A bench of Justices Vikram Nath and Sandeep Mehta said there was no rationale for controlling the price of a few scheduled medicines and allowing the rest to be sold at inflated prices as all medicines are essential. It suggested a uniform rule limiting the MRP to not more than 16% above the price to the retailer (PTR).
NEW DELHI: With the Centre failing to give even "one justification" to the satisfaction of the court in favour of patients for keeping the maximum retail price of medicines at exorbitant levels but also accepting that profit margins for drugs and medical consumables reach up to 1,000%, Supreme Court on Monday said that the price of all non-patented drugs and consumables should also be controlled and it should not be confined only to anti-cancer medicines as done by govt recently. As solicitor general Tushar Mehta and ASG Aishwarya Bhati informed SC about the decision to cap the trade margins on anti-cancer drugs at 30% of the maximum retail price, the court appreciated govt's decision but raised questions on why pricing of other medicines should not be capped. The bench pointed out various examples to drive home the point that patients are fleeced because of sky-high pricing.SC to government: There is a great divide... why can’t you control the entire range of drugs This relates to only cancer drugs. What about the overall? For an ordinary cardiac stent, Indian made stent, price to retailer (PTR) is Rs 5,000 but MRP is Rs 25,000... This is not even a tip of the iceberg. It (decision) has come only because of harsh observation from the court,” the bench of Justices Vikram Nath and Sandeep Mehta asked SG Tushar Mehta and also applauded his intervention resulting in a quick decision. It said the price of a drip line for saline for the retailer is Rs 11 but the MRP is around Rs 270. It said MRP for Azithromycin is Rs 78.29 but the PTS (price to stockist) is Rs 28.5. “There is a great divide... There are thousands of examples,” court said, asking govt to explain why all non-patented medicines shouldn’t be brought under price control. “Give me just one justification in favour of patients (for not controlling the prices). Why can’t you control the entire range of drugs?” the bench asked the ASG. Bhati submitted that areas with lower sales, such as rural areas, may require higher margins for the retailer so as to provide sufficient income and livelihood to the retailer, failing which the access to and availability of drugs in such areas may be adversely affected. She told the bench the Indian drug market is fairly competitive, with a large number of pharmaceutical companies in every drug segment, resulting in one of the lowest prices in the world. “If there is too much intervention by govt, it will lead to the market suffering. It will affect availability.” But court said all the justifications given by govt were not in favour of patients who had to pay the higher price. Intervening in the proceedings, the SG submitted govt was not averse to the plea and the bench also made it clear that its proceeding was only intended to “strengthen the hands of the govt and nothing else”. Govt, in its affidavit, said, “Another area of concern in the sector is supply of consumables in hospitals, where margins of 100-1000% or more are prevalent, along with a tendency of hospitals to purchase consumables that have a high MRP, with a low price to the distributor/hospital.
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It admitted that patients have a very low bargaining position vis-a-vis the hospital, and a patient’s knowledge of drugs, their substitutes and their prices is also limited. “These bargaining and information asymmetries result in malpractices despite strong competition among manufacturers, leading to the need for regulation. That hospitals purchase medicines from manufacturers who provide the highest trade margin and then sell those to patients at the MRP, with margins ranging from 170% to 700% or more in the case of anti-cancer (oncology) drugs,” the affidavit said. The apex court thereafter adjourned the case for Oct 27.
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