Supreme Court asks Centre to consider widening medicine trade margin caps beyond cancer drugs
The Union government's move to cap cancer medicine trade margins at 30% will save patients ₹2,500 crore annually, but judges want to know if other treatments can follow.
The Supreme Court has asked the Union government to examine whether statutory caps on trade margins can be expanded beyond anti-cancer therapies to cover other essential medicines and medical devices.
During proceedings before a bench of Justice Vikram Nath and Justice Sandeep Mehta, the Union government detailed a decisive healthcare measure: capping trade margins on cancer drugs at 30% of their maximum retail price (MRP). Solicitor General Tushar Mehta informed the bench that the policy, finalised by the National Pharmaceutical Pricing Authority (NPPA) on 8 October, is projected to cut retail prices by 20% to 70% and deliver an estimated ₹2,500 crore in annual savings to patients.
What the court asked about drug pricing
The bench commended the push for affordable cancer care but questioned why similar margin ceilings could not be applied universally across the pharmaceutical market. Justice Mehta highlighted sharp markups in devices and hospital supplies, pointing to domestically manufactured cardiac stents with a retailer purchase price of ₹5,000 that carry an MRP of ₹25,000, as well as disposable saline lines priced steeply above base supply costs.
The court asked why a standard 16% retailer margin, already applied to scheduled formulations under the Drugs (Prices Control) Order (DPCO), 2013, could not be broadened to prevent hospitals and distributors from inflating consumer costs.
How the Centre is balancing affordability and supply
Appearing for the Centre alongside Mehta, Additional Solicitor General Aishwarya Bhati explained that drug pricing policy requires a calibrated approach. India already maintains some of the most competitive medicine prices in the world, and excessive interventions risk discouraging supply or disrupting retail availability in smaller towns.
An affidavit filed by the Department of Pharmaceuticals explained that price caps cannot simply be applied uniformly across the entire market without careful economic planning. Distribution overheads vary widely across product categories. Low-cost formulations, slow-moving medicines, and drugs requiring temperature-controlled cold chains need sufficient operational margins to remain viable for distributors.
The government pointed out that national price monitoring is already extensive and effective. Under the DPCO framework, ceiling prices govern 935 essential formulations, and retail prices have been fixed for 3,881 new drugs. For non-scheduled medicines, annual price adjustments are strictly monitored by the NPPA. Market competition and oversight kept price increases across non-scheduled formulations to 5.6% over the 12 months ending April 2025, well within the permitted 10% statutory ceiling.
Protecting domestic manufacturers and patient access
The Centre also cautioned that blunt margin caps could inadvertently damage micro, small, and medium enterprise (MSME) pharmaceutical manufacturers. Smaller domestic producers rely on diverse distribution networks and local traders to deliver products to remote and rural regions where larger logistics chains do not operate.
To ensure smooth implementation for cancer care, the government has set up an expert committee headed by the Director General of Health Services. The panel will submit its recommended list of regulated oncology medicines within 10 to 15 days, with provisions to update the schedule regularly as new treatments enter the market.
The government told the court it is continuing to study pricing practices surrounding hospital consumables and will consult industry stakeholders before rolling out further targeted measures. The bench will hear the matter next on 27 October.
Key numbers
| What | Figure | Source |
|---|---|---|
| Trade margin cap on anti-cancer drugs | 30% of MRP | Department of Pharmaceuticals affidavit |
| Estimated annual patient savings from cancer drug cap | ₹2,500 crore | Department of Pharmaceuticals affidavit |
| Estimated retail price reduction for cancer drugs | 20% to 70% | Department of Pharmaceuticals affidavit |
| Number of scheduled formulations with fixed ceiling prices | 935 | Department of Pharmaceuticals affidavit |
| Number of new drugs with fixed retail prices | 3,881 | Department of Pharmaceuticals affidavit |
Questions readers are asking
What decision did the Centre announce regarding cancer drug prices?
The Centre informed the Supreme Court that it is capping the trade margin on anti-cancer medicines at 30% of their maximum retail price, a move expected to lower consumer prices by 20% to 70% and save patients approximately ₹2,500 crore each year.
Why did the Supreme Court question the Centre?
The bench asked why similar trade margin limits could not be introduced for other essential medicines and medical devices, such as cardiac stents and hospital consumables, where large markups also exist.
Why has the Centre resisted applying a uniform margin cap across all medicines?
The government stated that distribution expenses vary widely across products, and that blunt across-the-board caps could risk drug shortages in remote regions or hurt small and medium-sized domestic manufacturers.
In this story
| Name | Role in the story |
|---|---|
| National Pharmaceutical Pricing Authority | Decided on 8 October to cap trade margins on anti-cancer drugs at 30% of MRP. |
| Supreme Court of India | Heard proceedings on pharmaceutical trade margins and questioned expanding price controls beyond cancer therapies. |
| Department of Pharmaceuticals | Filed the affidavit outlining drug regulation, patient savings, and economic rationale. |
