Editorial: Supreme Court flags ten-fold drug markups, exposing gaps in price control
A cancer drug sold to the chemist at ₹2,700 reaches the patient at ₹27,000. Who decides that, and who stops it?
Published 1 October 2026. Written by Pratidin from the reports linked at the end; every fact checked by a separate review before publishing. How we work
The Hindu's editorial 'Bitter pills' (1 October 2026) takes up a Supreme Court hearing on drug prices. It notes that the Court 'has upbraided disparities between the price to retailer (PTR) and the maximum retail price (MRP) of certain drugs, including those used to treat cancers, in some instances up to 1,000%'. The PTR is what the chemist pays the company; the MRP is the most the patient can be charged. On 29 September 2026, a Bench of Justices Vikram Nath and Sandeep Mehta, hearing petitions by Kishan Chand Jain and others, was shown a cancer medicine with a PTR of about ₹2,700 and an MRP of about ₹27,000. 'This is carnage. Plain and simple,' the Bench said.
The legal frame is the Drugs (Prices Control) Order, 2013 (DPCO), issued under Section 3 of the Essential Commodities Act, 1955. For 'scheduled' medicines, those in the National List of Essential Medicines, the National Pharmaceutical Pricing Authority (NPPA) fixes a ceiling price: the simple average of the PTRs of brands with at least 1% market share, plus a 16% retailer margin. 'Non-scheduled' medicines, about four-fifths of the market by value, have no ceiling; companies may only raise their MRP by up to 10% a year. The Bench asked why the 16% margin should not apply to everything: 'Essential or non-essential does not matter?' It asked where 'this huge chunk of money' goes, and asked the Centre to examine hospitals that make patients buy from in-house pharmacies.
Solicitor General Tushar Mehta said, 'I am not saying the petitioners are wrong, but some way which balances equities will have to be found.' He is to hold talks with officials within two weeks, and the case returns on 12 October. At an earlier hearing on 22 September the Court had called the practice 'broad daylight dacoity'. The government has used the DPCO's extraordinary powers before: in February 2019 the NPPA capped trade margins on 42 non-scheduled anti-cancer drugs at 30%. In August 2026 it was reported to be weighing trade margin rationalisation within the DPCO itself. Data reported then suggested very high markups were concentrated in a small share of the market, which is the core of the debate: a blanket cap versus targeted control.
Prelims facts
- The DPCO, 2013 is issued under Section 3 of the Essential Commodities Act, 1955 and is administered by the NPPA.
- Ceiling price of a scheduled medicine = simple average PTR of brands with at least 1% market share, plus a 16% retailer margin.
- Makers of non-scheduled medicines may raise MRP by at most 10% in a year; there is no ceiling price.
- On 29 September 2026 the Supreme Court (Justices Vikram Nath and Sandeep Mehta) asked why the 16% margin cannot apply to all medicines; next hearing 12 October.
- In February 2019, using paragraph 19 of the DPCO, the NPPA capped trade margins on 42 non-scheduled anti-cancer drugs at 30%.
Quick recall
- Parent law of the DPCO, 2013
- Section 3 of the Essential Commodities Act, 1955.
- Retailer margin added in DPCO ceiling price formula
- 16%.
- Market-share cut-off for brands in the ceiling price average
- At least 1% of the medicine's market.
- Maximum annual MRP increase for non-scheduled medicines
- 10%.
- Body that fixes and enforces drug ceiling prices
- National Pharmaceutical Pricing Authority (NPPA).
- Trade margin cap of February 2019
- 30% on 42 non-scheduled anti-cancer drugs, using paragraph 19 of the DPCO.
- Bench in the September 2026 drug markup hearing
- Justices Vikram Nath and Sandeep Mehta.
- PTR
- Price to retailer: what the chemist or hospital pharmacy pays the supplier.
Prelims practice question
Under the Drugs (Prices Control) Order, 2013, the ceiling price of a scheduled formulation is calculated by:
- Adding a 16% retailer margin to the simple average price to retailer of brands with at least 1% market share
- Adding a 30% trade margin to the price to stockist of the lowest-priced brand
- Taking the cost of production of the market leader plus a fixed profit
- Allowing the maximum retail price to rise by up to 10% each year
Show answer
Answer: (a) Adding a 16% retailer margin to the simple average price to retailer of brands with at least 1% market share. Paragraph 4 of the DPCO takes the simple average PTR of all brands and generics with at least 1% market share and adds a 16% retailer margin. The 30% trade-margin cap was the 2019 measure for 42 anti-cancer drugs; the 10% annual increase rule applies to non-scheduled medicines.
