Court questions Centre over high medicine margins
When you buy a medicine, the shop and the distributors add their own cut, called the trade margin. Petitioners told the Supreme Court that these margins on essential medicines are far too high. The Court said economic policy cannot come before people’s lives, and asked why the price regulator acted on cancer drugs only after the Court stepped in. Read it to revise the NPPA and the Drugs (Prices Control) Order, 2013.
- Regulator
- National Pharmaceutical Pricing Authority (NPPA)
- Recent step
- 30% margin cap on 137 non-scheduled cancer drugs
- Key law
- Drugs (Prices Control) Order, 2013
- Court’s view
- Economic policy cannot outweigh lives

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
| Point | Scheduled drugs | Non-scheduled drugs |
|---|---|---|
| Which drugs | On the National List of Essential Medicines | All others |
| Price control | Government ceiling price | Company sets MRP |
| Yearly rise | Linked to the wholesale price index | Up to 10% a year |
| Margins | Inside the ceiling | Often high, now capped for some cancer 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?
| Angle | What to note |
|---|---|
| Out-of-pocket costs | Families pay a large share of health costs themselves, mostly on medicines. |
| Equity | High margins hurt the poor most. |
| Regulation gap | Non-scheduled drugs escape price ceilings. |
| Judicial push | The Court is pressing the regulator to act on its own. |
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.
Ready lines for your answer
- Economic policy cannot outweigh citizens' lives (Supreme Court).
- Price control means little if trade margins on most medicines are left free.
Quotable data pointThe NPPA capped trade margins on 137 non-scheduled anti-cancer medicines at 30% of the MRP.
Exam angle
Prelims: DPCO 2013, NPPA, Essential Commodities Act. · Mains GS-II: health, access to medicines, regulators.
Practice MCQs
Original practice questions (not PYQs).
Consider the following statements:
1. The Drugs (Prices Control) Order, 2013 is issued under the Essential Commodities Act, 1955.
2. The National Pharmaceutical Pricing Authority works under the Ministry of Health and Family Welfare.
3. A seller cannot sell a medicine below its Maximum Retail Price.
How many of the above statements are correct?
Answer (a) & explanation
Only statement 1 is correct. The pricing authority works under the Department of Pharmaceuticals, Ministry of Chemicals and Fertilizers. The Maximum Retail Price is a ceiling, so a seller may charge less.
The trade margin on 137 non-scheduled anti-cancer medicines has been capped at what share of the Maximum Retail Price?
Answer (c) & explanation
The National Pharmaceutical Pricing Authority capped trade margins on these medicines at 30% of the Maximum Retail Price.
Questions students ask about this
What is a trade margin on medicines?
It is the markup added by wholesalers, distributors and shops between the factory price and the price the patient pays.
Who controls medicine prices in India?
The National Pharmaceutical Pricing Authority, under the Drugs (Prices Control) Order, 2013.
What did the Supreme Court say?
It said economic policy cannot outweigh citizens' lives, and questioned why the regulator acted on cancer drugs only after court intervention.
What cap was set on cancer medicines?
Trade margins on 137 non-scheduled anti-cancer medicines were capped at 30% of the MRP.