The Supreme Court on Tuesday questioned the huge difference between the price at which medicines are sold by manufacturers to retailers and the maximum retail price (MRP) printed on them, observing that allowing a medicine bought for Rs 2,700 to be sold at an MRP of Rs 27,000 amounted to “extortion”.

“If that is not extortion, what else it is? People sell their houses, people sell their ornaments for getting the medicines” Justice Sandeep Mehta remarked during the hearing of petitions seeking regulation of medicine prices.

“There are medicines, essential medicines for cancer, which the MRP is 27,000 and the PTR (Price To Retailer) is 2700. That's absolute rampage, carnage with the...absolute dacoity, broad daylight dacoity. How a patient can be cheated for a medicine, which the manufacturer sells to the retailer at 2700, The MRP is printed at 27,000? Ten times! It is very surprising that the authorities who are supposed to take the decision on this are absolutely silent. We need not spell out the reason for that” Justice Mehta said.

The Court noted that medicines were sold to retailers at a fraction of their printed MRP and questioned why manufacturers should be permitted to fix MRPs several times higher than the actual sale price. “Why this disparity at all? A medicine which is, as a matter of fact, sold by the manufacturer to the retailer at 10% of its MRP, why it has got this high MRP? Why should there be such disparity?” Justice Mehta asked.

A bench of Justice Sandeep Mehta and Justice Vikram Nath made the observations while hearing petitions filed by Kishan Chand Jain and Dr Sanjay Kulshresthra concerning regulation of medicine prices, generic medicines, medical devices and prescription practices.

Arguments

Jain, appearing in person, submitted that the central issue was the absence of regulation over the initial price fixation of non-scheduled medicines under the Drugs (Prices Control) Order, 2013. The DPCO fixes ceiling prices for medicines in Schedule I, containing around 1,000 medicines, but does not regulate the initial price fixed by manufacturers for non-scheduled medicines. The only restriction is that the manufacturer cannot subsequently increase that price by more than 10%.

“For instance, a manufacturer wants to launch a medicine today. It can fix one rupee, it can fix 1,000 rupees. There is no regulatory regime to control the price fixation. Only after he has fixed it, then there is a restriction that he cannot increase it more than 10%,” he said.

Jain submitted that around 82% of medicines are non-scheduled. He further submitted that there are around 60,000 brands in the market, while the price-fixation mechanism covers fewer than 5,000. By value, he submitted, around 83% of medicines are non-scheduled and 17% are scheduled.

This, he said, allows manufacturers to fix high initial prices and creates room for large margins for retailers and healthcare establishments.

He referred to documents showing large differences between MRP and the price to retailer, including a medicine with an MRP of Rs 73 and a price to retailer of Rs 22.75, and another with an MRP of Rs 61 and a price to retailer of Rs 9.65.

Jain submitted that the DPCO requires manufacturers to issue price lists to dealers and retailers to display them. Justice Mehta questioned whether this would help patients who needed medicines urgently, while Justice Nath observed that an attendant buying medicines in such circumstances would not necessarily stop to obtain the price list and compare the price to retailer with the MRP. Jain responded that disclosure could put pressure on retailers and hospitals, but agreed that the larger question was why such a disparity existed at all.

Jain responded that disclosure would at least put pressure on retailers and hospitals, but agreed that the larger question was why such a disparity should exist in the first place. He alleged that the NPPA had the data about the price to retailer and price to stockist of medicines but did not make the relevant figures available on its portal.

Jain also challenged the legal basis for distinguishing between scheduled and non-scheduled medicines. Referring to Section 3(b) of the Drugs and Cosmetics Act and Section 2A of the Essential Commodities Act, he submitted that medicines had become essential commodities after the 2007 amendment and that the statutory definition of “drug” did not distinguish between scheduled and non-scheduled medicines.

He relied on a Parliamentary Standing Committee report which observed that a medicine becomes essential to a person suffering from the disease for which it is formulated. He therefore argued that the distinction under the DPCO did not take into account the 2007 amendment.

He also disputed the Department of Pharmaceuticals' position that essential medicines are those which are cost-effective for indications affecting the health needs of the majority, arguing that this approach leaves out patients suffering from less common diseases. He submitted that a medicine needed for treating a particular disease was essential to the patient suffering from that disease, regardless of how commonly it was used.

