Supreme Court flags 10-fold markup on cancer drugs, seeks uniform 16pc margin

The Supreme Court questioned the tenfold markup on an essential cancer drug and sought the Centre’s response on hospital medicine pricing practices. The bench suggested a uniform 16 per cent margin on medicines and posted the matter for further hearing on October 12

New Delhi: “This is carnage,” the Supreme Court on Tuesday said while voicing concern over a tenfold markup on cancer drugs by hospitals and advocating a uniform 16 per cent margin on all medicines.

A bench of Justices Vikram Nath and Sandeep Mehta asked the Centre to look into the issue of hospitals mandating the purchase of medicines from their chemists and said it was the common man who suffered from this system.

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“This is carnage. Plain and simple. The cancer drug is priced at an MRP of Rs 27,000 despite being supplied to retailers for Rs 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 was appearing for the Centre.

The bench was hearing petitions concerning regulation of medicine prices, generic prescriptions and controls on medical devices under the Drugs (Prices Control) Order (DPCO), 2013.

At the outset, Mehta said a way out needed to be found and some balance had to be created.

Justice Mehta said, “Why this distinction? Essential or non-essential does not matter? Why not keep a 16 per cent margin on MRP of everything? Think about what happens. Ultimately, the result is that the taxpayers suffer. In corporate hospitals, the MRP of an essential cancer drug was Rs 27,000 when the price to retailer (PTR) was Rs 2,700. Just see the difference.”

The solicitor general said he needed to discuss the issue with officials and agreed that it required attention.

Justice Mehta went on to say that the government should also look into the issue of many corporate hospitals mandating that patients buy medicines from their chemists or from “so and so pharmacy” and, if patients obtained them from outside, not assuring them of treatment.

“If that patient is taking treatment under a government scheme, who reimburses? The taxpayer does. So why not uniform criteria? DPCO says 16 per cent margin. Every medicine is covered under the Essential Commodities Act. We don’t know why they are asked to fix prices like this,” he said.

Justice Mehta further told the solicitor general that if a patient found a pharmacist who was very humane and said he would provide the medicine to the needy for Rs 2,700, the patient would start wondering whether the drug was genuine or spurious.

“The question is why this 10 times’ markup? Where does this huge chunk of money go? Who is benefiting from it?

“Ultimately, the loser is the honest taxpayer. We will examine this issue thoroughly. This affects a large section of society,” the bench said, adding that first there was the issue of pricing, followed by the ethical practices of medical practitioners.

Mehta added that pharma companies were not the gainers and that it appeared the private hospitals were benefiting.

“Let me have a meeting with the officials. Give me two weeks,” he submitted.

Justice Mehta said a simple statin, without combination, costs Rs 40, while with a combination of aspirin it costs Rs 70.

“How is this happening? Corporate hospitals are industries. It is not a service at all. Why should the common man suffer all this?” the bench told the solicitor general.

The solicitor general submitted, “I am not saying the petitioners are wrong, but some way which balances equities will have to be found. As I understand, pharma companies are not the ones benefiting from it.”

The bench posted the matter for further hearing on October 12 and said it would hear the Centre’s response on the issue.

The top court was hearing two petitions, including one by Kishan Chand Jain, which highlighted that while scheduled medicines face ceiling prices, the bulk of non-scheduled formulations, estimated at around 80 per cent or more by number and value in the market, allow manufacturers greater freedom in setting MRPs, subject to annual increase limits of 10 per cent.

On September 22, terming it a “broad daylight dacoity” against patients, the top court had expressed shock over the overpricing of essential cancer medicines, noting that one drug carried an MRP of Rs 27,000 despite being supplied to retailers for Rs 2,700.

It questioned how patients could be cheated like this and said, “It is very surprising that the authorities who are supposed to take action on this are silent.”

One of the petitions sought a direction to authorities to make drug formulations more cost-effective by preventing alleged unethical overpricing of essential medicines by pharma companies and retailers.

It also sought directions to ensure strict price control under the DPCO, prevent violations of the price-fixing mechanism in the drug supply chain and curb disproportionate profit-making by retailers through unfair trade practices.

The other plea has sought disciplinary action against medical practitioners for not prescribing generic medicines to patients.