Why is Rs 2,700 medicine sold at Rs 27,000? Supreme Court questions drug pricing

The Supreme Court on Tuesday (September 29) questioned the Centre over the wide gap that can exist between the price at which medicines reach retailers and the maximum retail price (MRP) paid by patients, asking why the 16% retailer margin used under the existing drug-price control framework could not be applied more broadly.

The issue could have significant implications for patients, particularly those undergoing expensive treatments such as cancer care, where medicines may account for a substantial part of the overall medical bill.

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A Bench of Justices Vikram Nath and Sandeep Mehta was hearing petitions relating to drug-price regulation, generic prescriptions and the pricing of medicines and medical devices. The matter will next be heard on October 12.

Huge gap between retailer price and MRP

The Court's concern was illustrated by an example involving an essential cancer medicine. The Bench was told that a medicine supplied to retailers for around ₹2,700 was being sold to patients at an MRP of about ₹27,000.

The Court questioned how such a large gap could be justified. For a patient, the difference is ₹24,300 on a single purchase. If the medicine is required repeatedly during a prolonged treatment, the financial impact can become substantial.

The example cited during the hearing should not, however, be interpreted as evidence that all cancer medicines or all hospitals have such markups.

What does the 16 per cent figure mean?

The 16% figure being discussed in court is not currently a universal 16% cap on all medicines.

Under the Drugs (Prices Control) Order (DPCO), 2013, the National Pharmaceutical Pricing Authority (NPPA) uses a 16% retailer margin while calculating the ceiling price of scheduled formulations. The mechanism is based on the average price to retailer and the permitted margin.

The Supreme Court has questioned why a similar principle could not be considered more broadly for medicines and medical devices.

However, the Court has not ordered a uniform 16% markup on all medicines. The matter remains under consideration.

Not all medicines are price-controlled

India’s drug-pricing framework treats different categories of medicines differently.

The government said the NPPA had fixed ceiling prices for 935 scheduled formulations as of July 23, 2026. These medicines are linked to the scheduled list under the DPCO and the National List of Essential Medicines (NLEM).

NLEM 2022 contains 388 medicines across 29 therapeutic categories.

For medicines outside the scheduled price-control mechanism, different rules apply. Manufacturers of non-scheduled formulations cannot increase their MRP by more than 10% over the preceding 12 months, according to the Department of Pharmaceuticals.

Thus, a medicine being outside the scheduled ceiling-price system does not mean that its pricing is completely unregulated.

Why hospital pharmacies matter

The Court also questioned hospitals requiring patients to purchase medicines and medical devices from their in-house pharmacies.

For consumers, the concern is straightforward: a patient admitted to a hospital may not have the practical freedom to compare prices with other pharmacies.

If the hospital prescribes a medicine and requires it to be purchased through its own pharmacy, the patient may have little choice over where to buy it. That becomes particularly significant when the medicine carries a high MRP.

The Court is examining whether the existing regulatory framework adequately protects patients in such situations. Its questions should not be read as a blanket ruling that every hospital requirement to use its own pharmacy is unlawful.

What patients should know

The Supreme Court hearing does not immediately change medicine prices.

Patients can still take some practical precautions. They can check the MRP before purchasing medicines, ask for a proper bill and, where medically appropriate, ask their doctor whether an equivalent lower-cost medicine is available.

Patients should not change prescribed medicines without consulting their doctor, particularly in serious conditions.

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Those facing large hospital bills can also ask whether a prescribed medicine or device must legally be purchased from the hospital pharmacy or whether it can be obtained from another licensed pharmacy.

Keeping prescriptions, bills and medicine packaging can also be useful if a pricing dispute later arises.

What happens next?

The Supreme Court's questions point to a larger issue: whether India's existing medicine-price framework provides enough protection when the gap between the retailer price and the patient's MRP becomes exceptionally large.

Any eventual decision could affect patients, hospitals, pharmacies, pharmaceutical companies and government healthcare programmes.

For now, however, there is no nationwide rule limiting the retailer margin on all medicines to 16%.

The Court is examining whether the principle behind the existing 16% retailer margin should have wider application. The matter will come up again on October 12.