Centre Tells Supreme Court It Will Cap Trade Margins On Cancer Drugs At 30%

The Centre said the measure is intended to prevent excessive markups on cancer drugs while ensuring that reasonable margins remain available in the supply chain.

The submission was made during the hearing of a petition concerning the sale of essential medicines at inflated prices before a Bench of Justices Vikram Nath and Sandeep Mehta.

The Solicitor General told the Bench that the Centre would notify a list of cancer drugs to be covered by the 30 per cent trade margin cap. The list, he said, would not be static. It would be updated periodically to include additional medicines on the basis of market developments and public health needs. Inexpensive drugs, the Solicitor General told the Court, would be kept out of the list.

The Centre has not yet notified the list, and the submission made in Court did not name the medicines that will be covered.

The Bench did not treat the Centre's proposal as a complete answer to the petition. It asked the Government why price-control measures were being restricted to anti-cancer medicines, and why similar measures were not being considered for other drugs.

The Court also asked how patients would benefit if pharmaceutical manufacturers were allowed to fix drug prices, and questioned the justification for higher medicine prices. It further called for broader scrutiny of drug pricing. The bench stressed that the exercise should not end with anti-cancer medicines and should extend to the pharmaceutical market as a whole.

It is to be noted that the Drug prices in India are regulated under the Drugs (Prices Control) Order, 2013, issued under the Essential Commodities Act, 1955. Ceiling prices fixed under the Order apply to scheduled formulations, that is, medicines listed in its First Schedule. For non-scheduled formulations, the manufacturer sets the launch price, and the Order restricts only the annual increase in the maximum retail price. 

The Court has listed the matter for further hearing on October 27.

Notably, on September 22, the Bench had flagged massive price disparity in essential cancer medicines, where a drug sold to retailers for ₹2,700 carries an MRP of ₹27,000. Justice Mehta had said, “How can a patient be cheated?”, questioning authorities’ silence over the pricing disparity. “It’s Ultimately Taxpayers’ Money”, he had said.

The bench had also noted that hospitals purchase medicines at these prices and seek government reimbursement for patients treated under the AYUSH scheme. “It’s ultimately tax payer’s money. There is a clear cut case of fraud," the bench had remarked.

Case Title: Kishan Chand Jain v. Ethics and Medical Registration Board (EMRB)