Use this in UPSC Mains: previous-year questions
Recurring theme: Affordable medicines, regulation of the private health market and the right to health
- How to use this
Use the cancer-drug markup case as a stark example of marketisation in health care, and margin control plus generics as state measures to contain it.
- On 29 September 2026 the Supreme Court was shown a cancer drug with a PTR of about ₹2,700 and an MRP of about ₹27,000, calling it 'carnage'; The Hindu's editorial notes markups up to 1,000%.
- Non-scheduled medicines, about four-fifths of the market by value, have no ceiling price under the DPCO, 2013; makers may only raise MRP by up to 10% a year.
- Precedent for state action: in February 2019 the NPPA capped trade margins on 42 non-scheduled anti-cancer drugs at 30%; expanding Jan Aushadhi generic outlets would extend affordable reach.
- How to use this
Use it to show that private provision of medicines needs regulation before it can help universal coverage, and to suggest pricing and generic alternatives.
- The Bench asked the Centre to examine hospitals that make patients buy from in-house pharmacies, and asked why the 16% retailer margin on scheduled drugs should not apply to all medicines.
- Price control acts on the ceiling, not the margin: a company can set a high MRP and a low PTR, giving retailers and hospitals a large cut paid out of pocket by patients.
- Solicitor General Tushar Mehta sought a way that 'balances equities'; data reported in August 2026 suggested very high markups sit in a small share of the market, framing the blanket versus targeted cap debate.
Mains practice question
High trade margins on medicines undermine the right to health even when prices are regulated. Examine the drug price control framework in India and suggest reforms. (250 words)
Model answer
In September 2026 the Supreme Court called ten-fold markups on some cancer drugs 'carnage', exposing gaps in India's drug price control framework.
The framework
- DPCO, 2013, under Section 3 of the Essential Commodities Act, 1955, administered by the NPPA.
- Scheduled medicines (in the National List of Essential Medicines): ceiling price = average PTR of brands with at least 1% market share plus 16% retailer margin.
- Non-scheduled medicines: no ceiling; MRP may rise by at most 10% a year.
- Paragraph 19: extraordinary powers, used in 2019 to cap trade margins on 42 anti-cancer drugs at 30%.
Gaps
- About four-fifths of the market by value is non-scheduled, so most medicines have no price ceiling.
- Price control acts on the ceiling, not the margin: a company can set a high MRP and offer a low PTR, giving retailers and hospitals a large cut.
- Hospitals that require purchases from in-house pharmacies leave patients no choice.
- High out-of-pocket spending on medicines pushes households into poverty.
Reforms
- Bring trade margin rationalisation into the DPCO, with caps graded by price band.
- Wider and faster revision of the National List of Essential Medicines.
- Expand Jan Aushadhi generic outlets and enforce prescription by generic name.
- Transparency: print PTR alongside MRP; let patients buy from any pharmacy.
- Stronger NPPA monitoring and recovery of overcharged amounts.
- Prefer targeted caps on outliers if blanket caps threaten supply.
Affordable medicines are central to the right to health under Article 21, and margin control is the missing piece in India's price regime.
The basics
Why this matters
Medicines are one of the largest parts of what Indian families pay for health care out of their own pockets. India regulates some drug prices, but the Supreme Court's hearing shows that the gap between what the chemist pays and what the patient pays can be enormous.
The supply chain in brief
A company sells to a stockist, the stockist to a retailer (chemist or hospital pharmacy), and the retailer to the patient. The PTR is what the retailer pays. The MRP, printed on the pack, is the most the patient can be charged. The difference is the retailer's margin.
Two kinds of medicines
The Drugs (Prices Control) Order, 2013 treats medicines differently depending on whether they are on the National List of Essential Medicines.
- NPPA fixes a ceiling price
- Ceiling = average PTR of brands with at least 1% share plus 16% retailer margin
- Covers medicines in the National List of Essential Medicines
- No ceiling price
- Company sets its own launch MRP
- MRP may rise by at most 10% a year
How a ceiling price is set
- 1List the brandsTake all brands and generics of the medicine with at least 1% market share
- 2Average the PTRsCompute the simple average of their prices to retailer
- 3Add the retailer marginAdd 16% to get the ceiling price
- 4EnforceNo company may sell above the ceiling; the [[National Pharmaceutical Pricing Authority]] monitors and recovers overcharges
The missing lever: margins
Price control caps the MRP, not the margin. A company can keep a high MRP and offer a low PTR so that chemists or hospitals earn more by stocking its brand. Trade Margin Rationalisation caps the gap directly. It was used for 42 anti-cancer drugs in 2019 under the DPCO's emergency power. The parent law is the Essential Commodities Act, 1955.
