Supreme Court reserves order on why most medicines stay outside price control
In one line: The Supreme Court has reserved orders on whether the Centre must extend price control beyond the essential medicines it now caps, after the Centre defended selective intervention.
Published 28 October 2026. Written by Pratidin from the reports linked at the end; every fact checked by a separate review before publishing. How we work
On 27 October 2026 a Supreme Court bench of Justices Vikram Nath and Sandeep Mehta reserved its order in Kishan Chand Jain v. Ethics and Medical Registration Board, a petition that asks why most medicines in India sit outside price control. The petitioner seeks regulation of the launch prices of non-scheduled medicines, mandatory generic prescriptions and price caps on medical devices. The bench allowed written submissions within two weeks. During the hearing the judges listed price gaps they found hard to justify: an MRP (maximum retail price) said to be "400 times" the procurement price, a chemotherapy injection bought from a dealer at ₹11,000 for which a hospital charged ₹1.3 lakh, and a saline drip with an MRP of ₹15 sold for ₹270.
The Centre, through Additional Solicitor General Aishwarya Bhati, said scheduled medicines (those whose prices are capped) make up 35% of the market by volume and 18% by price; the petitioner put non-scheduled medicines at about 83% of the market by value. The ASG said the National Pharmaceutical Pricing Policy, 2012 balances four aims: affordable essential medicines, innovation and competition, industry growth, and employment. "The decision is not to have a full control but to make only interventions from time to time," she said, pointing to Paragraph 19 of the Drugs (Prices Control) Order (DPCO), 2013, which allows price fixing in extraordinary circumstances in the public interest. Past uses include a 2014 cap on 106 non-scheduled diabetes and cardiovascular formulations, a 2019 trade-margin cap on 42 non-scheduled anti-cancer drugs, and a recent cap on trade margins of selected non-scheduled anti-cancer medicines at 30% of MRP.
The bench was sceptical. Justice Nath asked, "What stops you from taking control of the entire range of medicines and drugs?" Justice Mehta said the choice of what is scheduled is "where the game is", noted that makers fix a high MRP at launch and then face only a 10% annual increase limit, and remarked that the National Pharmaceutical Pricing Authority (NPPA) "seems to be defunct with due respect". For hospitals, Senior Advocate Mukul Rohatgi argued that medicine margins cover operating costs because government and insurance reimbursements are lower than billed amounts, warned that capping margins could raise other charges, and suggested an expert committee. The case has run through hearings on 29 September and 12 October, when the bench asked why a uniform 16% margin over the price to retailer could not apply.
Prelims facts
- On 27 October 2026 a bench of Justices Vikram Nath and Sandeep Mehta reserved orders on a plea to bring non-scheduled medicines under price control.
- The Centre said scheduled (price-capped) medicines are 35% of the market by volume and 18% by price.
- Paragraph 19 of the DPCO, 2013 lets the government fix prices of any drug in extraordinary circumstances in the public interest.
- Makers of non-scheduled medicines set their own MRP but cannot raise it by more than 10% in 12 months.
- The NLEM forms Schedule-I of the DPCO, 2013; the NPPA fixes ceiling prices for medicines in it.
Quick recall
- Which order governs drug price control in India today?
- The Drugs (Prices Control) Order, 2013.
- What forms Schedule-I of the DPCO, 2013?
- The National List of Essential Medicines (NLEM).
- When was the NPPA set up, and under which department?
- 29 August 1997; attached office of the Department of Pharmaceuticals, Ministry of Chemicals and Fertilizers.
- By how much can a maker raise the MRP of a non-scheduled formulation?
- By at most 10% over the preceding 12 months.
- On what basis are ceiling prices revised each year?
- The Wholesale Price Index (all commodities) of the previous calendar year.
- Which DPCO paragraph lets the government fix prices in extraordinary circumstances?
- Paragraph 19.
- Share of the market under ceiling prices, per the Centre (October 2026)?
- 35% by volume and 18% by price.
- Which bench reserved orders on 27 October 2026?
- Justices Vikram Nath and Sandeep Mehta.
Prelims practice question
With reference to drug price regulation in India, consider the following statements:
1. The National List of Essential Medicines (NLEM) forms Schedule-I of the Drugs (Prices Control) Order, 2013.
2. Manufacturers of non-scheduled formulations need the prior approval of the NPPA to fix the launch price of every such formulation.
