SC says “economic policy” cannot take precedence over lives as Center supports “calibrated” drug price controls

The Supreme Court on Tuesday (Oct 27, 2026) said “economic policy” cannot take precedence over the lives of citizens as it questioned the Center over its approach to regulating prices of essential medicines and health products.

Editorial | Bitter pills: about the intervention of the court, about the prices of medicines

A bench of Justices Vikram Nath and Sandeep Mehta questioned another Advocate General Aishwarya Bhati, who appeared at the Centre, over the failure of the National Medicines Pricing Authority (NPPA) to cap business margins on essential drugs despite concerns about excessive markups. It also sought to find out why such a cap was imposed on some cancer drugs only after court intervention.

Earlier this month, NPPA, the government’s drug price regulator, capped the trade margins of 137 non-scheduled cancer drugs at 30% of their maximum retail price (MRP). The adjusted prices are to apply from November 9.

“Is this a matter where economic policy will prevail over the lives of the citizens at large?… NPPA (has been) conspicuously silent… Why have you remained silent for so many years? Have you suddenly decided to cap the business margins of cancer drugs?… Don’t make us ask sharp questions,” the Bench observed.

The oral comments came during the hearing of petitions filed by advocate Kishan Chand Jain and pediatric surgeon Sanjay Kulshrestha seeking stricter enforcement of price controls under the Drugs (Control of Prices) Ordinance, 2013 (DPCO) to curb excessive margins across the pharmaceutical supply chain.

However, Ms. Bhati told the Bench that “total government control” over essential drugs could adversely affect the market. She said the government favored a “calibrated approach” that struck a balance between ensuring the availability of essential medicines at reasonable prices and the need to encourage innovation and competition in the pharmaceutical industry.

“So taking out just one limb, having drugs at reasonable prices, may not be the right way to look at it. Maintaining a balance between all these limbs is our endeavor as regulators… We want investment to come in here as well… We can do these interventions from time to time, but total control is not the answer,” Ms Bhati said.

The bench pulls out the NPPA

The Bench also questioned why the 16% retail margin prescribed under the DPCO should not apply to all essential drugs and sought a basis for classifying the drugs as scheduled or non-scheduled. While scheduled formulations are subject to government-imposed price caps, non-scheduled drugs remain outside this framework, although they may involve significant mark-ups.

“How do you decide which drug is essential and which is not? Why shouldn’t all drugs be essential? The issue here is which drug to keep (in the Scheduled List) and which not to keep. With due respect, NPPA appears to be completely defunct,” Justice Mehta observed.

The bench also referred to a report by The Hindu on October 22 about the hefty dues pending NPPA recovery from pharmaceutical companies in overcharging cases. The report said that as of March 31, 2026, the regulator had recovered only ₹1,582.4 crore of the required ₹10,029.8 crore, including interest, leaving ₹8,447.4 crore.

“Government is waiting to recover dues from manufacturers. Recently there was a report about this… Patients and their families have to sell ornaments, houses to get treatment which, if there was proper control… would have been a quarter of the cost,” Justice Mehta said.

Defense of hospitals

Senior advocate Mukul Rohatgi, appearing for the hospital association, argued for steep markups on essential drugs, including cancer drugs, arguing that cutting such margins would make running hospitals financially unviable. He said hospitals have made significant expenditures on salaries, doctors, infrastructure, technology and infection control and will have to make up for any lost revenue by charging for services that were not previously billed separately.

“Of the amount I bill, I only get a portion from insurance or the government. I have to subsidize these bills… If this goes down to 10% or 20%, the hospital will collapse. If I don’t get the difference, it will lead to an increase in (fees for) other facilities,” Mr Rohatgi said.

However, the Bench rejected this contention and observed that patients cannot be subjected to ‘dacoity’. It reserved its order on the matter and gave the parties two weeks to file their written submissions.

Published – 27 Oct 2026 21:35 IST