FROM ₹11 SALINE TO ₹270 RETAIL PRICE: SUPREME COURT CHALLENGES INDIA’S MEDICINE MARK-UPS AND DEMANDS WIDER PRICE CONTROL

October 12, 2026

The Supreme Court on Monday questioned the Union government’s approach to regulating medicine prices, asking why restrictions on pharmaceutical trade margins should be confined to cancer drugs when patients face substantial mark-ups on a much wider range of medicines and medical supplies. The bench warned that excessive pricing could place an unreasonable financial burden on patients and directed the Centre to develop a broader framework for controlling medicine prices.

A bench comprising Justices Vikram Nath and Sandeep Mehta expressed dissatisfaction with the government’s response to concerns over pharmaceutical pricing. The Centre had informed the court that it had introduced a 30 per cent cap on trade margins for anti-cancer medicines, a measure expected to save patients approximately ₹2,500 crore annually. The judges, however, questioned why comparable safeguards could not be extended to other medicines.

During the hearing, the bench highlighted the difference between the actual cost and the selling price of commonly used medical products. It cited the example of a saline drip that reportedly cost approximately ₹11 but was being sold for ₹270. The judges also pointed to a cardiac stent manufactured in India at a cost of around ₹5,000 but sold by hospitals for more than ₹25,000.

The court raised similar concerns over the pricing of azithromycin, a commonly prescribed antibiotic. It observed that the medicine was being sold for more than ₹70 despite an actual cost of approximately ₹28. These examples, the bench indicated, raised fundamental questions about the extent to which patients should be expected to pay prices substantially above the underlying cost of medicines and medical supplies.

Justice Nath questioned the logic of permitting such substantial mark-ups when transportation, raw materials, research and development, and other ancillary expenses were already incorporated into the maximum retail price. The bench asked why the government should allow prices to reach multiples of the underlying cost when it possessed the regulatory authority to intervene.

“There is hardly anything to be happy about. There is actually nothing for the benefit of the patients,” the bench remarked while responding to the Centre’s explanation of the existing pricing framework.

Solicitor-General Tushar Mehta and Additional Solicitor-General Aishwarya Bhati, appearing for the Union government, defended the current system and outlined the measures already in place. Mehta reiterated that the cap on trade margins for anti-cancer medicines represented a significant intervention and was expected to deliver substantial savings to patients.

Bhati argued that medicine prices in India remained among the lowest in the world, which was one reason patients from other countries travelled to India for treatment. The government’s representatives also suggested that allowing sufficient margins could help ensure the distribution of medicines to remote and underserved areas, where supply chains and transportation could present additional challenges.

The bench acknowledged that distribution costs and other commercial considerations mattered but questioned whether those factors justified the magnitude of the mark-ups brought to its attention. It stressed that if medicines covered by the Drugs (Prices Control) Order (DPCO) were not reaching patients, it was the government’s responsibility to ensure their availability. The central issue, the judges indicated, was determining which medicines should be included in the price-controlled list and which should remain outside it.

The Centre submitted a detailed, 551-page affidavit explaining the existing framework for identifying essential medicines and fixing their prices. It stated that the National List of Essential Medicines (NLEM) was prepared and published by the Ministry of Health and Family Welfare, with the latest list issued in 2022. The list comprised 388 medicines and more than 900 formulations.

The government explained that the list was developed by the Standing National Committee on Medicines, which considers factors including the World Health Organization’s Essential Medicines List, medicines used in national health programmes, the Indian Pharmacopoeia and the National Formulary. These criteria are intended to identify medicines considered essential for meeting public-health needs.

Under the current framework, the ceiling price of a scheduled formulation listed under Schedule I of the DPCO, 2013, is determined using market data. The calculation takes the simple average of the prices to retailers of brands and generic versions with a market share of at least one per cent of the total market turnover for that medicine, based on moving annual turnover, and adds a 16 per cent margin. The resulting ceiling price becomes the maximum retail price above which the medicine cannot be sold.

The government stated that ceiling prices had been fixed for 935 formulations. Manufacturers may determine appropriate margins for wholesalers and retailers within the prescribed ceiling price. For non-scheduled formulations, manufacturers are generally permitted to set the initial launch price, taking existing competition into account. The National Pharmaceutical Pricing Authority monitors maximum retail prices and ensures that manufacturers do not increase the price of a non-scheduled medicine by more than 10 per cent over the price prevailing during the preceding 12 months.

However, the Supreme Court’s questions indicated that the existence of a regulatory framework does not, by itself, resolve concerns about medicines and medical supplies that remain outside direct price controls. The judges emphasised the need for the government to examine whether the current list of controlled medicines is sufficiently comprehensive and whether the existing method adequately protects patients against excessive pricing.

The hearing follows earlier judicial criticism of steep mark-ups on cancer medicines sold through hospitals. On September 29, the court had expressed serious concern over instances in which cancer drugs were reportedly sold at several times their underlying cost. It also raised the issue of hospitals requiring patients to purchase medicines from their own pharmacies, potentially limiting patients’ ability to seek more affordable alternatives.

The broader proceedings concern the regulation of medicine prices, prescriptions for generic drugs and controls on medical devices under the DPCO, 2013. The court’s latest observations suggest that it wants the government to move beyond a narrow intervention limited to cancer medicines and consider a more comprehensive approach to pharmaceutical and medical-supply pricing.

The bench granted the Centre time to formulate the practical details of a broader pricing-control mechanism and scheduled the next hearing for October 27. It urged the government to use the intervening period to develop workable proposals, indicating that the court intended to support effective government action that could reduce the burden on patients.

The central question now confronting the government is how to prevent unjustified mark-ups without undermining the availability and distribution of medicines. Any revised framework will need to consider manufacturing costs, research expenditure, transportation, retail distribution and the commercial incentives required to maintain supply, while ensuring that patients are not forced to bear excessive costs for essential treatment.

The Supreme Court’s intervention has placed pharmaceutical pricing and patient affordability firmly under renewed scrutiny. With the next hearing approaching, the Centre is expected to explain how it intends to address the gaps identified by the bench and whether price controls can be extended more broadly to medicines and medical products where the disparity between cost and selling price has raised serious concerns.