SC caps trade margins on anti-cancer drugs at 30%:Asks why other drug prices not regulated; seeks response by 27 October

The Supreme Court questioned the Centre’s decision to cap trade margins on anti-cancer drugs at 30%. The court said there was nothing in the government’s response to be pleased about. It asked why trade margins could not be capped on other medicines if the same could be done for cancer drugs. The Centre said the decision is expected to save patients around ₹2,500 crore annually. The court gave Solicitor General Tushar Mehta until October 27 to provide details on how drug prices are determined. Solicitor General Tushar Mehta and Additional Solicitor General Aishwarya Bhati appeared on behalf of the Centre. The bench said, “We understand that there are costs related to transportation, raw materials, research and development, and other expenses. But all these are included in the MRP. What is the rationale for allowing medicines to be sold at prices 400 times higher than their actual cost? How can you allow this?” Bhati said that medicine prices in India are the lowest in the world. She said this is why a large number of people come to India for treatment. Tushar Mehta said that medicine prices cannot be controlled beyond a certain limit. He said higher margins help medicines reach remote areas. Justice Mehta said, “If medicines approved under the DPCO do not reach consumers, it is the government’s responsibility to ensure that they reach patients. The real dispute is which medicines should be included in the price-controlled list under the DPCO and which should not.” Centre explains price-setting process in affidavit In a detailed 551-page affidavit, the Centre said the National List of Essential Medicines (NLEM) is prepared and published by the Ministry of Health and Family Welfare. According to the affidavit, the NLEM was published in 2011, 2015 and most recently in 2022. The Centre said the NLEM is prepared by the Standing National Committee on Medicines, which includes all relevant stakeholders and experts. The committee considers the World Health Organization’s Essential Medicines List, medicines used in national health programmes, the Indian Pharmacopoeia and the National Formulary. According to the Centre, the NLEM 2022 includes 388 medicines and more than 900 formulations. How are prices of DPCO-listed medicines fixed? The Centre said the ceiling prices of medicines listed under Schedule I of the DPCO, 2013, are determined on the basis of market data. For this, the simple average price of all branded and generic medicines with a market share of 1% or more of the total market turnover is calculated. The market share is determined on the basis of the medicine’s moving annual turnover. A 16% margin is added to the simple average. The Centre said the ceiling price determined in this manner becomes the maximum retail price (MRP). A medicine cannot be sold in the market at a price higher than this. However, manufacturers can offer reasonable margins to wholesalers and retailers within the ceiling price. The Centre said ceiling prices have so far been fixed for 935 formulations. Centre’s response on non-scheduled medicines The Centre said manufacturers are free to set the initial prices of non-scheduled medicines. While setting the initial price, manufacturers take into account competition in the market. The Centre said competition in this segment generally prevents manufacturers from fixing prices arbitrarily. The Centre said the National Pharmaceutical Pricing Authority (NPPA) monitors the MRPs of all non-scheduled formulations. The aim is to ensure that no manufacturer increases the MRP of a non-scheduled medicine by more than 10% over the MRP in force during the preceding 12 months. Court had expressed concern on September 29 as well On September 29, the Supreme Court expressed concern over hospitals charging margins of up to 10 times on cancer medicines. The court described this as “massacre”. The court had suggested fixing a uniform margin of 16% on all medicines. It also asked the Centre to look into cases where hospitals force patients to buy medicines from their own pharmacies. The court had said that ordinary people bear the brunt of this system. The Supreme Court is hearing petitions related to medicine prices, prescriptions for generic medicines and the regulation of medical devices under the DPCO, 2013.