Even as the Centre informed the Supreme Court on Monday (October 12, 2026) that it had decided to cap trade margins at 30% for non-scheduled cancer drugs, the court questioned why the benefit of such price regulation should be confined to cancer drugs and not extended to other essential medicines and medical products.
The development comes after a Bench of Justices Vikram Nath and Sandeep Mehta expressed concern over stark disparities between the price to retailer (PTR) and the maximum retail price (MRP) of certain medicines, particularly cancer drugs, with mark-ups in some instances soaring to 1,000%. The Centre, in its 551-page affidavit, said the proposed trade-margin rationalisation (TMR) was expected to reduce the MRP of anti-cancer drugs by 20% to 70%, translating into estimated annual savings of around ₹2,500 crore. It said the measure would reduce patients’ out-of-pocket expenditure and improve the affordability and accessibility of cancer medicines, while retaining a 30% trade margin for the distribution chain. The measure, it said, led to a substantial reduction in the MRP of 526 brands and annual savings of around ₹984 crore for patients, based on information furnished by pharmaceutical companies. The Centre said the 2019 exercise provided a policy and operational precedent for extending trade-margin rationalisation to a wider range of non-scheduled anti-cancer medicines.
The Bench had flagged that such exorbitant mark-ups constituted “broad daylight dacoity” and placed an enormous financial burden on patients.
The National Pharmaceutical Pricing Authority (NPPA) will examine the committee’s recommendations before issuing a price notification to implement the cap. “We understand that there are transportation costs, raw material costs, R&D costs and other ancillary costs, but all these are included in the MRP. How can you allow this? What is the benefit for the patients?” the Bench observed. “Higher margins in such cases are important for ensuring the availability of such medicines to consumers… Our concern is that there has to be a balance in pricing. There has to be some level of market play available for drugs. We do not want to control the entire ecosystem of drugs. The policy was framed with the outlook that there should be intervention only when necessary,” she submitted.
Solicitor General Tushar Mehta, appearing for the Centre, informed the Bench that the proposed 30% trade-margin cap would cover both patented and non-patented cancer medicines, with an expert committee headed by the Director General of Health Services tasked with identifying the drugs to be brought within its ambit. What is the logic behind allowing them to sell at 400 times the actual cost?
Accordingly, the Bench gave the Centre until October 27 to work out the modalities for capping medicine prices, when the matter will be heard next.