Justice Mehta also highlighted an anomaly arising from the classification of medicines as scheduled and non-scheduled. He referred to Rasuvas, a commonly used statin, and observed that a strip costs around Rs. 240 because it is a non-scheduled drug and is therefore not subject to the DPCO's price control. However, when Rasuvas is combined with aspirin, the combination falls within the scheduled category and the same strip costs around Rs 70.

“So a combination should be more costly. It should be costlier, but the disparity is there. It's a very commonly used drug,” he observed.

Jain further sought regulation of medical-device prices, submitting that the government had notified all medical devices intended for use in humans or animals as “drugs” under Section 3(b)(iv) of the Drugs and Cosmetics Act from April 1, 2020. He argued that medical devices also carry large markups and required a price-fixation mechanism.

He also explained that the ceiling price for scheduled medicines is calculated using the prices of companies with at least 1% market share, with an average being worked out and a 16% retailer margin added.

Dr Sanjay Kulshresthra, appearing in person in the connected petition, supported the challenge to the pricing regime. Referring to paragraph 19 of the DPCO, he submitted that the government could, in extraordinary circumstances and in public interest, fix the retail ceiling price of any drug for such period as it considered necessary.

He placed before the Court a table showing differences between printed prices and actual sale prices, including one medicine with a printed price of Rs 4,196 that was available for Rs 980. He also referred to antibiotic TG-BEX and submitted that the disparity between its printed price and sale price was 1,500%.

He submitted that antibiotics were particularly expensive and that excessive margins could encourage their promotion, at a time when the country was facing the problem of antimicrobial resistance.

He also explained the difference between traditional chemists and corporate hospitals. He submitted that some chemists may forego part of their margin, but corporate hospitals often require patients to purchase medicines from their own hospital stores and charge the full MRP.

He argued that this disproportionately affects poor patients, who may have no practical choice when treatment is being provided in a hospital.

Justice Mehta noted that the problem also affected government-funded treatment because the higher price would ultimately be reimbursed from public funds.

“There is one more factor. Many patients are now getting treatment under the PM, GSY, Ayushman Bharat. So, ultimately, it's the taxpayer's money which goes into all this. Because the medicine, which is supposed to be sold for 200 rupees, is dispensed for 2,000 rupees. The hospital gets the reimbursement, and the taxpayer pays it. Government is paying and it is ultimately the taxpayer's money. All government services are. This is a clear-cut case of fraud on the face of it”, he said.

Kulshresthra also addressed generic medicines. He submitted that doctors supported the use of generic medicines because they could make treatment cheaper, but there were concerns about quality and reliability that needed to be addressed before generic prescribing could work effectively.

He argued that when a doctor prescribes a generic medicine without specifying a brand, the choice of manufacturer is effectively transferred to the pharmacist. He highlighted that the pharmacist has not examined the patient and may choose a product based on commercial incentives. He suggested that patients should retain a choice between generic and branded medicines.

Justice Mehta observed that an informed patient could always ask for a branded medicine containing the same formulation if the doctor had prescribed the formulation.

Kulshresthra also raised concerns about substandard and spurious medicines and sought stronger punishment for violations. However, the Court observed that prescribing the quantum of punishment was a policy matter for the government.

Additional Solicitor General KM Nataraj submitted that the Union government was not treating the proceedings as adversarial and would consider areas where the existing system could be improved. He referred to the Pradhan Mantri Bhartiya Janaushadhi Pariyojana as an existing initiative for providing medicines at lower prices. The Court, however, asked what patients requiring medicines unavailable at Janaushadhi Kendras would do.

Senior Advocate Kapil Sibal, appearing for the Indian Pharmaceutical Alliance, submitted that manufacturers were not selling medicines at high prices and that retailers were earning huge profit margins. Justice Mehta, however, pointed out that manufacturers fix the MRP.

The Court kept the matter on September 29 to hear the submissions of Sibal and Union of India.

Cases: W.P.(C) No. 794/2023 Diary No. 25176 / 2023 Kishan Chand Jain v. Ethics And Medical Registration Board (EMRB) (Erstwhile Medical Council Of India) and W.P.(C) No. 717/2026 Diary No. 25121/2026 Dr. Sanjay Kulshresthra v. Union of India