Supreme Court Questions Wider Medicine Margin Caps

On 12 October 2026, the Supreme Court of India questioned why trade margin caps on anti-cancer medicines could not be extended to other drugs. The Centre informed the Court that it had decided to cap trade margins on anti-cancer medicines at 30% of the Maximum Retail Price (MRP), with estimated annual savings of about ₹2,500 crore for patients.

Medicine price caps and the court proceedings

A bench of Justices Vikram Nath and Sandeep Mehta sought wider price-control measures and asked the Centre to submit modalities by the next hearing, scheduled for 27 October 2026. The Court referred to price differences between a saline drip costing ₹11 and a sale price of ₹270, and between an India-made cardiac stent costing about ₹5,000 and hospital prices exceeding ₹25,000. It also questioned the difference between the cost and selling price of the antibiotic Azithromycin.

The Centre’s representative argued that trade margins support the supply of medicines to remote areas. The Court stated that ensuring the availability of price-controlled medicines to patients is a government responsibility.

Drug price control framework

The Drugs (Prices Control) Order, 2013 (DPCO) provides for ceiling prices on scheduled formulations listed in its Schedule I. The Department of Pharmaceuticals administers the DPCO through the National Pharmaceutical Pricing Authority (NPPA), which fixes and revises medicine prices under the framework.

For a scheduled formulation, the ceiling price is calculated using the simple average of the prices to retailers of brands and generic versions with at least 1% market share, based on moving annual turnover; a 16% margin is added to that average. The ceiling price becomes the MRP limit, and manufacturers may allow wholesaler and retailer margins within that limit.

National List of Essential Medicines

The National List of Essential Medicines (NLEM) is prepared by the Ministry of Health and Family Welfare with advice from the Standing National Committee on Medicines. Its review considers the World Health Organization’s Essential Medicines List, national health programmes, the Indian Pharmacopoeia and the National Formulary. The 2022 NLEM contains 388 drugs and more than 900 formulations. Inclusion in the NLEM and price control under the DPCO are connected parts of India’s medicine pricing framework.

Important Facts for Exams

• The Essential Commodities Act, 1955, provides the legal basis for regulating the production, supply and distribution of essential commodities.
• The National Pharmaceutical Pricing Authority was established in 1997 as an attached office of the Department of Chemicals and Petrochemicals.
• The Drugs (Prices Control) Order, 2013, is issued under the Essential Commodities Act, 1955.
• The National List of Essential Medicines is periodically revised, and the latest list cited in the proceedings was published in 2022.

The Supreme Court fixed 27 October 2026 as the next hearing date for the Centre’s proposed medicine price-cap modalities.