Go deeper
In one line: The Supreme Court has questioned why some medicines, including cancer drugs, reach patients at up to ten times what chemists pay, and The Hindu's editorial uses this to examine India's drug price regime.
Why it matters for UPSC
GS2 health and regulatory bodies; GS3 pricing and markets. Prelims asks about the DPCO, NPPA and the Essential Commodities Act.
The core idea
The Drugs (Prices Control) Order, 2013, issued under the Essential Commodities Act, 1955, caps the price of essential (scheduled) medicines. The National Pharmaceutical Pricing Authority sets and enforces those caps. But most of the market is non-scheduled, and even for scheduled drugs the law caps the price, not the gap between the chemist's cost and the patient's price. Trade Margin Rationalisation is the tool that targets that gap directly.
Numbers and dates to remember
- PTR about ₹2,700 against MRP about ₹27,000 for one cancer drug (ten-fold).
- DPCO ceiling = average PTR of brands with at least 1% share + 16% retailer margin.
- Non-scheduled MRP increase limit: 10% a year.
- February 2019: 30% trade margin cap on 42 anti-cancer drugs.
- Hearings: 22 September and 29 September 2026; next date 12 October 2026.
Where to go next
- Drugs (Prices Control) Order, 2013: how India caps medicine prices.
- National Pharmaceutical Pricing Authority: the regulator that enforces the caps.
- Trade Margin Rationalisation: capping the gap between PTR and MRP.
- Essential Commodities Act, 1955: the parent law behind price control.
Go deeper: a uniform margin cap or targeted control?
For a uniform cap. The Bench asked why the 16% margin in the Drugs (Prices Control) Order, 2013 should not apply to every medicine. Supporters argue that patients cannot judge prices of prescription drugs, especially in hospitals, so the market does not discipline margins. A ten-fold markup on a cancer drug transfers money from the sick to the supply chain, and when the state pays through insurance schemes, from taxpayers too.
Against a blanket cap. The Solicitor General accepted the problem but said a way that 'balances equities' must be found. Data reported in August 2026 suggested that very high markups are concentrated in a small share of the non-scheduled market. Industry representatives said the gap between PTR and MRP also covers taxes, storage, cold chain and distributor costs, not manufacturer profit alone.
The middle path. Trade Margin Rationalisation caps margins at the first point of sale, as was done for 42 anti-cancer drugs in 2019. The government was reported in August 2026 to be considering making it a regular part of the DPCO. This lets the National Pharmaceutical Pricing Authority act on outliers without fixing every price.
The constitutional frame. The Supreme Court has read the right to health into Article 21, and Article 47 directs the state to improve public health. Price control under the Essential Commodities Act, 1955 is one way the state acts on these duties.
Hospitals. The Court's question about in-house pharmacies points to a separate problem: captive buyers. Reforms that could address this include letting patients buy from any pharmacy and printing the PTR beside the MRP.
Drugs (Prices Control) Order, 2013
How India caps medicine prices.
In one line: The DPCO, 2013 is the government order that fixes ceiling prices for essential medicines and limits price increases for other medicines.
How it works
- It is issued under Section 3 of the Essential Commodities Act, 1955 and replaced the DPCO of 1995.
- Scheduled formulations are the medicines in the National List of Essential Medicines. Their ceiling price is the simple average PTR of brands with at least 1% market share, plus a 16% retailer margin.
- Non-scheduled formulations have no ceiling, but their MRP may rise by at most 10% in a year.
- Paragraph 19 lets the government fix the ceiling or retail price of any drug in extraordinary circumstances, in the public interest.
Why it is in the news
The Supreme Court asked in September 2026 why the 16% margin cannot apply to all medicines.
Where to go next
National Pharmaceutical Pricing Authority
The regulator that enforces the caps.
In one line: The National Pharmaceutical Pricing Authority (NPPA) is the government body that fixes and enforces drug prices under the DPCO.
What it does
- Fixes and revises ceiling prices of scheduled medicines.
- Monitors prices of non-scheduled medicines so that increases stay within 10% a year.
- Recovers amounts overcharged by companies from consumers.
- Monitors availability of medicines and acts on shortages.