3. Ceiling prices of scheduled formulations are revised every year on the basis of the Wholesale Price Index.
Which of the statements given above are correct?
- 1 and 2 only
- 1 and 3 only
- 2 and 3 only
- 1, 2 and 3
Show answer
Answer: (b) 1 and 3 only. 1 is correct: NLEM 2022 was notified as Schedule-I of the DPCO, 2013. 2 is wrong: makers of non-scheduled formulations fix the MRP themselves; the limit is that they cannot raise it by more than 10% in 12 months (prior price approval applies to 'new drugs' of existing scheduled-formulation makers). 3 is correct: ceiling prices are revised annually on the basis of the WPI (all commodities) for the previous calendar year.
Use this in UPSC Mains: previous-year questions
Recurring theme: State regulation of the healthcare market: drug pricing, regulators and the right to health
- How to use this
Use drug pricing as a concrete case of marketisation in healthcare and of the State's regulatory levers to protect patients.
- Only 18% of the medicine market by price is under ceiling prices; non-scheduled makers fix launch MRPs, capped only at a 10% yearly rise.
- In October 2026 the Supreme Court flagged a ₹15 saline drip sold for ₹270 and questioned why all medicines cannot be controlled.
- Measures: trade-margin caps (30% of MRP on selected cancer drugs), Paragraph 19 DPCO interventions, a stronger NPPA watching hospital pharmacies.
- How to use this
Show that private provision can bridge gaps but brings high-margin pricing that needs regulation.
- Hospitals told the Supreme Court medicine margins cover costs that government and insurance reimbursements do not.
- The bench cited a chemotherapy injection bought at ₹11,000 and billed at ₹1.3 lakh, a cost that falls on patients or public schemes.
Shows the Centre-State split in health; drug pricing, unlike most services, is a Central regulatory function through the NPPA.
Mains practice question
Most medicines sold in India lie outside price control. Examine the case for and against extending price regulation to non-scheduled medicines, in the light of recent Supreme Court hearings. (250 words)
Model answer
In October 2026 the Supreme Court reserved orders on a plea to regulate non-scheduled medicines, after the Centre said scheduled drugs cover only 18% of the market by price and 35% by volume.
The present framework
- The DPCO, 2013 caps ceiling prices only for Schedule-I (NLEM) medicines, revised yearly by the WPI.
- Non-scheduled makers fix their own MRP, with a 10% annual increase limit.
- Paragraph 19 allows case-by-case intervention: 106 diabetes and cardiac formulations (2014), 42 cancer drugs (2019), and a 30%-of-MRP trade margin cap on selected cancer drugs.
Case for wider control
- The bench cited an MRP "400 times" the procurement price and a ₹15 saline drip sold for ₹270.
- Patients have little bargaining power or information, as the Centre's own affidavit concedes.
- High launch MRPs escape the 10% rule; public schemes and taxpayers bear inflated hospital bills.
- Right to health under Article 21 and Article 47 support state action.
Case against blanket control
- The 2012 pricing policy balances affordability with innovation, competition, industry growth and jobs.
- Hospitals say medicine margins cross-subsidise costs that reimbursements do not cover; caps may shift charges elsewhere.
- Rigid caps can hurt supply of low-priced medicines.
Way forward
- Trade-margin rationalisation (for example, a cap linked to the price to retailer) rather than full price fixing.
- Strengthen NPPA monitoring of hospital pharmacies; expert committee, as hospitals suggest.
- Push generics through Jan Aushadhi and generic prescription.
A calibrated mix of margin caps and stronger enforcement can protect patients without choking supply.
The basics
Why this matters
How the state decides which medicines get a price cap, and which are left to the market, is a classic GS2 (health, regulators) and GS3 (industrial policy) question. The Supreme Court's hearing on 27 October 2026 put that choice under a spotlight.
Two kinds of medicine
India's price regime divides medicines into two groups. Scheduled medicines are those on the National List of Essential Medicines, which forms Schedule-I of the Drugs (Prices Control) Order, 2013. The National Pharmaceutical Pricing Authority fixes a ceiling price for them, and no one may sell above it (plus GST). Everything else is non-scheduled: the maker fixes the MRP, and the only rule is that it cannot rise by more than 10% in 12 months.
