Court questions Centre over high medicine margins

Medicine trade margins: what happened?

A strip of tablets may cost a company ₹20 to make but sell for ₹100 at the chemist. The gap is made up of trade margins along the way, and the patient pays all of it.

• Petitioners told the Supreme Court that trade margins (markups added by wholesalers and shops) on essential medicines are far too high.
• The Court said economic policy cannot come before people’s lives.
• It asked why the National Pharmaceutical Pricing Authority acted on cancer drugs only after the Court stepped in.
• The NPPA has not capped trade margins on essential medicines in general.
• Recently, it capped margins on 137 non-scheduled anti-cancer medicines at 30% of the Maximum Retail Price (MRP).

How are medicine prices controlled in India?

Medicines are of two kinds for price control. Scheduled drugs are those on the National List of Essential Medicines; the government fixes a ceiling price (maximum price) for them.

Non-scheduled drugs have no ceiling price. Companies set their own MRP, but they cannot raise it by more than 10% a year.

The rules come from the Drugs (Prices Control) Order, 2013, issued under the Essential Commodities Act, 1955. The NPPA, set up in 1997 under the Department of Pharmaceuticals (Ministry of Chemicals and Fertilizers), enforces it.

Trade margin rationalisation means capping the cut taken between the factory and the patient. India first used it for 42 cancer drugs in 2019.

Scheduled versus non-scheduled drugs

Which laws and Articles apply?

• Essential Commodities Act, 1955: the parent law under which drug prices are controlled.
• Drugs (Prices Control) Order, 2013: ceiling prices, the 10% yearly limit and special powers in public interest.
• Article 21: the right to life, which courts have read to include the right to health.
• Article 47: the State’s duty to raise nutrition levels and improve public health.

Why does medicine trade margins matter?

What are the problems with medicine trade margins?

• Most medicines are non-scheduled, so their margins are largely uncontrolled.
• Action often comes only after court cases.
• Doctors prescribing costly brands keeps prices high.
• Weak checks on chemists and hospitals selling above fair rates.

What should be done next on medicine trade margins?

• Cap trade margins on more essential and life-saving medicines.
• Expand Jan Aushadhi stores that sell quality generic medicines cheaply.
• Encourage prescription of generic names.
• Publish price data openly so patients can compare.

What can Prelims ask on medicine trade margins?

Prelims probability: Expect a statement question on drug pricing: the Drugs (Prices Control) Order, 2013 is issued under the Essential Commodities Act, 1955 and enforced by the National Pharmaceutical Pricing Authority.

• DPCO 2013: issued under the Essential Commodities Act, 1955.
• NPPA: set up 1997; under the Department of Pharmaceuticals, Ministry of Chemicals and Fertilizers.
• Non-scheduled drugs: MRP can rise up to 10% a year.
• MRP is a ceiling, so a seller may charge less, never more.
• 137 non-scheduled anti-cancer drugs: trade margin capped at 30% of MRP.

How to write about medicine trade margins in Mains

Practice question (15 marks, 250 words): High out-of-pocket spending on medicines pushes many Indian families into poverty. Examine the role of drug price regulation in making healthcare affordable.

• Intro: SC remarks on medicine margins; economic policy vs lives.
• Present system: DPCO 2013, NPPA, scheduled vs non-scheduled.
• Gaps: uncontrolled margins, late action, brand prescriptions.
• Measures: wider margin caps, Jan Aushadhi, generics, transparency.
• Conclusion: medicine affordability is part of the right to health.