It works under the Department of Pharmaceuticals in the Ministry of Chemicals and Fertilizers.
Why it is in the news
The Supreme Court's questions on markups will require the NPPA and the Department to say whether margins can be capped more widely.
Where to go next
Trade Margin Rationalisation
Capping the gap between PTR and MRP.
In one line: Trade Margin Rationalisation (TMR) caps the difference between the price at the first point of sale and the MRP, instead of capping the MRP itself.
How it works
In February 2019 the NPPA used paragraph 19 of the DPCO to cap trade margins on 42 non-scheduled anti-cancer medicines at 30%. Companies had to fix the retail price from the price to stockist, adding no more than 30%. A similar approach was later used for some medical devices, such as oxygen concentrators.
Why it matters
A ceiling price does not stop a company from giving retailers a large cut. TMR targets that cut directly, so it is suited to problems like the ten-fold markups the Supreme Court flagged in 2026.
Why it is in the news
In August 2026 the government was reported to be weighing making TMR part of the DPCO.
Where to go next
Essential Commodities Act, 1955
The parent law behind price control.
In one line: The Essential Commodities Act, 1955 lets the Centre control the production, supply, distribution and price of goods it declares essential.
How it works
Section 3 of the Act empowers the Centre to issue control orders for essential commodities. Drugs are among the commodities listed as essential. Orders under it, such as the DPCO, have the force of law, and breaking them is an offence.
Why it matters
Because price control rests on this Act, the government can act quickly through orders rather than new legislation. The 2019 trade margin cap on cancer drugs was made under the DPCO, which in turn rests on Section 3.
Why it is in the news
Any wider cap on medicine margins that follows the Supreme Court hearing would most likely be made through this route.
Where to go next
Prelims-style quiz
In February 2019 the NPPA capped trade margins on 42 non-scheduled anti-cancer medicines. At what level?
- 16%
- 30%
- 10%
- 70%
Show answer
Answer: (b) 30%. The cap was 30% on the price to stockist, imposed under paragraph 19 of the DPCO. 16% is the retailer margin in the ceiling formula, 10% the annual increase limit for non-scheduled medicines, and 70% the margin cap later used for some medical devices.
Consider the following statements:
1. The ceiling price formula averages the prices to retailer of brands with at least 1% market share.
2. Non-scheduled medicines account for a minority of India's pharmaceutical market by value.
Which of the statements given above is/are correct?- 1 only
- 2 only
- Both 1 and 2
- Neither 1 nor 2
Show answer
Answer: (a) 1 only. 1 is correct. 2 is incorrect: non-scheduled medicines are about four-fifths of the market by value.
Consider the following statements about the Drugs (Prices Control) Order, 2013:
1. It is issued under the Essential Commodities Act, 1955.
2. It fixes ceiling prices for all medicines sold in India.
3. It limits the annual increase in the MRP of non-scheduled medicines to 10%.
How many of the statements given above are correct?- Only one
- Only two
- All three
- None
Show answer
Answer: (b) Only two. 1 is correct: it is issued under Section 3 of the ECA, 1955. 2 is incorrect: ceiling prices apply only to scheduled medicines. 3 is correct.
Consider the following statements:
Statement-I: A medicine outside the National List of Essential Medicines can carry an MRP many times its price to retailer without breaching a ceiling price.
Statement-II: Under the DPCO, 2013, ceiling prices are fixed only for scheduled formulations.
Which one of the following is correct in respect of the above statements?- Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
- Both Statement-I and Statement-II are correct and Statement-II does not explain Statement-I
- Statement-I is correct but Statement-II is incorrect
- Statement-I is incorrect but Statement-II is correct
Show answer
Answer: (a) Both Statement-I and Statement-II are correct and Statement-II explains Statement-I. Both are correct. Because only scheduled formulations get a ceiling, a non-scheduled medicine has no ceiling to breach, so Statement-II explains Statement-I.
Consider the following statements about the Supreme Court hearing of 29 September 2026 on drug markups:
1. The Bench asked why a 16% margin could not apply to all medicines.
2. The Bench asked the Centre to examine hospitals that require patients to buy from in-house pharmacies.
3. The Court struck down the DPCO, 2013.
4. The Solicitor General said a way that balances equities would have to be found.
How many of the statements given above are correct?- Only one
- Only two
- Only three
- All four
Show answer
Answer: (c) Only three. 1, 2 and 4 are correct. 3 is incorrect: the Court did not strike down the DPCO; it questioned the margins and listed the case for 12 October.