The Centre on Monday, 13 October 2025, informed the Supreme Court that it has decided to cap trade margins on anti-cancer medicines at 30 per cent of the maximum retail price (MRP), as the apex court pushed for a far broader overhaul of medicine pricing across the entire pharmaceutical sector. The disclosure came during a hearing before a bench of Justices Vikram Nath and Sandeep Mehta, who have been scrutinising the yawning gap between manufacturer prices and retail sticker prices on essential drugs.

What the Centre Proposed

Solicitor General Tushar Mehta, appearing for the Union government, told the bench that the Centre would notify a list of cancer drugs to which the 30% trade margin cap would apply. He added that the list could be periodically updated to include additional anti-cancer medicines based on market developments and public health considerations, while inexpensive drugs could be excluded from its ambit.

Additional Solicitor General Aishwarya Bhati argued that pricing was only one dimension of the government's pharmaceutical policy and that a balance had to be maintained between affordability, availability, and broader market considerations. 'We don't want to control the entire ecosystem of drugs,' Bhati said, cautioning that excessive government intervention could adversely affect both market dynamics and the availability of medicines.

Supreme Court's Sharper Questions

The Justice Vikram Nath-led bench was not satisfied with the narrow scope of the proposed measure and questioned whether capping margins only on cancer drugs would address the wider problem of excessive trade mark-ups across medicines and medical devices. The court cited the example of an Indian-made cardiac stent supplied to retailers at around ₹5,000 but carrying an MRP of ₹25,000 — a five-fold disparity. When SG Mehta noted that stents were already subject to price caps, the bench pressed further.

Judges also flagged a specific drug with an MRP of ₹2,850 against a price to stockist (PTS) of just ₹78.29 and asked the Centre to explain how such pricing arrangements served patients' interests. The court also raised the Drugs (Prices Control) Order, 2013, questioning whether medicines nominally subject to price controls actually reached consumers at the prescribed trade margins.

A Pattern of Escalating Judicial Scrutiny

The latest hearing is part of a series of increasingly pointed exchanges between the Supreme Court and the government over pharmaceutical pricing. On 22 September, the Justice Vikram Nath-led bench had described the ten-fold difference between a cancer drug's retailer procurement price and its MRP as 'broad daylight dacoity' — a phrase that drew wide attention. On 29 September, the court questioned why a uniform trade margin cap could not be applied across all pharmaceutical products and flagged concerns over corporate hospitals compelling patients to purchase medicines exclusively from their in-house pharmacies.

Notably, in separate but related proceedings, the Supreme Court has also directed the Centre to constitute a committee to examine the need for statutory regulation of pharmaceutical marketing practices — including the offering of gifts, hospitality, and financial incentives to doctors by drug companies. That committee is required to consider stakeholder inputs and recommend whether a statutory framework is warranted.

Background and Legal Context

The proceedings arise from public interest litigations (PILs) seeking comprehensive regulation of medicine prices, initial price fixation for non-scheduled medicines, medical devices, generic medicines, and prescription practices. In earlier hearings, the court had repeatedly questioned why manufacturers were permitted to fix MRPs substantially higher than the prices at which they supplied the same drugs to retailers — effectively shifting a large mark-up burden onto patients.

What Happens Next

The Supreme Court has posted the matter for further hearing on 27 October 2025. The Centre is expected to place on record a more detailed framework, including how it proposes to address pricing anomalies beyond the anti-cancer segment. The outcome could set a precedent for how India regulates pharmaceutical trade margins at scale, with implications for millions of patients and a sector worth hundreds of thousands of crores annually.