The Supreme Court has criticised the government for failing to prevent exploitation in the pharmaceutical sector, highlighting massive disparities between drug production costs and retail prices.
The court questioned the inefficacy of the National Pharmaceutical Pricing Authority (NPPA) and called for stricter price controls to protect patients from exorbitant medical expenses.
While recent price caps on cancer drugs offer some relief, the court emphasised the need for broader reforms to ensure affordable healthcare for ordinary citizens.
Rarely does the Supreme Court let fly at the government. Although it ticks off lawyers and litigants, and is given to disparaging certain people, it maintains a certain decorum when it pulls up ministries and departments. In October, however, a two-judge bench of the apex court launched a broadside against the Narendra Modi government for allowing what it described as the “broad daylight dacoity with patients”. The judges were clearly incensed by the inability of drug price control regime to protect patients from exploitation—by drug manufacturing companies, the pharma trade and by hospitals—and asked the government: can you show any justification for this loot?
The main trigger is the wide disparity between the maximum retail prices (MRP) of medicines and the prices at which the drugs are sold to retailers, or PTR, by drug firms. From the documents provided by the petitioners, the court culled some stunning examples of the huge difference between PTR and MRP. It cited the case of a saline drip costing Rs 11 being sold for Rs 270, of a medicine sold to retailers at Rs 15 carrying an MRP of Rs 250, and the cost of a high-end medicine soaring from Rs 11,000 at the retail level to over Rs 1,30,000 for patients.
The big puzzle is how India’s drug companies are able to fix a price for a drug and then sell it at a PTR which is just one-tenth to one-fifth of the MRP. Surely the MRP includes all components of cost, including research and development. What, then, is the nature of this collusion? Pharmaceutical companies were represented in court as were private hospitals which had filed an application to be heard in the matter. During early hearings, the court had questioned the exorbitant rates for devices and drugs charged by private hospitals.
Additional Solicitor General Aishwarya Bhati who was appearing for the Centre had a hard time of it. Asked if the government could show any justification for such loot, she could say little to assuage the bench. “Should it (the pharmaceutical industry) be allowed to run amok?” the bench asked. “The government is allowing this to happen. It is under the government’s own eyes that it is happening.” She contended that drug prices in India were among the lowest in the world because the market was competitive with many drug manufacturers in every segment. Also, the government’s policy is not to control the entire ecosystem. To which, the court remarked rather tartly that was the reason why the entire system is working to help the industry. It observed that the National Pharmaceutical Pricing Authority (NPPA) which is entrusted with fixing the ceiling price of medicines and enforcing these, was a "totally defunct" body.
The big puzzle is how India’s drug companies are able to fix a price for a drug and then sell it at a PTR (price to retailer) that is one-tenth of MRP
These exchanges are significant because they have brought into the spotlight the fundamental flaws in what would appear to be a strictly regulated market. Under the Drug Price Control Order (DPCO), medicines are broadly classified into two broad categories: scheduled and non-scheduled formulations which refer to particular strength of the medication and its dosage. Scheduled formulations are those identified by the Union Ministry of Health and Family Welfare in its National List of Essential Medicines (NLEM) considered absolutely necessary to meet the country’s healthcare needs. Those drugs not included in this list are classified as non-scheduled formulations, and the writ petitions had sought inclusions of these in the DPCO regimen. The task of fixing the ceiling price and enforcing price controls of scheduled formulations is entrusted to NPPA.
Giving credence to the observations of the Supreme Court on the NPPA is a recent report in Bhaskar English which said the government had yet to recover Rs 8,447 crore out of total dues of Rs 10,029.8 crore from drug companies for overcharging. The report said Rs 5,800 crore was tied up in legal disputes. All this matters because patients bear the major cost of medical care in India because they are not covered by medical insurance or government schemes. Out-of-pocket expenses on healthcare is also the reason why huge numbers — about 38 million according to a study conducted by the Public Health Foundation of India over a 15-year period ending in 2012 — fall into poverty because they have to bear the burden of buying medicines on their own.
From September-end, the bench has held several hearings on two writ petitions, filed separately in 2023 and 2024 by an advocate and a medical practitioner. The first seeks directions to ensure strict compliance with price control orders to prevent profit gouging by the retail trade and the other to curb unethical practices by the medical fraternity.
Reacting to the stinging observations of court, the NPPA on October 17 capped the trade margin at 30 per cent on 137 non-scheduled cancer drugs, including patented medicines. The list covers a range of cancer treatments, including patented medicines. The cap applies to the listed formulations — this means strength of the medicine and dosage forms — including combination medicines. The revised prices are scheduled to come into force from November 9. The court, however, was far from pleased. It asked why a stricter, uniform cap of 16 per cent could not be applied across the board for essential medicines.
Nor are civil society organisations fighting for access to medicines happy. The Working Group on Access to Medicines and Treatments concedes that there have been very large absolute reductions, a stellar example being Samtepa 100 mg injection which is used for palliative treatment of advanced breast and ovarian cancer. Manufactured by Samarth Life Sciences, the price has been slashed by over 91 per cent from Rs 80,071.86 to Rs 7,150.33. Similarly, prices of some biological treatments have been cut drastically, which, ironically, reveals the extent to which patients have been ripped off for so long. The Group points out that NPPA's cap on trade margins for non-scheduled cancer medicines will not make any dent on the affordability of high-end drugs, more so in the case of patented treatments. Despite such capping in 2019, prices of cancer medicine have soared. For instance, the price of Ribociclib, used to treat breast cancer, soared from Rs 58,000 in 2022 to Rs 78,000 in 2025. Pembrolizumab—marketed as Keytruda by Merck—continues to be priced at an astounding Rs 1,95,000 per vial. More on this in a later column.
The short point is that price capping will help to some extent if enforced properly, but this alone will not make healthcare affordable for ordinary patients.
This column was originally published in the November 16-30, 2026 edition of Down To Earth