Why Not Cap Retail Margins at 16%? SC Seeks Govt Response on Steep Cancer Drug Markups

New Delhi: Raising concerns over excessive markups on cancer and other medicines, the Supreme Court on Tuesday asked the government why a uniform pricing rule should not cap the maximum retail price (MRP) at 16% above the price to retailer (PTR).

According to a recent media report by the ET, a bench comprising Vikram Nath and Sandeep Mehta expressed concern over the hardship such pricing causes ordinary patients and criticised pharmaceutical companies for their apparent indifference.

The bench said, "We don't know why they (pharma companies) are asked to fix prices like this. This is carnage. Plain and simple."

Referring to a cancer medicine supplied to retailers for ₹3,520 but sold to patients for ₹22,427, the court questioned the rationale for treating essential and non-essential medicines differently under the Drugs (Prices Control) Order.

"Why not keep a 16% (retail) margin on MRP (maximum retail price) on everything?" the court asked, drawing attention to the substantial gap between the two prices.

"Just see the drastic difference," the court observed. It also raised concerns about corporate hospitals requiring patients to buy medicines from their own pharmacies. When treatment is covered by Ayushman Bharat or other government health programmes, these inflated medicine costs are ultimately met through public funds, the court noted.

The bench further observed that patients purchasing medicines from outside pharmacies are sometimes not assured treatment by corporate hospitals. Questioning why patients should bear the consequences of such practices, it asked, "Why should the common man suffer all this. Corporate hospitals are industries; they are not a service at all."

Appearing for the government, Solicitor General Tushar Mehta assured the bench that it would explore a solution. He said the government would "find a way out. Some way that balances equities. As I understand, pharma companies are not the ones benefiting from it," he said. The court scheduled the next hearing for October 12, observing that the matter also concerned the ethics of medical practitioners in their dealings with patients.

During the previous week's hearing, the Supreme Court had objected to the considerable difference between the PTR and MRP of certain cancer medicines. It questioned why manufacturers should be allowed to set retail prices several times higher than the prices at which they supply the medicines.

The court had described the sale of essential medicines at inflated prices by manufacturers and retailers as "daylight robbery", noting that patients are compelled to sell their jewellery to afford treatment.

The court also observed that such pricing practices could lead to systemic fraud involving public funds when treatment expenses are reimbursed under government health schemes.

The court said, "Hospitals are buying medicines at these prices and then reimbursing from the government. It's ultimately taxpayer's money. There is a clear-cut case of fraud. "ET reported.