Supreme Court Questions High Drug and Device Mark-ups, Pushes for Wider Price Control

The Supreme Court on October 12, 2026 asked the Centre why price intervention for medicines and medical devices remained limited to anti-cancer drugs when the gap between procurement cost and maximum retail price appeared wide across categories, bringing the working of the drug price control order back into focus. A bench of Justices Vikram Nath and Sandeep Mehta raised the question during a hearing on pricing of medicines and devices. The bench referred to an Indian-made cardiac stent as an illustration of a substantial mark-up. It also pointed to the difference between the price at which manufacturers supply drugs to stockists and the MRP paid by patients. The matter was listed for further consideration on October 27, 2026 on whether regulation should go beyond cancer medicines.

Justices Vikram Nath and Sandeep Mehta heard the issue on October 12, 2026. The bench asked why state action had been confined to anti-cancer medicines. It said the record before it suggested that high mark-ups were not restricted to one therapeutic group. The judges drew attention to the chain from factory to stockist to retailer to patient. In that chain, the bench noted, the ex-factory or stockist supply price and the printed MRP often stood far apart. That distance, the bench indicated, was borne by patients and families at the chemist counter and at hospitals. The questions were put to the Centre for a response. No final direction extending control to other drugs or devices was issued on that date. The bench kept the larger question open and posted it for further hearing on October 27, 2026.

The hearing sits within the wider framework of drug price control in India. Prices of scheduled formulations listed under the National List of Essential Medicines are subject to ceiling prices fixed by the National Pharmaceutical Pricing Authority. Prices of non-scheduled formulations are monitored, with manufacturers barred from raising MRPs by more than a permitted percentage in a year. Paragraph 19 of the 2013 Order gives the government power to fix or revise prices in public interest for drugs and devices. It is that provision which has been used for trade margin rationalisation in the past for stents and knee implants and, more recently, for cancer medicines. The bench's questions on October 12 went to whether that power should be used more widely.

How drug price control order Covers Other Drugs

In reply to the bench's queries, the Centre pointed to action already taken for cancer treatment. The National Pharmaceutical Pricing Authority issued a notification on October 17, 2026 under Paragraph 19 of the Drugs (Prices Control) Order, 2013. The notification capped the trade margin at 30 percent on 137 non-scheduled anti-cancer medicines. The cap applies to the chain from the manufacturer to the stockist to the retailer. Revised ceiling prices under the notification were scheduled to take effect from November 9, 2026. The government projected that the measure would produce annual savings of Rs 2,500 crore for patients. The calculation rests on the difference between prevailing MRPs and the recalculated prices after margin rationalisation. For families paying for chemotherapy cycles from savings and borrowings, that difference can decide whether treatment continues without interruption.

A trade margin cap does not fix what a company spends to make a drug. It limits what intermediaries can add after the ex-factory price. The Authority starts from the price at which the manufacturer sells to the stockist. It then allows a defined margin for wholesale and retail put together. The MRP is reworked on that basis. Where the existing MRP reflects a margin far above 30 percent, the price must come down. Where the margin is already within the limit, the change is small. The court on October 12 focused on this first leg, the stockist supply price, because it shows what the product costs before retail mark-ups. The bench asked for an explanation of why that gap remained wide for many products outside the cancer list. The Centre's answer will be tested when the matter returns.

Stent Example Draws Attention to Devices

The reference to an Indian-made cardiac stent gave the hearing a second limb beyond tablets and injections. Medical devices that are notified as drugs under the pricing regime fall within the same enforcement net. The bench used the stent to ask whether a product made in India and procured at a modest cost should carry a retail price several times higher by the time it reaches the catheterisation laboratory. The question was not about one brand or one hospital bill. It was about the method by which device prices are built up through distribution margins. The bench asked why that method had drawn firm state action for anti-cancer medicines but not for other high-cost therapies and implants. The Centre has not yet placed on record a plan to repeat the cancer-drug exercise for devices or for other therapeutic groups. That is the issue listed for October 27.

Much public discussion loosely refers to a drug price control act. In strict legal terms, retail price discipline comes from the Drugs (Prices Control) Order issued under the Essential Commodities Act, with the National Pharmaceutical Pricing Authority as the enforcement agency. That distinction matters because an Order under Paragraph 19 can be issued quickly to meet a public health need, while a separate Act of Parliament would need a longer legislative process. Day-to-day price talk is often confused by retail searches that have nothing to do with this regime, such as a query for birth control pills philippines mercury drug price, which points to a private chemist's list in another country and not to a ceiling fixed by Indian regulators. A trade margin cap in India works in the opposite way. It starts from a verifiable factory or import price and trims the additions allowed further down the line, rather than tracking advertised shop prices.