NPPA Seems Totally Defunct: SC Asks If Drugmakers Can Be Allowed to 'Run Amok' Over Medicine Pricing

A bench of justices Vikram Nath and Sandeep Mehta observed that the National Pharmaceutical Pricing Authority (NPPA) seems to be a "totally defunct" body and asked the government why the entire system was working to help pharmaceutical manufacturers.

The top court reserved its verdict on two petitions which raised drug-related issues, including that of ensuring strict price control over medicines.

Court Questions Pricing Discrepancies

After the Centre told the bench about the decision to cap the trade margin on anti-cancer drugs at 30 per cent of the maximum retail price (MRP), the bench asked why there can't be a uniform 16 per cent margin on all medicines.

"The government policy is that entire ecosystem is not to be controlled," Additional Solicitor General (ASG) Aishwarya Bhati, appearing for the Centre, told the bench.

The bench observed that a medicine having Rs 15 as price to retailer (PTR), carries an MRP of Rs 250.

"Can you show any justification for this loot," the bench asked, adding, "The government is allowing this to happen. It is under the government's own eyes that it is happening."

When Bhati referred to the aspect of having control, the bench asked, "Should it be allowed to run amok?"

The law officer told the bench that medicine prices in India were among the lowest in the world.

While referring to the difference between the MRP and PTR, the bench said, "Why is the entire system working to help these people (manufacturers)."

NPPA's Role Under Scrutiny

The top court referred to a recent case where a medical distributor's wife was admitted to a hospital for cancer treatment.

It said the hospital charged Rs 1.30 lakh for an injection which was available at a price of Rs 11,000 to the distributor.

"It seems that the public at large is living in some day dream that some day they will be benefitted by the NPPA," the bench observed.

NPPA was constituted as an independent regulator for pricing of drugs and to ensure availability and accessibility of medicines at affordable prices.

When Bhati referred to the issue of control, the bench observed, "It is not a question of control. There is 300 per cent, 400 per cent or more difference. Why this difference? Where does that difference go? What is the justification for this massive difference."

Patient Welfare Versus Commerce

The law officer referred to the Centre's affidavit which said the Indian drug market is fairly competitive, with a large number of pharmaceutical companies in every drug segment, resulting in one of the lowest prices in the world.

When Bhati stressed on the need for a calibrated approach, the bench observed that patients don't have the bargaining powers and they have to shell out exorbitant price for medicines.

"We wish every medicine is considered as generic medicine," the bench said.

It also questioned the Centre why it took so long to cap the trade margin on anti-cancer drugs at 30 per cent of the MRP.

"Only after we started putting questions, the government has woken up and now you are saying we have done this," the bench told the law officer.

Bhati also referred to the aspect of growth of the pharmaceutical industry.

"You are talking about commerce and economic policy. Don't weigh patients against commerce," the bench said.

"When we talk of patients and their lives, can we look at it with a capitalist view?" it asked.

Previous Criticisms and Petitions

While hearing the matter on October 12, the top court had said the Centre's response on capping the trade margin of anti-cancer drugs at 30 per cent of the MRP was "hardly anything to be happy about" and questioned why the government cannot cap trade margins of other medicines.

The Centre, which had earlier come under severe criticism from the top court for steep markup of cancer drugs by hospitals, said that the government has taken an important decision to cap the trade margin on anti-cancer drugs at 30 per cent of the MRP, which is expected to result in annual savings of approximately Rs 2,500 crore to patients.

The bench had said that the Centre's response was insufficient and flagged that a single saline drip was sold in market for Rs 270 while its actual cost was Rs 11.

One of the petitions sought a direction to the authorities to make drug formulations more cost-effective by preventing alleged unethical overpricing of essential medicines by pharma companies and retailers.

It also sought directions to ensure strict price control under the Drugs (Prices Control) Order, 2013, to prevent violations of the price-fixing mechanism in the drug supply chain and disproportionate profit-making by retailers through unfair trade practices.

The other plea has sought disciplinary action against medical practitioners for not prescribing generic medicines to patients.