Supreme Court is strict on expensive medicines for fatal diseases including cancer: Seeks answer from the Central Government, will the pockets of common patients get big relief?

The Supreme Court of India has taken strong cognizance of the serious problem of millions of families falling below the poverty line every year due to expensive treatment for cancer, kidney, heart disease and rare genetic diseases in the country. The apex court, while hearing a Public Interest Litigation (PIL), has issued a formal notice to the Central Government, Ministry of Health and Family Welfare and National Pharmaceutical Pricing Authority (NPPA) seeking their response. It has been requested in the petition that a legal limit (price ceiling) should be fixed on the retail prices of patented and vital medicines used in the treatment of fatal diseases like cancer so that they can become accessible to common citizens. After this intervention of the court, there is hope that the government may have to take some concrete regulatory steps on the prices of life-saving medicines.

The petition filed in the Supreme Court highlights the constitutional provisions and the ongoing health crisis:

• Right to Health Part of Right to Life: The petitioners argued that the ‘Right to Life’ provided under Article 21 of the Constitution of India is not limited to mere survival, but also includes the right to a dignified life and health.

• Death due to lack of treatment unconstitutional: If a patient dies simply because he is unable to buy cancer medicine worth lakhs of rupees, it is a failure of the welfare obligation of the state.

• Huge profits of pharmaceutical companies (High Trade Margins): The petition alleges that multinational and domestic pharmaceutical companies sell anti-cancer drugs at exorbitant trade margins ranging from 500% to 1000% of the production cost.

Prices of essential medicines in India are fixed under the Drug Price Control Order (DPCO) and National Essential Medicines List (NLEM):

1. Limited Scope: At present only about 40 to 50 cancer medicines are included in the Essential Medicine List (NLEM), the maximum price of which is fixed by the government.

2. New and advanced medicines out: New life-saving drugs like modern immunotherapy, targeted therapy and biologicals, which cost between ₹50,000 and ₹2.5 lakh per dose, are largely out of price control.

3. Recent relaxation in custom duty: Although in the budget the government had reduced the basic custom duty on three major life-saving cancer drugs (Trastuzumab Deruxtecan, Osimertinib and Durvalumab) to zero, but experts believe that tax exemption alone does not bring the retail prices within the budget of the common man.

If the Central Government takes strong policy steps following pressure from the Supreme Court, patients may get the following direct benefits:

• Trade Margin Rationalization (Trade Margin Capping): The government may cap the margin at the manufacturer level to the final retail price (MRP) in the range of 30% to 50%, which could reduce prices of many expensive medicines by 40% to 60% overnight.

• Compulsory Licensing: In the event of a serious public health crisis, the government can allow domestic companies to make cheaper generic versions of extremely expensive foreign patented drugs under Sections 84 and 92 of the Indian Patent Act.

• Detail of NLEM List: Second and third generation cancer drugs can be compulsorily included in the list of essential medicines.

However, reducing drug prices is not straightforward and easy. The Central Government will also have to face these challenges while presenting its case in the court:

• Opposition from global pharma companies: International pharmaceutical companies argue that billions of dollars are spent in research and development (R&D) of new medicines. If prices are reduced too much, they may stop launching new drugs in India.

• Supply chain crisis: Due to excessive price control, many times manufacturers reduce the production of those medicines, due to which there is a danger of creating artificial shortage of life saving medicines in the market.

With the Supreme Court demanding answers, the ball is now completely in the court of the Central Government. Now it will be important to see what action plan the government presents in the affidavit and whether it is able to provide real relief to millions of middle class and poor families suffering from cancer from the huge financial burden of treatment by cracking down on profiteering companies.