- NPPA fixes a ceiling price
- Ceiling revised every year by WPI
- Retailer margin of 16% built in
- 35% of market by volume, 18% by price (Centre)
- Maker sets the launch MRP
- MRP may rise at most 10% in 12 months
- Government can step in under Paragraph 19
- About 83% of market by value (petitioner)
How intervention works today
Instead of capping everything, the government uses Trade margin rationalisation and the emergency power in Paragraph 19 of the DPCO. A trade margin is the gap between what a stockist or retailer pays and what the patient pays. Capping it leaves the maker free to set its own price but stops huge mark-ups down the chain.
- 1997NPPA set up on 29 August to fix and enforce drug prices
- 2012National Pharmaceutical Pricing Policy based on essentiality of drugs
- 2013DPCO, 2013 notified; NLEM medicines become scheduled
- 2014Caps on 106 non-scheduled diabetes and cardiovascular formulations
- 2019Trade margins capped on 42 non-scheduled anti-cancer drugs
- 2026Trade margins of selected non-scheduled cancer drugs capped at 30% of MRP
The argument in court
The bench asked why the whole range of medicines cannot be controlled, and cited a saline drip with an MRP of ₹15 sold for ₹270. The Centre replied that the 2012 policy must balance affordability against innovation, competition, industry growth and jobs, and that full control is a deliberate choice it has not made. Hospitals said medicine margins pay for costs that government and insurance reimbursements do not cover.
The open question for the Court is whether this policy choice is one for judges at all. That links the story to the Right to health under Article 21, which the Court has read into the right to life.
Go deeper
Why it matters for UPSC
Drug pricing joins health (GS2), regulators (GS2) and industrial policy (GS3). Prelims likes the DPCO, NLEM and NPPA; Mains asks how the state should temper the marketisation of healthcare.
The core idea
The Drugs (Prices Control) Order, 2013 caps prices only for medicines on the National List of Essential Medicines. The National Pharmaceutical Pricing Authority fixes those ceilings. For other medicines the maker sets the launch price and can raise it by up to 10% a year. Between the two, the Centre uses Trade margin rationalisation and an emergency power under Paragraph 19. The petitioner says this leaves most of the market unregulated; the Centre says full control would hurt innovation and supply. Behind the debate lies the Right to health under Article 21.
Numbers and dates to remember
- 27 October 2026: order reserved by Justices Vikram Nath and Sandeep Mehta.
- 35% by volume, 18% by price: share of scheduled medicines (Centre).
- About 83%: non-scheduled share by value (petitioner).
- 10%: maximum yearly MRP increase for non-scheduled medicines.
- 1997: NPPA set up; 2013: DPCO notified.
Where to go next
- Drugs (Prices Control) Order, 2013: the legal instrument behind every ceiling price.
- National List of Essential Medicines: decides which medicines are scheduled.
- National Pharmaceutical Pricing Authority: the regulator the bench called 'defunct'.
- Trade margin rationalisation: the middle path between control and freedom.
- Right to health under Article 21: the constitutional hook for judicial scrutiny.
Go deeper: control the price, or the mark-up?
For wider control. The bench cited an MRP said to be 400 times the procurement price, a chemotherapy injection bought at ₹11,000 and billed at ₹1.3 lakh, and a ₹15 saline drip sold for ₹270. The Centre's own affidavit accepts that patients have little bargaining power or information. Because the 10% rule bites only after launch, a high launch MRP is never tested. When hospitals bill government schemes, inflated prices fall on taxpayers, a point the bench made in September.
For selective control. The Centre argues that the Drugs (Prices Control) Order, 2013 and the 2012 policy deliberately balance four aims: affordable essential medicines, innovation and competition, industry growth, and jobs. It says it prefers targeted steps under Paragraph 19, and cites caps in 2014 and 2019 and the recent 30% trade-margin cap on cancer drugs. Hospitals add that margins cross-subsidise services that reimbursements do not cover, and suggest an expert committee.
The middle path. Trade margin rationalisation keeps the maker's freedom but limits the supply-chain mark-up; the bench asked why a uniform 16% over the price to retailer, the margin already built into scheduled prices, could not apply. A stronger National Pharmaceutical Pricing Authority with power to monitor hospital pharmacies is another option.
The judicial question. Pricing is policy, and courts usually defer. But the Court has read the Right to health under Article 21, and its reserved order will show how far it will go in steering economic policy for public health.
