The Supreme Court on Tuesday reserved its verdict in the case that could decide how much hospitals and the medicine trade may charge patients over and above a drug's cost, after a final hearing in which the bench described steep hospital mark-ups on essential medicines as "loot" and "dacoity" that prey on patients with no bargaining power.

Source: Bar and Bench

A bench of Justices Vikram Nath and Sandeep Mehta was hearing the public interest litigation filed by advocate Kishan Chand Jain, which seeks price regulation and trade-margin caps on non-scheduled medicines and medical consumables, mandatory generic-drug prescriptions, and statutory margin caps on medical devices under the Drug Price Control Order (DPCO).

The bench cited an incident placed before it involving a medicine dealer whose wife was undergoing cancer treatment at a well-known private hospital. The dealer told the hospital the chemotherapy injection cost him Rs 11,000 at dealer price, but the hospital refused to use his supply and charged Rs 1,30,000 (yaani Rs 1.3 lakh) for the same injection. "Can you show any justification for this loot, please? Why this difference? Where does the money go?" the court asked.

Rs 11,000Dealer price of the chemotherapy injection cited in court
Rs 1,30,000What the hospital charged for the same injection
30%Trade-margin cap the Centre has set on anti-cancer drugs

What the Centre argued

Appearing for the Centre, Additional Solicitor General Aishwarya Bhati submitted that the government has been "constantly calibrating" its pricing policies and that medicine prices in India are among the lowest in the world. The bench was unconvinced: "Your calibration is too wayward. Rs 11,000 to Rs 1,30,000 is no calibration... When you talk of patients and life, should we have such capitalistic thinking?"

Source: Verdictum (with PTI inputs)

The Centre also told the court that government policy is that "the entire ecosystem is not to be controlled". The bench asked in response, "Why is the entire system working to help these people (manufacturers)?" and observed that the National Pharmaceutical Pricing Authority (NPPA) seems to be a "totally defunct" body. Rejecting the hospitals' defence that high medicine prices help them survive, the bench said a hospital can survive through other means — "not through this dacoity".

Why the verdict matters

Earlier in these hearings, the Centre informed the court that it has capped the trade margin on anti-cancer drugs at 30 per cent of the maximum retail price (MRP), a step it says is expected to save patients about Rs 2,500 crore a year (yaani roughly Rs 25 billion). On October 12, the bench had called that limited step "hardly anything to be happy about" and asked why margins cannot be capped for other medicines as well.

The reserved verdict will now decide how far price regulation can extend beyond cancer drugs to medicines and consumables at large. A ruling backing wider margin caps would directly affect what patients pay at hospital pharmacies across India; the court gave no date for pronouncing the verdict.