Supreme Court Urges Nationwide Cap on Trade Margins for Essential Medicines

When the Centre told the Supreme Court on Monday that it would cap trade margins at 30% for both patented and non‑patented cancer medicines, the bench didn’t just nod and move on. Instead, the justices asked a very pointed question: why limit such a safeguard to cancer drugs alone?

Justices Vikram Nath and Sandeep Mehta, hearing the matter, have repeatedly warned that the gap between the price a retailer pays (PTR) and the maximum retail price (MRP) can be jaw‑dropping. In a few cases, the markup has ballooned to a thousand percent – a figure they described as “broad‑daylight dacoity” that shoves an unbearable financial burden onto patients already fighting for their lives.

Solicitor General Tushar Mehta explained that an expert committee, headed by the Director General of Health Services, would pick the cancer drugs that fall under the 30% cap. The National Pharmaceutical Pricing Authority (NPPA) would then review those recommendations before issuing a formal price notification.

While the court acknowledged the move as a step in the right direction, it argued it fell short of the larger goal. The bench pointed out that the Drugs (Prices Control) Order, 2013 already limits retailer margins for medicines listed under DPCO to 16%. If the government can enforce a 30% ceiling for cancer drugs, why not extend the same or similar restrictions to every essential medicine and medical product that is already price‑regulated?

In its view, a uniform margin cap would close loopholes that allow distributors and retailers to squeeze out profits at the expense of the patient. It would also bring consistency to a market that currently sees a bewildering mix of regulations, with some drugs tightly controlled and others left to market whims.

For now, the Centre will have to explain how it plans to broaden the scope of the margin cap, or risk a judicial directive that could reshape the pricing landscape for a huge swath of the pharmaceutical sector.