Supreme Court questions government over medicine overpricing

The Supreme Court on Tuesday questioned the Centre over its failure to bring all medicines under price control, asking why economic interests should weigh over citizens’ lives and why pharmaceutical companies should be allowed to charge high prices for essential drugs.

Reserving its order on two petitions challenging high medicine prices, a bench of justices Vikram Nath and Sandeep Mehta questioned the wide gap between the maximum retail price (MRP) and the price to retailer (PTR). “Do not treat it as commerce but treat it as what concerns the lives of citizens. Is this a matter where the government’s economic policy should weigh over the lives of citizens,” the bench said.

Also read: 'Govt allowing this to happen': Supreme Court questions overpricing of medicines, massive gap in MRP and cost to retailers

The Centre informed the court about its decision to cap trade margins on 137 anti-cancer drugs at 30% of the MRP, expected to save patients around ₹2,500 crore annually. The court, however, pointed out that the decision came only after its intervention.

“What stops you from taking control over the entire medicines. What is the rationale behind leaving some medicines outside the scheduled drugs category that puts it outside the Drug Price Control Order (DPCO)?” the bench said.

Additional solicitor general Aishwarya Bhati, appearing for the Centre, said the government did not support excessive trade margins but wanted to protect investment and competition.

“The price of drugs when seen globally are the cheapest in India. The government does not leave the sector unregulated. At the same time, complete control cannot be the solution,” she said.

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The bench said patients had no bargaining power and were forced to bear the burden of high prices. It cited an instance in which a medicine distributor offered to procure an anti-cancer drug directly from the manufacturer for ₹1,100 for his wife’s treatment, but a private hospital charged him ₹1.30 lakh.

“Policy seems to benefit corporates even as the public suffers. We can give you 100 other examples of drugs and devices which are heavily priced. You can simply bring them under the trade margin of 16%,” it said.

The court also criticised the Centre’s affidavit for not addressing three parliamentary committee reports on drug pricing. “Your affidavit is silent on them (reports) because it is not very convenient to you,” it said.

ASG Bhati informed the court that the government has ensured to make generic drugs available to people through the PM Jan Aushadi Kendras and that the government calibrates prices of non-scheduled drugs.

Also read: SC castigates Centre over medicine overpricing, asks 'can you justify this loot'

The pleas were by lawyer Kishan Chand Jain and doctor Sanjay Kulshreshtha. One of them noted that the annual turnover of Pradhan Mantri Bhartiya Janaushadhi Kendras was ₹2,200 crore, around 1% of the industry’s annual turnover.

Senior advocate Mukul Rohatgi appearing for a body of private hospitals said the private health sector became relevant as the state was not found to be up to the mark. He said that if the court feels that the margin of money is pocketed by hospitals, a panel can be formed to seek the truth.

Drugs are regulated as an essential commodity under Section 3 of the Essential Commodities Act, 1955 and the Drugs (Prices Control) Order, 2013 (DPCO) is issued by the Centre in exercise of the powers conferred under this provision.