Centre caps trade margin for cancer drugs at 30% after Supreme Court rap

The Central government informed the Supreme Court on Monday that it has capped the trade margins on anti-cancer drugs at 30 percent of the Maximum Retail Price (MRP) [Kishan Chand Jain vs Ethics And Medical Registration Board (EMRB) (Erstwhile Medical Council Of India) And Ors.].

A Bench of Justices Vikram Nath and Sandeep Mehta however flagged the exorbitant profit margins on everyday medical items and asked why the Centre’s new price-margin cap has been confined only to anti-cancer drugs

The hearing comes weeks after the top court flagged severe discrepancies where ₹2,700 cancer drugs carried an MRP of ₹27,000, calling it "broad daylight dacoity" and fraud on public health schemes.

After the government told the Court today that issue of pricing of cancer drugs has been addressed, the Court asked why the broader pharmaceutical and medical device sector continues to escape upfront margin regulation.

"This relates to only cancer drugs. What about the overall? For an ordinary cardiac stent, Indian made stent, price to retailer (PTR) is ₹5,000 but MRP is ₹25,000. You put a cap of 16 percent and you will reduce medical interventions by three-fourths. Doctors cause interventions to be done because the margins are so high," the Bench observed.

When Solicitor General (SG) Tushar Mehta submitted that cardiac stents are already capped, the Court confronted the law officers with severe disparities across routine medicines and consumables.

"Azithromycin, MRP ₹78.29, PTS (Price to Stockist) ₹28.50. Tell us one beneficial reasoning for the patient... A drip line for saline, MRP is ₹11 and it's selling for ₹270... How does the manufacturer fix a price and it is sold ultimately at one-fifth or one-tenth?" the Bench asked.

The Court was hearing a petition seeking mandatory generic drug prescriptions, strict initial price controls on non-scheduled medicines, and maximum retail price caps on medical devices.

Earlier, petitioner Kishan Chand Jain had submitted that under the Drug Price Control Order (DPCO) of 2013, the National Pharmaceutical Pricing Authority (NPPA) fixes ceiling prices for only around 1,000 "scheduled" drugs, leaving nearly 82 per cent of medicines in the market non-scheduled.

Additional Solicitor General (ASG) Aishwarya Bhati argued that pricing policy requires a delicate balance with drug availability and market forces.

"We don’t want to control the entire ecosystem of drugs. India already has amongst the lowest prices of medicines. If there is too much intervention by the government, then it will lead to the market getting suffered. It will affect availability," Bhati submitted.

Unconvinced, the Court responded:

"Give us one justification where there is a concern shown for patients. You are giving a 16 percent margin on DPCO. Do the DPCO controlled medicines not reach the consumers?"

SG Mehta submitted that the Union will announce a periodically updated list of approved cancer medicines governed by the 30 percent cap, excluding only inexpensive formulations.

Senior Advocate Kapil Sibal, representing the Indian Pharmaceutical Alliance, maintained that such mark-ups do not exist across the majority of formulations.

The matter will be heard next on October 27.

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