Supreme Court Questions Centre Over Pharmaceutical Price Regulation and Pending Overcharging Dues

NEW DELHI — The Supreme Court stated on Tuesday that economic policy cannot take precedence over the lives of citizens while questioning the Centre's approach to regulating essential medicine prices and medical products.

A Bench comprising Justices Vikram Nath and Sandeep Mehta questioned Additional Solicitor General Aishwarya Bhati, representing the Centre, regarding the failure of the National Pharmaceutical Pricing Authority (NPPA) to cap trade margins on essential medicines despite ongoing concerns over excessive mark-ups. The court also questioned why a ceiling on certain anti-cancer drugs was implemented only following judicial intervention.

Earlier this month, the NPPA capped trade margins on 137 non-scheduled anti-cancer medicines at 30 per cent of their maximum retail price (MRP), with the revised prices scheduled to take effect from November 9. The oral observations came during hearings on petitions filed by advocate Kishan Chand Jain and paediatric surgeon Sanjay Kulshrestha, seeking stricter enforcement of price controls under the Drugs (Prices Control) Order, 2013 (DPCO).

Defending the current framework, Bhati submitted that complete government control over essential medicines could adversely affect the market. She noted that the government favors a calibrated approach to balance reasonable medicine prices with the need to encourage innovation and competition in the pharmaceutical sector. She added that while targeted interventions can be made, complete market control is not viewed as the appropriate solution.

The Bench further questioned the classification criteria separating scheduled and non-scheduled drugs, asking why the 16 per cent retailer margin prescribed under the DPCO should not apply uniformly to all essential medicines. The court remarked on the long-standing silence of the NPPA regarding excessive mark-ups on non-scheduled drugs.

Additionally, the Supreme Court referenced a recent report highlighting substantial dues pending recovery by the NPPA from pharmaceutical companies in overcharging cases. The report indicated that as of March 31, 2026, the regulator had recovered ₹1,582.4 crore out of the ₹10,029.8 crore demanded, leaving ₹8,447.4 crore outstanding.

Representing an association of hospitals, Senior Advocate Mukul Rohatgi defended the mark-ups on essential medicines and anti-cancer drugs, stating that capping margins would compromise hospital operations due to high expenditures on infrastructure, salaries, and technology. He submitted that reduced margins would lead to increased charges across other unbilled services. The Bench dismissed this contention, reserved its order in the matter, and granted parties two weeks to file written submissions.

"Regulatory scrutiny on pricing frameworks in the pharmaceutical and healthcare sectors has direct implications for business operations, compliance costs, and financial planning for healthcare providers. For businesses operating in regulated markets, navigating compliance while maintaining operational viability requires robust financial forecasting and transparent pricing models. Clear regulatory oversight also impacts market entry and long-term investment strategies across the healthcare supply chain." — Dr. Shishir Gupta, Founder & CEO, StartupLanes