‘Broad daylight dacoity’, says Supreme Court on overpricing of essential cancer drugs
2-minute summary
The Supreme Court of India has strongly criticized the exorbitant overpricing of essential cancer drugs, characterizing it as 'broad daylight dacoity' against patients. A division bench of Justices Vikram Nath and Sandeep Mehta expressed shock over a case where a life-saving cancer drug carried a Maximum Retail Price (MRP) of ₹27,000 despite being supplied to retailers at just ₹2,700 (a 10-fold markup). The court questioned the silence of regulatory authorities responsible for price control. The observations were made during the hearing of petitions seeking strict enforcement of the Drugs (Prices Control) Order (DPCO), 2013, to prevent unethical profit-making, and demanding disciplinary action against medical practitioners who fail to prescribe affordable generic medicines. The Union government has stated it is treating the matter as non-adversarial, and the court has scheduled further hearings to address price-fixation mechanisms.
Why it's in the news
The Supreme Court of India termed the 10-fold markup on essential cancer drugs 'broad daylight dacoity' and questioned the silence of regulatory authorities. The court was hearing petitions demanding strict enforcement of the Drugs (Prices Control) Order (DPCO), 2013, and mandatory prescription of generic medicines.
Facts to remember
- The Supreme Court criticized the exorbitant overpricing of essential cancer drugs, highlighting a case where a life-saving drug carried an MRP of ₹27,000 despite being supplied to retailers at just ₹2,700.
- The National Pharmaceutical Pricing Authority was established in 1997 and regulates prices under the Drugs (Prices Control) Order, 2013, issued under the Essential Commodities Act, 1955.
- Article 47 is a Directive Principle of State Policy mandating the State to regard the improvement of public health as among its primary duties.
Background and context
In India, out-of-pocket expenditure (OOPE) accounts for nearly half of the total health expenditure, pushing millions of families into poverty annually. Pharmaceutical expenses, particularly for chronic and life-threatening diseases like cancer, constitute the largest share of this burden. To ensure the availability of essential medicines at reasonable prices, the Government of India exercises price control through the National Pharmaceutical Pricing Authority (NPPA), established in 1997. The NPPA regulates prices under the Drugs (Prices Control) Order (DPCO), issued under the Essential Commodities Act, 1955. The National List of Essential Medicines (NLEM) serves as the primary basis for price regulation. However, a major loophole exists in trade margins: manufacturers often keep the Price to Retailer (PTR) low while inflating the Maximum Retail Price (MRP) to offer high profit margins to hospital chains and retailers, bypassing price caps on non-scheduled formulations.
Constitutional provisions
- Article 21 — Guarantees the Right to Life, which the Supreme Court has consistently interpreted to include the right to health and affordable medical treatment.
- Article 47 — A Directive Principle of State Policy (DPSP) mandating the State to regard the improvement of public health as among its primary duties.
Committees and reports
- High Level Expert Group (HLEG) on Universal Health Coverage (UHC) for India — Recommended increasing public expenditure on health and ensuring free provision of essential medicines to reduce out-of-pocket expenditure.
- Pranab Sen Committee on High Prices of Essential Drugs — Suggested price negotiation and trade margin caps to prevent excessive markups on medicines.
Government schemes
- Pradhan Mantri Bhartiya Janaushadhi Pariyojana (PMBJP) — Aims to provide quality generic medicines at affordable prices to all through dedicated outlets (Jan Aushadhi Kendras).
- Ayushman Bharat - Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) — Provides secondary and tertiary care hospitalization cover of up to Rs. 5 lakh per family per year, significantly easing the burden of cancer treatment.
International organisations
- World Health Organization (WHO) — Maintains the Model List of Essential Medicines and advocates for universal health coverage and affordable access to cancer therapeutics globally.
Mains practice: Analyze the regulatory and ethical challenges in curbing the exorbitant pricing of life-saving medicines in India. Suggest measures to balance pharmaceutical innovation with public health accessibility.
Introduction:
The Supreme Court’s recent characterization of life-saving cancer drug overpricing as 'broad daylight dacoity' underscores the severe crisis of healthcare affordability in India. With out-of-pocket expenditure (OOPE) accounting for nearly 50% of total health spending, exorbitant trade margins on essential medicines push millions into poverty annually.
Regulatory and Ethical Challenges:
• Trade Margin Distortion: While the Price to Retailer (PTR) is low, the Maximum Retail Price (MRP) is artificially inflated (sometimes up to 1000%) to incentivize hospitals and retailers to stock specific brands, exploiting vulnerable patients.
