforce the DPCO.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Order recovery of money from companies if patients are overcharged.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">In some cases, cap prices even of medicines\/devices otherwise outside regular price control.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2><b>Scheduled vs Non-Scheduled Medicines<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The DPCO divides medicines into two categories. A formulation means a medicine in a particular strength and dosage form.<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><b>Scheduled formulations<\/b><span style=\"font-weight: 400;\">: Listed in Schedule I of the DPCO, based on the National List of Essential Medicines (NLEM) prepared by the Ministry of Health and Family Welfare. These are subject to government <\/span><b>price controls<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><b>Non-scheduled formulations<\/b><span style=\"font-weight: 400;\">: Medicines not on this list \u2014 <\/span><b>not<\/b><span style=\"font-weight: 400;\"> subject to price ceilings.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The current NLEM contains 384 medicines, accounting for only 20% of total drug market turnover. This means 80% of the market operates largely outside direct price control.<\/span><\/li>\n<\/ul>\n<h2><b>How Ceiling Prices Are Calculated<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">A ceiling price is the highest price at which a scheduled formulation can be sold, before taxes. The NPPA calculates it through a specific method:<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">It identifies every version (brand and generic) of a formulation sharing the same active ingredient.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">It excludes versions accounting for less than 1% of total market sales, measured via Moving Annual Turnover (MAT) \u2014 a product&#8217;s sales popularity over the previous year, sourced from market research firms.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">For each remaining version, it takes the Price to Retailer (PTR) \u2014 what the manufacturer\/distributor charges the chemist or hospital pharmacy.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">It <\/span><b>averages these PTRs<\/b><span style=\"font-weight: 400;\">, <\/span><b>then adds a 16% retailer margin<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">The result is the ceiling price \u2014 the MRP cannot legally exceed this, apart from local taxes or GST.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Example:<\/b><span style=\"font-weight: 400;\"> If three versions hold \u22651% market share with PTRs of \u20b98, \u20b910, and \u20b912, the average is \u20b910. Adding the 16% margin gives a ceiling price of \u20b911.60.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Annual Revision<\/b><span style=\"font-weight: 400;\">: Ceiling prices are revised every April 1, based on the Wholesale Price Index (WPI). Manufacturers may raise prices in line with the preceding year&#8217;s WPI change without separate approval; if WPI falls, they must cut prices within 45 days.<\/span><\/li>\n<\/ul>\n<h2><b>The Loophole: Non-Scheduled Medicines<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Medicines outside the NLEM face no price ceiling. Manufacturers can freely set the initial MRP. The <\/span><b>only restriction<\/b><span style=\"font-weight: 400;\">: the MRP cannot rise by more than 10% in 12 months thereafter.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">This is precisely what&#8217;s being challenged. Petitioners argue that since the DPCO never regulates the launch price of non-scheduled drugs, manufacturers can set inflated prices from day one \u2014 making the 10% annual cap meaningless, since it only limits growth from an already-inflated base.<\/span><\/li>\n<\/ul>\n<h2><b>The Constitutional Argument<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The PILs invoke Article 21 \u2014 <\/span><b>the right to life<\/b><span style=\"font-weight: 400;\">, which includes the right to health \u2014 as the constitutional basis for regulating medicine pricing.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">One petition argues that allowing manufacturers to freely set the initial MRP gives them arbitrary, unrestricted power to set any MRP, regardless of the actual cost of manufacturing the medicine.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Hospital pharmacy influence<\/b><span style=\"font-weight: 400;\">: The petition claims retail price or MRP of medicines by companies are decided according to inputs of corporate hospitals, and that pharmacy expenses constitute <\/span><b>30\u201340% of a critically ill patient&#8217;s total bill<\/b><span style=\"font-weight: 400;\"> in corporate hospitals.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Generic vs branded pricing<\/b><span style=\"font-weight: 400;\">: Citing Lok Sabha statements, the petition notes medicines sold under generic names (their composition names) are <\/span><b>50% to 90% cheaper<\/b><span style=\"font-weight: 400;\"> than their branded counterparts \u2014 pointing to prescribing practices as another lever for reducing patient costs.<\/span><\/li>\n<\/ul>\n<h2><b>Conclusion<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The Supreme Court&#8217;s blunt language captures a system where regulation exists on paper but bites only a fifth of the market.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">A 16% margin cap means little when 80% of drugs can launch at any price a company chooses, and even &#8220;controlled&#8221; medicines can be marked up far beyond legal limits in hospital pharmacies.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Fixing this requires closing the launch-price loophole, not just capping future hikes.<\/span><\/li>\n<\/ul>\n<p><strong>Source: <a href=\"https:\/\/indianexpress.com\/article\/explained\/explained-law\/medicine-drug-pricing-challenge-supreme-court-10902322\/\" target=\"_blank\" rel=\"nofollow noopener\">IE<\/a> | <a href=\"https:\/\/www.hindustantimes.com\/india-news\/blatant-daylight-dacoity-sc-on-10-fold-gap-in-cancer-drug-prices-101790105343688.html\" target=\"_blank\" rel=\"nofollow noopener\">HT<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Medicine Pricing in India faces scrutiny as the Supreme Court questions retailer margins, non-scheduled drug prices and gaps in existing price-control rules.<\/p>\n","protected":false},"author":18,"featured_media":127259,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18],"tags":[60,10627,22,59],"class_list":["post-127232","post","type-post","status-publish","format-standard","has-post-thumbnail","category-upsc-mains-current-affairs","tag-mains-articles","tag-medicine-pricing","tag-upsc-current-affairs","tag-upsc-mains-current-affairs","no-featured-image-padding"],"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/127232","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/18"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=127232"}],"version-history":[{"count":4,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/127232\/revisions"}],"predecessor-version":[{"id":127264,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/127232\/revisions\/127264"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/127259"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=127232"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=127232"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=127232"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}