‘This is carnage’: Supreme Court questions 10-fold markup on cancer drugs by hospitals

New Delhi: The Supreme Court on Tuesday termed the 10-fold markup on some cancer medicines by hospitals "carnage" and suggested a uniform 16% margin on all medicines. A bench of Justices Vikram Nath and Sandeep Mehta also asked the Centre to examine the practice of corporate hospitals requiring patients to buy medicines from their in-house pharmacies, saying the system ultimately burdens ordinary patients and taxpayers. "This is carnage. Plain and simple," the bench said, referring to a cancer drug with a maximum retail price (MRP) of ₹27,000 despite being supplied to retailers for ₹2,700."Corporate hospitals don't spare anyone. They won't allow even the dead body to be taken out. The pharma sector is not bothered," the bench told Solicitor General Tushar Mehta, who appeared for the Centre.

The court was hearing petitions concerning the regulation of medicine prices, generic prescriptions and medical devices under the Drugs (Prices Control) Order (DPCO), 2013. Justice Sandeep Mehta questioned why a uniform 16% margin could not be applied to all medicines, irrespective of whether they were classified as essential or non-essential.

"Ultimately, the result is that the taxpayers suffer," the bench said, pointing to the difference between the ₹2,700 price to retailer and the ₹27,000 MRP of the cancer drug. The bench also asked the Centre to examine complaints that some corporate hospitals require patients to purchase medicines from their own pharmacies or designated chemists and may refuse to guarantee treatment if medicines are purchased elsewhere.

"If that patient is taking treatment under a government scheme, who reimburses? The taxpayer does. So why not uniform criteria?" Justice Mehta asked. He noted that the DPCO provides for a 16% margin and questioned why medicines covered under the Essential Commodities Act were being sold with such a large markup. The bench also questioned where the additional money from the 10-fold markup goes and who benefits from it. It said the issue affects a large section of society and that the court would examine both drug pricing and the ethical practices of medical practitioners.

Solicitor General Tushar Mehta said the government would examine the issue and agreed that a balance needed to be found. He sought two weeks to discuss the matter with officials. Justice Mehta also cited the price difference between a plain statin, which he said costs around ₹40, and a combination of the drug with aspirin, which costs around ₹70, and questioned the pricing practices of corporate hospitals.

The Centre's counsel said pharma companies did not appear to be the main beneficiaries of the markups and that a solution balancing the interests of all stakeholders needed to be found. The Supreme Court posted the matter for further hearing on October 12 and said it would consider the Centre's response.

The court was hearing two petitions, including one filed by Kishan Chand Jain, challenging aspects of the regulation of medicine prices. The petition points out that while scheduled medicines are subject to ceiling prices, non-scheduled formulations, which account for around 80% or more of medicines by number and value in the market, allow manufacturers greater freedom in fixing MRPs, subject to annual price increases of up to 10%.

On September 22, the Supreme Court had described the alleged overpricing of essential cancer medicines as "broad daylight dacoity" and questioned how a drug supplied to retailers for ₹2,700 could carry an MRP of ₹27,000. One of the petitions seeks measures to make medicines more affordable by preventing alleged overpricing of essential drugs by pharmaceutical companies and retailers. It also seeks stricter enforcement of price controls under the DPCO and action against alleged unfair trade practices and disproportionate margins in the drug supply chain. The other petition seeks disciplinary action against medical practitioners for allegedly failing to prescribe generic medicines.