• Regulatory Gaps: The National Pharmaceutical Pricing Authority (NPPA) regulates prices of medicines listed in the National List of Essential Medicines (NLEM) under the Drugs (Prices Control) Order (DPCO). However, non-scheduled formulations and newer oncology drugs often escape strict price caps.
• Ethical Dilemma: Pharmaceutical companies justify high prices citing Research & Development (R&D) costs. However, prioritizing excessive profits over the Right to Health (Article 21) violates basic bioethical principles of beneficence and justice.
• Low Generic Prescription Rates: Despite guidelines, many medical practitioners continue to prescribe expensive branded drugs instead of generic alternatives due to lack of trust or unethical marketing practices.
Way Forward:
• Trade Margin Rationalization (TMR): The government must cap trade margins from the first point of sale (distributor) to the consumer, especially for non-scheduled life-saving drugs.
• Expanding NLEM: Regularly update the NLEM to include advanced oncology and rare-disease drugs under price control.
• Strengthening Jan Aushadhi Kendras: Scale up the PMBJP scheme to ensure uninterrupted supply of high-quality generic cancer drugs.
• Strict Enforcement of Generic Prescriptions: Implement mandatory electronic prescribing systems that default to generic names, backed by regular audits.
Conclusion:
Access to affordable healthcare is an integral component of the Right to Life under Article 21. Balancing pharmaceutical viability with public welfare requires robust regulatory oversight, trade margin caps, and an unwavering commitment to ethical medical practices.
Prelims practice questions
Q1. With reference to the National Pharmaceutical Pricing Authority (NPPA) in India, consider the following statements: 1. It is an independent regulatory body under the Ministry of Health and Family Welfare. 2. It is empowered to enforce price control of medicines under the Drugs (Prices Control) Order (DPCO). 3. It monitors the availability of drugs and identifies shortages to take remedial steps. Which of the statements given above are correct?
- 1 and 2 only
- 2 and 3 only
- 1 and 3 only
- 1, 2 and 3
Answer: B. Statement 1 is incorrect because the NPPA is an attached office of the Department of Pharmaceuticals under the Ministry of Chemicals and Fertilizers, not the Ministry of Health and Family Welfare. Statements 2 and 3 are correct as NPPA enforces DPCO and monitors drug availability.
Q2. The Drugs (Prices Control) Order (DPCO) is issued by the Government of India under the powers conferred by which of the following legislations?
- The Drugs and Cosmetics Act, 1940
- The Essential Commodities Act, 1955
- The Pharmacy Act, 1948
- The Patents Act, 1970
Answer: B. The Drugs (Prices Control) Order (DPCO) is an order issued by the Central Government under Section 3 of the Essential Commodities Act, 1955, to regulate the prices of drugs.
Q3. Consider the following statements regarding the National List of Essential Medicines (NLEM) in India: 1. The list is prepared by the Ministry of Chemicals and Fertilizers. 2. All medicines included in the NLEM automatically come under price control. Which of the statements given above is/are correct?
- 1 only
- 2 only
- Both 1 and 2
- Neither 1 nor 2
Answer: B. Statement 1 is incorrect because the NLEM is formulated by the Ministry of Health and Family Welfare (specifically through an expert committee under the Central Drugs Standard Control Organisation/ICMR). Statement 2 is correct because once a drug is included in the NLEM, the NPPA is mandated to fix its ceiling price under the DPCO.
Revision flashcards
- Which ministry administers the National Pharmaceutical Pricing Authority (NPPA)? The Ministry of Chemicals and Fertilizers (specifically the Department of Pharmaceuticals).
- What is the primary legislative act under which the Drugs (Prices Control) Order (DPCO) is promulgated? The Essential Commodities Act, 1955.
- What is the difference between 'Price to Retailer' (PTR) and 'Maximum Retail Price' (MRP) in the context of the recent Supreme Court observation? PTR is the price at which a manufacturer/distributor sells to a retailer, while MRP is the final price paid by the consumer. Huge gaps between the two represent excessive trade margins.
- Which constitutional article guarantees the Right to Health as part of the Right to Life? Article 21 of the Constitution of India.
- What is the main objective of the Pradhan Mantri Bhartiya Janaushadhi Pariyojana (PMBJP)? To make quality generic medicines available at affordable prices to all, particularly the poor, through dedicated outlets known as Jan Aushadhi Kendras.