Supreme Court questions steep mark-ups on cancer drugs, calls pricing disparity ‘carnage’
2-minute summary
The Supreme Court of India strongly criticized the steep mark-ups on essential cancer medications, describing the massive price gaps between the Price to Retailer (PTR) and the Maximum Retail Price (MRP) as 'carnage' and 'extortion'. Hearing petitions seeking regulatory intervention on the affordability of drugs, medical equipment, and generics, the Bench questioned why the 16% retailer margin prescribed under the Drugs (Prices Control) Order (DPCO), 2013 is not uniformly enforced. The Court highlighted instances where cancer drugs priced around ₹,3,000 for retailers were sold to consumers for ₹27,000. While the Centre acknowledged the crisis and noted that private hospitals often benefit from these steep mark-ups through in-house pharmacy mandates, the judiciary emphasized the heavy toll on ordinary taxpayers and government-funded healthcare schemes like Ayushman Bharat.
Why it's in the news
The Supreme Court expressed sharp anguish over exorbitant mark-ups on life-saving cancer drugs and questioned the regulatory enforcement mechanisms under the Drugs (Prices Control) Order (DPCO), 2013.
Facts to remember
- The Supreme Court described the massive price gaps between the Price to Retailer and the Maximum Retail Price of essential cancer medications as carnage and extortion.
- The Bench questioned why the 16% retailer margin prescribed under the Drugs Prices Control Order, 2013 is not uniformly enforced.
- Drug price regulation in India is primarily anchored by the Drugs Prices Control Order issued under the Essential Commodities Act, 1955.
- The National Pharmaceutical Pricing Authority was established in 1997 to fix and revise prices of scheduled formulations and monitor non-scheduled drugs.
Background and context
Drug price regulation in India is primarily anchored by the Drugs (Prices Control) Order (DPCO) issued under the Essential Commodities Act, 1955. The National Pharmaceutical Pricing Authority (NPPA), established in 1997, is mandated to fix and revise prices of scheduled formulations and monitor the prices of non-scheduled drugs. Despite price caps on National List of Essential Medicines (NLEM) formulations, patients often face affordability challenges due to wide margins between manufacturer prices, wholesale distributor prices, and final retail or institutional prices. The proliferation of in-house pharmacies in corporate and private hospitals has further exacerbated out-of-pocket expenditure, posing severe financial distress to families battling catastrophic illnesses such as cancer.
Constitutional provisions
- Article 21 — Right to health and medical care is an integral part of the Right to Life and Personal Liberty under Article 21, placing a positive obligation on the State to ensure affordable access to life-saving medicines.
- Article 47 — Directive Principles of State Policy (DPSP) directs the State to raise the level of nutrition and the standard of living and to improve public health.
Committees and reports
- Kasturirangan Committee / Parliamentary Standing Committee Reports on Health and Family Welfare — Frequently examine the affordability of drugs, functioning of the NPPA, and the need for stricter price controls on medical devices and oncology medicines.
Government schemes
- Ayushman Bharat - Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) — Provides health cover to vulnerable families; inflated drug pricing directly impacts the financial sustainability of such government-funded insurance schemes.
- Pradhan Mantri Bharatiya Janaushadhi Pariyojana (PMBJP) — Aims to provide quality generic medicines at affordable prices through dedicated kendras to reduce out-of-pocket expenditure.
Mains practice: Examine the efficacy of pharmaceutical price regulation mechanisms in India in balancing industry innovation with affordable access to life-saving drugs like cancer therapeutics.
Introduction:
The recent observations by the Supreme Court terming steep mark-ups on cancer drugs as 'carnage' highlight systemic flaws in pharmaceutical pricing, supply chain margins, and regulatory enforcement in India.
Body:
• Regulatory Framework & Gaps: The Drugs (Prices Control) Order (DPCO), 2013 and the National Pharmaceutical Pricing Authority (NPPA) regulate scheduled medicines. However, enormous gaps often persist between the Price to Retailer (PTR) and the Maximum Retail Price (MRP), especially for non-scheduled formulations and specialized oncology drugs.
• Institutional Mark-ups: Private hospitals and corporate healthcare facilities frequently leverage in-house pharmacy mandates, charging exorbitant margins that shift the financial burden onto vulnerable patients and public exchequers via health insurance schemes like Ayushman Bharat.
• Impact on Public Health: Catastrophic health expenditures force families into debt, selling assets or compromising basic needs, directly violating the right to health under Article 21.
• Balancing Innovation and Access: While strict price caps curb extortionate profiteering, policymakers must ensure that price controls do not stifle pharmaceutical R&D, generic manufacturing competitiveness, or essential foreign investments in advanced biotechnology.
Conclusion:
Strengthening price monitoring across the entire supply chain, enforcing uniform distribution margins, promoting generic substitution, and enhancing transparency in hospital pharmacies are imperative to achieve affordable healthcare and true universal health coverage in India.
Prelims practice questions
Q1. With reference to the National Pharmaceutical Pricing Authority (NPPA) in India, consider the following statements: 1. It is a statutory body established under the Ministry of Health and Family Welfare. 2. It is responsible for fixing and revising the prices of controlled bulk drugs and formulations. 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: NPPA is an attached office of the Department of Pharmaceuticals under the Ministry of Chemicals and Fertilizers (not a statutory body under Ministry of Health). Statement 2 is correct: NPPA monitors and fixes prices of scheduled drugs and formulations.
Q2. Consider the following statements regarding the Drugs (Prices Control) Order (DPCO): 1. DPCO is issued by the Central Government under the Essential Commodities Act, 1955. 2. It empowers the government to fix the ceiling price of essential medicines included in the National List of Essential Medicines (NLEM). Which of the statements given above is/are correct?
- 1 only
- 2 only
- Both 1 and 2
- Neither 1 nor 2
Answer: C. Both statements are correct. The DPCO is promulgated under Section 3 of the Essential Commodities Act, 1955, enabling price control on scheduled formulations listed in the NLEM.
Q3. Which of the following bodies/schemes is primarily dedicated to providing quality generic medicines at affordable prices across India?
- Pradhan Mantri Bharatiya Janaushadhi Pariyojana (PMBJP)
- Amrut Pharmacies
- Mission Indradhanush
- Rashtriya Arogya Nidhi
Answer: A. Pradhan Mantri Bharatiya Janaushadhi Pariyojana (PMBJP) is a campaign launched by the Department of Pharmaceuticals to provide quality generic medicines at affordable prices through dedicated Janaushadhi Kendras.
Revision flashcards
- Which authority enforces drug price caps and monitors pharmaceutical pricing in India? National Pharmaceutical Pricing Authority (NPPA), operating under the Department of Pharmaceuticals, Ministry of Chemicals and Fertilizers.
- Under which legislative act is the Drugs (Prices Control) Order (DPCO) promulgated? The Essential Commodities Act, 1955.
- What does NLEM stand for in the context of Indian public health policy? National List of Essential Medicines.
- How do private hospitals often inflate out-of-pocket drug costs for patients? By mandating purchases through in-house pharmacies and applying steep mark-ups between procurement cost (PTR) and retail price (MRP).
- Which Fundamental Right in the Indian Constitution encompasses the right to health and medical care? Article 21 (Right to Life and Personal Liberty).