Supreme Court flags steep drug mark-ups and urges 16% cap on essential medicines

A two-judge bench of the Supreme Court, comprising Justices Vikram Nath and Sandeep Mehta, expressed alarm over the stark disparity between retailer costs and the maximum retail price (MRP) of essential drugs, pointing to a cancer therapy listed at roughly ₹27,000 despite a price to retailer (PTR) of about ₹2,700. They queried the Centre on why the Drugs (Prices Control) Order, 2013 allows only a 16% notional retailer margin for scheduled essential medicines, while the bulk of market offerings—non-scheduled drugs—can be increased by 10% each year.

The judges also probed the regulatory split between scheduled and non-scheduled categories and the pricing of medicines dispensed via corporate hospital pharmacies, noting that reimbursements under schemes such as Ayushman Bharat ultimately burden public finances. The Solicitor General Tushar Mehta acknowledged the issue but emphasized the need for a balanced solution that does not unduly favor any party. Industry representatives argued that the gap between PTR and MRP reflects distribution costs, taxes, and handling expenses rather than manufacturer profit, especially for injectable oncology products that require specialized logistics. They called for greater price-transparency across the supply chain while maintaining incentives for research, development, and quality manufacturing.