Hospital charged drug dealer Rs 1.3 lakh for injection he could buy for Rs 11,000: SC

The Supreme Court said hospitals could not justify charging patients up to 100 or 200 times the cost of medicines, calling such pricing 'dacoity' and questioning the Centre's failure to curb excessive markups.

In Short

• Supreme Court slams Centre over huge medicine price disparity
• Questions hospitals charging up to 200 times procurement cost
• Court doubts government's regulatory framework and oversight

The Supreme Court on Tuesday came down heavily on the government and its regulatory mechanisms over the massive disparity between the procurement costs of medicines and the prices charged to patients, questioning how hospitals could charge Rs 1.3 lakh for a cancer injection available to a medical distributor for just Rs 11,000.

The Justices Vikram Nath and Sandeep Mehta questioned why the system appeared to favour pharmaceutical manufacturers and whether the government was allowing medicine prices to spiral out of control.

"Why is the entire system working to help these people (manufacturers)?" the bench asked during the hearing of two petitions concerning the pricing of medicines in India.

Rebuking hospitals and the government for allowing such steep markups, the court said hospitals must find other means to sustain their operations and survive through other means, "not through this dacoity".

Highlighting the disparity between procurement costs and the prices charged to patients, the bench referred to an incident involving a medical distributor whose wife was undergoing cancer treatment at a renowned hospital.

According to the account presented before the court, the distributor approached the hospital authorities and explained that he dealt in the particular injection used in chemotherapy, which was available to him at a dealer price of Rs 11,000.

"The dealer requested the hospital authorities, 'Sir, I am myself a dealer and to me the injection comes at Rs. 11,000 dealer price'. The hospital refused to administer that injection and charged Rs. 1,30,000 for that injection. Can you show any justification for this loot, please? Why this difference? Where does the money go?" the court asked the government.

The court observed that cancer patients and their families are often in no position to negotiate prices when their lives and treatment are at stake. It questioned how such substantial markups could be permitted and whether the existing regulatory framework was adequate to prevent patients from being charged excessively.

The bench also raised concerns over the government's approach to regulating medicine prices, pointing to the substantial gap between the MRP and the price at which medicines are supplied to retailers.

"The government is allowing this to happen. It is under the government's own eyes that it is happening," the bench observed.

Questioning whether such a system should be allowed to continue unchecked, the court asked, "Should it be allowed to run amok?"

Additional Solicitor General Aishwarya Bhati, appearing for the Centre, told the court that medicine prices in India were among the lowest in the world. The Centre also submitted that the government's policy was not to control the entire pharmaceutical ecosystem.

However, the bench questioned this approach, seeking to understand why the pricing system appeared to favour manufacturers despite the significant financial burden on patients. The court also questioned the effectiveness of the Drugs Prices Control Order (DPCO), 2013, which provides the framework for regulating medicine prices in India.

CENTRE'S 30% TRADE MARGIN CAP FOR CANCER DRUGS UNDER SCRUTINY

The Supreme Court's latest observations came as it also questioned the Centre's decision to cap trade margins on anti-cancer drugs at 30 per cent of their maximum retail price.

On October 12, the court had said the government's response on the issue was "hardly anything to be happy about" and asked why similar restrictions could not be extended to other medicines.

The Centre on Tuesday informed the court that its decision to cap trade margins on anti-cancer drugs at 30 per cent applies to their MRP and not the price at which retailers procure the medicines.

The court asked why a medicine with an MRP of Rs 100 was sold to retailers for Rs 10 to Rs 20 and why the government allowed such pricing practices for non-scheduled drugs.

Senior Advocate Mukul Rohatgi, appearing for hospitals, argued that private hospitals were necessary because the public healthcare system was overstretched. He said a substantial portion of private hospitals' revenue came from insurance and government health schemes, while patients paying out of their own pockets accounted for around 30 per cent.

Rohatgi also argued that hospitals could not rely on patients bringing medicines purchased from outside, citing concerns about spurious drugs and the costs of maintaining round-the-clock infrastructure.

However, the bench said hospitals could charge patients for their services but could not justify medicines being priced at 100 or 200 times their cost.

The observations formed part of the court's broader scrutiny of the existing drug pricing framework and the extent to which it protects patients from steep differences between procurement costs and the amounts ultimately charged to them.

The court reserved its order in the matter after hearing the submissions.

- Ends