Centre to cap trade margins on cancer drugs, SC calls for broader price review

New Delhi: The Centre on Monday informed the Supreme Court that it has decided to regulate trade margins on anti-cancer medicines by capping them at 30 per cent of the maximum retail price (MRP), while the apex court called for a broader review of medicine pricing across the pharmaceutical sector.

Solicitor General Tushar Mehta, appearing for the Union government, told a bench of Justices Vikram Nath and Sandeep Mehta that the Centre would notify a list of cancer drugs to which the trade margin cap would apply.

The Centre’s second highest law officer submitted that the list could be periodically updated to include additional anti-cancer medicines, depending on market developments and public health considerations, while excluding inexpensive drugs.

The development came after the apex court repeatedly questioned the substantial disparity between the price at which medicines are supplied to retailers and the MRP printed on them, raising concerns over the financial burden on patients and the need for an effective regulatory framework.

However, the Justice Vikram Nath-led Bench questioned whether the proposed measure would address the wider problem of excessive trade margins on medicines and medical devices beyond the anti-cancer segment.

During the hearing, the top court cited the example of an Indian-made cardiac stent supplied to retailers at around Rs 5,000 but carrying an MRP of Rs 25,000, and questioned the justification for such a disparity.

SG Mehta responded that stents were already subject to price caps.

The bench also referred to the pricing of another drug, citing an MRP of Rs 2,850 against a price to stockist (PTS) of Rs 78.29, and asked the Centre to explain how such pricing arrangements benefited patients.

Additional Solicitor General Aishwarya Bhati submitted that pricing was only one aspect of the government's policy and that a balance had to be maintained between affordability, availability and market considerations.

"We don't want to control the entire ecosystem of drugs," the Centre's law officer said, arguing that excessive government intervention could adversely affect the market and the availability of medicines.

However, the Supreme Court questioned why the government could not regulate the entire range of medicines and asked the Centre to explain how the existing pricing framework served patients' interests. It also referred to the Drugs (Prices Control) Order, 2013, and questioned whether medicines subject to price controls reached consumers despite the prescribed trade margins.

The apex court has now posted the matter for further hearing on October 27.

The proceedings arise from public interest litigations (PILs) seeking regulation of medicine prices, initial price fixation of non-scheduled medicines, medical devices, generic medicines and prescription practices.

In earlier hearings, the Supreme Court had questioned why manufacturers were permitted to fix substantially higher MRPs for medicines than the prices at which they supplied them to retailers.

On September 22, the Justice Vikram Nath-led Bench had described the ten-fold difference between the retailer procurement price of an essential cancer medicine and its MRP as "broad daylight dacoity".

On September 29, the Supreme Court had questioned why a uniform trade margin cap could not be prescribed for pharmaceutical products and flagged concerns over the practice of corporate hospitals requiring patients to purchase medicines from their in-house pharmacies.

The latest proceedings come days after the Supreme Court, in separate proceedings, directed the Centre to constitute a committee to examine the need for statutory regulation of pharmaceutical companies' marketing practices, including the offering of gifts, hospitality and other benefits to doctors to promote their products. The proposed committee is to consider stakeholder suggestions and objections and recommend whether a statutory framework is required to regulate pharmaceutical marketing practices.

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