Supreme Court Asks Why the Trade Margin Cap Should Stop at Cancer Medicines
On 12 October 2026, the Centre told the Supreme Court that it has decided to cap trade margins at 30% for non-scheduled cancer medicines, both patented and non-patented. A trade margin is the gap between the price at which a company first sells a medicine and the MRP the patient pays.
An expert committee headed by the Director General of Health Services will pick the medicines to be covered. The National Pharmaceutical Pricing Authority (NPPA) will examine its list and then issue a price notification.
The Centre's affidavit said the cap could cut the MRP of cancer medicines by 20% to 70%, saving patients about ₹2,500 crore a year.
A Bench of Justices Vikram Nath and Sandeep Mehta called the step welcome but not enough. It asked why other medicines and medical devices could not be brought under the 16% retailer margin used under the Drugs (Prices Control) Order (DPCO), 2013. The Bench had earlier flagged mark-ups of up to 1,000% on some medicines.
The Bench gave examples: an India-made cardiac stent costing about ₹5,000 sold by hospitals for over ₹25,000, and a saline drip line with an MRP of ₹11 sold for ₹270.
The Centre argued that a single cap for all medicines could make low-value medicines unprofitable for chemists and hurt their availability, especially in rural areas. The court said ensuring that price-controlled medicines reach patients is the government's duty. The case will next be heard on 27 October 2026. The petitions seek stricter enforcement of price controls under the DPCO.
Drug Price Regulation in India: DPCO and NPPA
India controls the prices of many medicines so that ordinary people can afford them. The main rulebook is the Drugs (Prices Control) Order, 2013 (DPCO). It is not an Act of Parliament but an order issued by the Central Government under Section 3 of the Essential Commodities Act, 1955. The body that fixes and enforces prices under it is the National Pharmaceutical Pricing Authority (NPPA).
The court's question goes to the heart of the DPCO system: which medicines should be on the controlled list and which should be left to the market. The Centre says only targeted intervention is needed; the court is asking whether the 16% retailer margin logic should cover far more medicines and devices.
Trade Margin Rationalisation (TMR): A New Pricing Tool
Trade Margin Rationalisation, or TMR, makes medicines cheaper by limiting how much the middlemen in the supply chain can add to the price. Instead of fixing one final price, the government caps the gap between the price at the first point of sale (when the company sells to a stockist) and the MRP. Each company still chooses its own selling price, but it cannot print an inflated MRP far above it.
The Centre is repeating the 2019 cancer medicine experiment on a larger scale. The court welcomed it but called it "the tip of the iceberg", asking why TMR or similar margin limits should not cover all essential medicines and medical products.
Medical Device Regulation in India
Medical devices are instruments, machines, implants and other products used to diagnose, prevent or treat disease, such as stents, syringes, drip sets, glucometers and MRI machines. In India they are regulated for safety and quality under the Drugs and Cosmetics Act, 1940 and the Medical Devices Rules, 2017, by the Central Drugs Standard Control Organisation (CDSCO) and state drug regulators. Their prices are a separate matter, handled by the NPPA under the DPCO.
The court's examples of a stent and a saline drip line sold at many times their cost show that big mark-ups are common in devices and hospital consumables, not just in medicines. Its question is whether margin limits should also apply to such medical products.
- Proposed trade margin cap: 30% on non-scheduled cancer medicines (patented and non-patented)
- Expected MRP reduction: 20% to 70%; estimated savings about ₹2,500 crore a year
- Medicines to be chosen by an expert committee headed by the Director General of Health Services; NPPA to notify prices
- 2019 precedent: 30% cap on 42 non-scheduled anti-cancer medicines; MRP cut for 526 brands; savings about ₹984 crore a year
- DPCO 2013 retailer margin: 16% over average PTR for scheduled medicines
- Court examples: stent costing about ₹5,000 sold above ₹25,000; drip line with MRP ₹11 sold at ₹270; mark-ups up to 1,000% on some medicines
- Next hearing: 27 October 2026