‘Can you justify this loot?’: Supreme Court slams Centre over medicine overpricing

The Supreme Court on Tuesday questioned the Centre over the wide gap between the maximum retail price (MRP) of medicines and the price at which retailers purchase them, asking whether the government could justify what it described as this ‘loot’ and allow manufacturers to ‘run amok’.

A bench of Justices Vikram Nath and Sandeep Mehta criticised the functioning of the National Pharmaceutical Pricing Authority (NPPA), describing it as a ‘totally defunct’ body, and questioned why the pricing system appeared to favour pharmaceutical manufacturers. The court reserved its verdict on two petitions concerning drug pricing and access to affordable medicines.

During the hearing, the bench cited an example of a medicine bought by retailers for Rs 15 but carrying an MRP of Rs 250. Questioning the disparity, it asked, “Can you show any justification for this loot,” adding, “The government is allowing this to happen. It is under the government’s own eyes that it is happening.”

When Additional Solicitor General Aishwarya Bhati, appearing for the Centre, referred to the need for regulatory control, the bench asked, “Should it be allowed to run amok?”

The court further questioned why the system appeared to benefit manufacturers. “Why is the entire system working to help these people (manufacturers),” it asked.

The Centre maintained that medicine prices in India were among the lowest globally, citing the competitive nature of the domestic pharmaceutical market and the presence of numerous companies across drug segments. Bhati also argued for a calibrated approach to regulation.

The bench, however, stressed that patients lacked bargaining power and were forced to pay exorbitant prices for medicines. “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,” it asked.

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‘Don’t weigh patients against commerce’

The judges questioned the Centre’s emphasis on the pharmaceutical industry’s growth and economic considerations, saying, “You are talking about commerce and economic policy. Don’t weigh patients against commerce.”

“When we talk of patients and their lives, can we look at it with a capitalist view?” the bench asked, adding, “We wish every medicine is considered as generic medicine.”

The court also referred to a case in which the wife of a medical distributor, undergoing cancer treatment, was charged Rs 1.30 lakh for an injection that was available to the distributor for Rs 11,000.

“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.

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Centre’s decision on cancer drug margins questioned

The hearing also focused on the Centre’s decision to cap trade margins on anti-cancer drugs at 30 per cent of their MRP. The bench questioned why a uniform trade margin of 16 per cent could not be applied to all medicines and asked why the government had taken so long to act.

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

At an earlier hearing on October 12, the court had said the Centre’s response on capping cancer drug margins was “hardly anything to be happy about”. It had also cited the example of a saline drip sold for Rs 270 despite an actual cost of Rs 11. The Centre had estimated that the 30 per cent cap on anti-cancer drug margins would save patients around Rs 2,500 crore annually.

What do the petitions seek?

One petition seeks measures to prevent alleged unethical overpricing of essential medicines and enforce strict price controls under the Drugs (Prices Control) Order, 2013, including curbs on disproportionate profits in the supply chain.

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The other seeks disciplinary action against medical practitioners who do not prescribe generic medicines to patients.

The NPPA was established as an independent regulator to oversee drug prices and ensure that medicines remain available and accessible at affordable rates.