Supreme Court Questions Government's Approach to Drug Pricing Amid Cancer Treatment Concerns

Supreme Court's Stance on Drug Pricing

New Delhi: On Monday, the Supreme Court expressed dissatisfaction with the Centre's recent decision to limit the trade margin on anti-cancer medications to 30% of the maximum retail price (MRP), stating that this response is 'hardly satisfactory' and questioning why similar measures aren't applied to other pharmaceuticals.

The government, previously criticized by the court for the exorbitant pricing of cancer treatments in hospitals, announced that this new cap is expected to save patients around Rs 2,500 crore annually.

Justices Vikram Nath and Sandeep Mehta highlighted the inadequacy of the government's response, pointing out that a saline drip is sold for Rs 270, despite its actual cost being only Rs 11.

The bench remarked, 'There is hardly anything to be happy about. There is actually nothing for the benefit of the patients,' as Solicitor General Tushar Mehta and Additional Solicitor General Aishwarya Bhati attempted to clarify the existing pricing framework.

Mehta reiterated that the government's decision to cap anti-cancer drug margins is a significant step, promising substantial savings for patients.

Justice Nath challenged the solicitor general, questioning why the government can regulate anti-cancer drug prices but not extend this regulation to all medications.

'We recognize that there are costs associated with transportation, raw materials, and research and development, but these are already factored into the MRP. What justifies allowing prices to soar to 400 times the actual cost?' the bench queried.

Bhati defended the government's stance, claiming that India's medicine prices are among the lowest globally, attracting many international patients seeking treatment.

Justice Mehta pointed out that while a cardiac stent manufactured in India costs around Rs 5,000, hospitals charge over Rs 25,000 for it. Similarly, the common antibiotic Azithromycin is priced above Rs 70, while its actual cost is about Rs 28.

Tushar Mehta argued that capping prices too low could hinder the distribution of medicines to remote areas.

Justice Mehta emphasized that if DPCO-approved medicines are not accessible to consumers, it is the government's responsibility to ensure their availability. The core issue lies in determining which medicines should be included in the DPCO-controlled list.

The bench has given Tushar Mehta until October 27 to propose a framework for regulating medicine prices, stating, 'We will be supporting the government's efforts. Whatever needs to be done, please complete it by October 27.'

In a comprehensive 551-page affidavit, the Centre explained that the National List of Essential Medicines (NLEM) is compiled by the Ministry of Health and Family Welfare, with the latest version published in 2022.

The NLEM is developed by the Standing National Committee on Medicines, which includes various stakeholders and experts, and considers the World Health Organization's Essential Medicines List, drugs used in national health programs, and the Indian Pharmacopoeia. The 2022 NLEM includes 388 drugs and over 900 formulations.

Regarding price regulation, the Centre stated that the ceiling price for scheduled formulations is determined based on market data, averaging the prices of all brands and generic versions with a market share of at least one percent, plus a 16% margin.

This ceiling price becomes the MRP, which cannot be exceeded in the market. However, manufacturers can offer margins to wholesalers and retailers within this ceiling.

For non-scheduled formulations, manufacturers can set initial launch prices based on competition, making arbitrary pricing challenging in a competitive market.

The NPPA monitors the MRP of all non-scheduled formulations to ensure that price increases do not exceed 10% of the previous year's MRP.

On September 29, the Supreme Court expressed grave concern over the excessive markups on cancer drugs, advocating for a uniform 16% margin across all medications.

The court urged the Centre to investigate the practice of hospitals requiring patients to purchase medicines from their affiliated chemists, highlighting that this system adversely affects the average citizen.