Drugs (Prices Control) Order, 2013
The legal instrument behind every ceiling price.
In one line: The DPCO, 2013 is the government order that sets how medicine prices are capped, revised and enforced in India.
What it does
It lists scheduled medicines in Schedule-I, which is the National List of Essential Medicines. For these, a ceiling price is fixed and revised every year, with effect from 1 April, on the basis of the Wholesale Price Index of the previous calendar year. For non-scheduled formulations, the maker sets the MRP but cannot raise it by more than 10% in 12 months. It also requires the MRP to be printed on the label.
Paragraph 19
This paragraph lets the government fix or cap the price of any drug in extraordinary circumstances, in the public interest. The Centre cited it in court as the basis for its selective interventions, such as caps on cancer drug margins.
Why in news
The petitioner says this design leaves most of the market free; the Centre says it is a deliberate balance.
Where to go next
Drugs (Prices Control) Order, 2013: every story that connects to it (3)
National List of Essential Medicines
Decides which medicines are scheduled.
In one line: The NLEM is the Health Ministry's list of medicines considered essential for India's priority health needs, and it doubles as the list of price-controlled drugs.
How it links to prices
The NLEM is notified as Schedule-I of the Drugs (Prices Control) Order, 2013. Being on the list is what makes a medicine 'scheduled', so its ceiling price is fixed. NLEM 2022 was notified as Schedule-I on 11 November 2022. In a written reply in July 2026, the government said the list contains 388 medicines, and that ceiling prices had been fixed for 935 scheduled formulations as on 23 July 2026.
The catch
A medicine's essentiality, not its price or market share, decides whether it is scheduled. Many widely sold combinations and newer brands stay off the list, which is why the bench said the scheduling decision is 'where the game is'.
Where to go next
National Pharmaceutical Pricing Authority
The regulator the bench called 'defunct'.
In one line: The NPPA is India's drug price regulator, set up on 29 August 1997, that fixes ceiling prices and acts against overcharging.
Structure and functions
It is an attached office of the Department of Pharmaceuticals in the Ministry of Chemicals and Fertilizers. Its job is to implement and enforce the Drugs (Prices Control) Order, 2013, fix ceiling prices of scheduled formulations, fix retail prices of 'new drugs', monitor availability and act against companies that overcharge. It acts on references from State price monitoring units, drug controllers and consumer complaints.
Why in news
On 27 October 2026 Justice Sandeep Mehta told the Centre that the NPPA 'seems to be defunct with due respect', given the price gaps cited in court. Critics want it to watch hospital pharmacies, where many mark-ups arise.
Where to go next
National Pharmaceutical Pricing Authority: every story that connects to it (3)
Trade margin rationalisation
The middle path between control and freedom.
In one line: Trade margin rationalisation caps the mark-up added between the trade's purchase price and the MRP, without fixing the maker's own price.
How it works
A medicine passes from maker to stockist to retailer to patient. Each adds a margin. For scheduled drugs, a 16% retailer margin over the price to retailer is built into ceiling prices. For non-scheduled drugs there is no such limit, so an MRP can be many times the trade price. A margin cap limits that gap. The Centre capped margins of 42 non-scheduled cancer drugs in 2019 and, recently, of selected cancer drugs at 30% of MRP.
The debate
The petitioner says a 30%-of-MRP cap still allows a mark-up of about 42.86% on the purchase price. The bench asked why a uniform 16% cap could not apply across medicines and devices. Hospitals warn that tighter margins may push up other charges.
Where to go next
Trade margin rationalisation: every story that connects to it (2)
Right to health under Article 21
The constitutional hook for judicial scrutiny.
In one line: The Supreme Court has read the right to health into the right to life under Article 21, which lets it question policies that put medicines out of reach.
The constitutional base
Article 21 protects life and personal liberty. The Court has held over the years that life means a life with dignity, which includes health and access to medical care; in Paschim Banga Khet Mazdoor Samity (1996) it held that failure to provide timely emergency treatment violates Article 21. Article 47, a Directive Principle, asks the State to improve public health.
Why in news
In the drug price case Justice Mehta told the Centre, 'You are dealing with the lives of people.' The question is how far a court can push the executive on economic policy such as which medicines to schedule. The Centre says this is a deliberate policy choice; the reserved order will show where the Court draws the line.
Where to go next
Take the 28 October 2026 quiz: 24 Prelims-style questions with answers