SC says ‘economic policy’ cannot take precedence over lives as Centre backs ‘calibrated’ drug-price controls

Supreme Court of India

The Supreme Court on Tuesday (October 27, 2026) said “economic policy” could not take precedence over the lives of citizens as it questioned the Centre over its approach to regulating the prices of essential medicines and medical products.

Editorial | Bitter pills: on Court’s intervention, drug pricing

A Bench of Justices Vikram Nath and Sandeep Mehta questioned Additional Solicitor-General Aishwarya Bhati, appearing for the Centre, over the failure of the National Pharmaceutical Pricing Authority (NPPA) to cap trade margins on essential medicines despite concerns over excessive markups. It also sought to know why such a ceiling had been imposed on certain anti-cancer drugs only after the court’s intervention.

Earlier this month, the NPPA, the government’s drug-price regulator, capped trade margins on 137 non-scheduled anti-cancer medicines at 30% of their maximum retail price (MRP). The revised prices are set to take effect from November 9.

“Is this a matter in which economic policy will weigh supreme over the lives of citizens at large?... NPPA [was] conspicuously silent... For so many years, why were you silent? Suddenly, you decided to cap trade margins of cancer drugs?... Don’t force us to ask harsh questions,” the Bench remarked.

The oral observations came during the hearing of petitions filed by advocate Kishan Chand Jain and paediatric surgeon Sanjay Kulshrestha seeking stricter enforcement of price controls under the Drugs (Prices Control) Order, 2013, (DPCO) to curb disproportionate margins across the pharmaceutical supply chain.

Ms. Bhati, however, told the Bench that “complete government control” over essential medicines could adversely affect the market. She said the government favoured a “calibrated approach”, striking a balance between ensuring essential medicines are available at reasonable prices and the need to encourage innovation and competition in the pharmaceutical industry.

“Therefore, to cull out just one limb, to have medicines at reasonable prices, may not be the correct way to look at it. Maintaining a balance among all these limbs is our endeavour as regulators... We want investments to also come here... We can make these interventions from time to time, but complete control is not the answer,” Ms. Bhati submitted.

The Bench also questioned why the 16% retailer margin prescribed under the DPCO should not apply to all essential medicines and sought the basis for classifying drugs as scheduled or non-scheduled. While scheduled formulations are subject to government-fixed price ceilings, non-scheduled medicines remain outside this framework, even where substantial markups may be involved.

“How do you decide which medicine is essential and which is not? Why should all medicines not be essential? That is where the game is — which medicine to keep [in the scheduled list] and which not to keep. The NPPA seems to be totally defunct, with due respect,” Justice Mehta remarked.

The Bench also referred to The Hindu’s October 22 report on substantial dues pending recovery by the NPPA from pharmaceutical companies in overcharging cases. The report noted that, as of March 31, 2026, the regulator had recovered only ₹1,582.4 crore of the ₹10,029.8 crore demanded, including interest, leaving ₹8,447.4 crore outstanding.

“There are pending recoveries from the manufacturers by the government. There was a news item on this recently... The patients and their families have to sell ornaments, houses to get the treatment, which, if the proper control was there... would be one-fourth the cost,” Justice Mehta said.

Senior advocate Mukul Rohatgi, appearing for an association of hospitals, defended the steep markups on essential medicines, including anti-cancer drugs, contending that capping such margins would make hospital operations financially unviable. He submitted that hospitals incurred substantial expenditure on salaries, doctors, infrastructure, technology and infection control, and would have to recover any loss in revenue by charging for services that were previously not billed separately.

“Of the amount I bill, I receive only a portion from insurance or the government. I have to subsidise those bills... If this is brought down to 10% or 20%, hospitals will collapse. If I don’t get the difference, it will lead to an increase in [charges for] other facilities,” Mr. Rohatgi said.

The Bench, however, dismissed the contention, remarking that patients could not be subjected to “dacoity”. It reserved its order in the matter and gave the parties two weeks to file their written submissions.