New Delhi: The Supreme Court on Tuesday questioned the Central Government’s decision to limit the trade margin on cancer drugs to 30 percent. The court asked why it took so many years for the government to take this step. It also expressed concern over the exorbitant fees charged by private hospitals on medicines and medical supplies.
A bench of Justices Vikram Nath and Sandeep Mehta said that this matter concerns people’s lives and cannot be viewed solely from the perspective of commercial interests or economic policies.
The bench headed by Justice Nath asked the Centre, “Why did you suddenly decide to limit the trade margin on cancer drugs to 30 percent? Why did you remain silent for so many years? Don’t force us to ask tough questions. You are dealing with matters concerning people’s lives. Don’t treat this like a business.”
The Supreme Court was hearing public interest litigations (PILs) related to regulating drug prices, generic drugs, medical devices, and the prescribing process by doctors.
Court Concerned Over Rising Patient Expenses
The Supreme Court expressed dissatisfaction with the central government’s argument that the purpose of setting trade margin limits was to balance the interests of various stakeholders.
The court also questioned why patients face additional financial burden when reimbursement of treatment expenses under government health schemes like Ayushman Bharat is limited to a set limit. The bench noted that patients ultimately have to pay for expenses exceeding the prescribed limit out of their own pockets.
Citing the example of the high margins charged on medical supplies in hospitals, the court noted that patients are being charged up to 250 rupees for a saline drip line that costs approximately 15 rupees to retailers.
The Supreme Court questioned, “If this is happening, then what’s the point of implementing the Drug Price Control Order (DPCO)? The government itself is allowing this to happen.”
The DPCO, or Drug Price Control Order, is a regulatory mechanism that controls drug prices.
Questions about the huge price difference in cancer injections
During the hearing, the bench also mentioned the case of a drug dealer’s wife, who was undergoing cancer treatment at a major private hospital.
According to the court, the drug dealer had told the hospital that he could provide a chemotherapy injection at the dealer price of ₹11,000. However, the hospital allegedly refused to use the drug and charged ₹1.30 lakh for the same injection.
Regarding this, the Supreme Court questioned, “Can you justify this plunder? Why is there such a difference in price? Where does this money go?”
Supreme Court Comments on Private Hospitals’ Argument
Senior advocate Mukul Rohatgi, representing private hospitals, argued that hospitals must procure medicines through their pharmacies to ensure the availability and quality of medicines provided to patients.
He stated that hospitals must maintain 24-hour infrastructure and facilities. Furthermore, the authenticity and quality of every medicine available in the market cannot always be trusted.
Rohatgi also argued that reducing drug prices may not necessarily reduce the overall cost of treatment, as hospitals may have to cover their operating expenses through other means.
However, the Supreme Court did not accept this argument. The bench stated that while hospitals can cover their legitimate expenses through other means, charging excessive margins on medicines is not justified.
The court said, “A hospital can operate through other means, not through this kind of plunder. You are a commercial hospital and charge for everything. But why should the price of a drug be 100 or 200 times higher than its actual price?”
Limiting Margins on Cancer Drugs Estimated to Save ₹2,500 Crore
The Central Government had earlier told the Supreme Court that limiting the trade margin on the maximum retail price (MRP) of cancer drugs to 30 percent is expected to save patients approximately ₹2,500 crore annually.
In an affidavit filed in the apex court, the Department of Pharmaceuticals stated that this measure could reduce the MRP of cancer drugs by 20 to 70 percent, depending on the drug.
According to the government, the objective of this arrangement is to prevent excessive trade margins on drugs and maintain reasonable margins for distributors and retailers.
The Centre also mentioned a measure taken in 2019. At that time, the National Pharmaceutical Pricing Authority (NPPA) had imposed a 30 percent trade margin limit on 42 select non-scheduled cancer drugs.
According to the government, this move reduced the maximum retail prices of 526 brands and resulted in estimated savings of approximately ₹984 crore annually for patients.
Supreme Court Reserves Decision
After hearing arguments from all parties in the case, the Supreme Court has concluded the hearing and reserved its decision. The court has also directed all parties to file written submissions.
The public interest litigations have questioned the current drug pricing system. The petitioners have raised concerns about the supply price of the drugs and the fees charged to patients.