Supreme Court scrutiny of drug marketing practices and cancer-medicine trade margins puts corporate accountability, medicine affordability and patient protection at the centre of India’s healthcare policy debate

India’s pharmaceutical sector is facing renewed regulatory scrutiny as the Supreme Court examines two important issues: alleged unethical promotional practices by drug companies and the affordability of medicines, particularly expensive cancer treatments. The proceedings have highlighted a wider policy challenge—how to ensure that pharmaceutical companies operate transparently, doctors prescribe independently and patients can access essential medicines at reasonable prices.

The Supreme Court’s October 8, 2026, direction to the Centre to examine a statutory framework for pharmaceutical marketing practices, followed by its October 12 hearing on trade-margin controls for certain cancer medicines, has brought these concerns into sharper focus. Although the two matters fall under different legal frameworks, both raise questions about whether existing rules are sufficiently enforceable and whether regulatory intervention adequately protects patients.

India already has mechanisms governing pharmaceutical promotion and drug prices. The Uniform Code for Pharmaceutical Marketing Practices (UCPMP) regulates ethical marketing, while the Drugs (Prices Control) Order (DPCO), 2013, provides a framework for controlling and monitoring medicine prices. However, the effectiveness of these mechanisms depends on clear legal authority, transparent procedures, meaningful penalties and consistent enforcement.

The central issue is no longer simply whether India needs more regulations. It is whether existing and proposed rules can translate ethical standards and affordability objectives into practical protection for patients.

UCPMP: The Gap Between Ethical Standards and Corporate Accountability

The Department of Pharmaceuticals introduced the Uniform Code for Pharmaceutical Marketing Practices in 2015 as a voluntary framework for promoting ethical conduct in the pharmaceutical industry. The UCPMP 2024, issued on March 12, 2024, and amended in September 2025, strengthened the framework and made compliance compulsory.

The code provides for ethics committees, designated ethics officers, complaint-handling procedures, appeals, self-declarations and disclosure of prescribed marketing expenditure. These measures are intended to improve transparency and discourage promotional practices that could influence medical decisions inappropriately.

However, mandatory compliance with an executive code does not automatically mean that every violation attracts statutory penalties. The distinction between a compulsory administrative framework and obligations backed by specific legislation is central to the current debate.

Biplab Lenin, partner at Cyril Amarchand Mangaldas, told Business Standard that the present framework lacks statutory force because it was issued by the Department of Pharmaceuticals rather than under a specific legislative mandate. He argued that a stronger legal framework could establish clearer prohibitions, proportionate sanctions, accountability for companies and doctors, and an effective enforcement authority.

The Supreme Court has asked the Centre to examine whether an appropriate statutory mechanism is required. The direction leaves the choice of legislative and regulatory measures to the government.

Why Pharmaceutical Freebies Raise Concerns

Promotional benefits offered by pharmaceutical companies to medical practitioners have long been a concern for regulators and patient advocates. Gifts, hospitality, travel facilities and monetary grants can create actual or perceived conflicts of interest if they influence prescribing decisions.

The issue is not that all engagement between doctors and pharmaceutical companies is improper. Scientific conferences, clinical education and legitimate research can contribute to medical knowledge. The regulatory challenge is to distinguish genuine professional activities from benefits intended to induce prescriptions or influence clinical judgment.

Medical practitioners are already subject to professional restrictions under Regulation 6.8 of the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002, concerning gifts, hospitality, travel facilities and monetary grants from the pharmaceutical industry. Violations may attract professional disciplinary action.

The concern raised before the Supreme Court is that pharmaceutical companies may not face a corresponding, comprehensive statutory regime specifically addressing all forms of unethical inducement.

A stronger framework could establish clear rules on permissible promotional expenditure, disclosure obligations, investigations and consequences for repeated or deliberate violations. It could also clarify how responsibility should be allocated between pharmaceutical companies, their management and the individuals involved in prohibited conduct.

For patients, the objective is straightforward: treatment decisions should be guided by clinical evidence, safety, efficacy and individual medical needs—not by improper financial incentives.

Apex Laboratories Judgment: What Existing Law Already Provides

The Supreme Court’s decision in Apex Laboratories Pvt Ltd v Deputy Commissioner of Income Tax (2022) is an important part of the legal background.

In that case, the Court upheld the disallowance under Section 37(1) of the Income Tax Act, 1961, of expenditure incurred on freebies provided to medical practitioners in violation of applicable professional regulations. Explanation 1 to Section 37(1) excludes expenditure incurred for a purpose that constitutes an offence or is prohibited by law.

The judgment demonstrated that pharmaceutical companies can face financial consequences under existing laws when expenditure is prohibited. However, it was a tax decision and did not establish a general criminal offence for every breach of the UCPMP.

This distinction matters because tax disallowance, professional disciplinary action and penalties for corporate misconduct serve different purposes. A company may lose a tax deduction without necessarily facing a separate statutory penalty specifically designed to deter unethical marketing.

A dedicated legal framework could reduce uncertainty by defining prohibited conduct, identifying the authority responsible for enforcement and specifying the consequences of different categories of violations.

Decriminalisation Debate: The Need for Proportionate Penalties

The government’s broader decriminalisation agenda adds another dimension to the debate. The Jan Vishwas (Amendment of Provisions) Bill, 2026, passed by both Houses of Parliament, proposes changes to several central laws, including provisions of the Drugs and Cosmetics Act, 1940, to replace certain criminal consequences with monetary penalties.

The stated policy objective is to simplify compliance and improve the business environment by reducing the burden associated with minor regulatory offences.

However, decriminalisation does not automatically remove criminal liability for unethical pharmaceutical marketing, nor does the measure itself create a statutory UCPMP regime. The implications depend on the specific provisions amended and the legal framework ultimately adopted.

The challenge is to distinguish technical or procedural failures from deliberate misconduct that could undermine public health. Monetary penalties may be appropriate for certain reporting or documentation violations, while repeated inducements, intentional deception or conduct involving serious risks to patients may justify stronger consequences where authorised by law.

A well-designed system should therefore use proportionate sanctions rather than treating every violation identically. It should also provide due process, a fair opportunity to respond and an independent mechanism for reviewing enforcement decisions.

Drug Pricing: How the DPCO Framework Works

The second issue before the Supreme Court concerns the affordability of medicines and the possibility of extending trade-margin controls beyond selected non-scheduled cancer medicines.

Section 3 of the Essential Commodities Act, 1955, empowers the Centre to regulate essential commodities in the public interest. Under this authority, the Drugs (Prices Control) Order, 2013, provides the principal framework for pharmaceutical price regulation.

Paragraph 4 of the DPCO provides for ceiling prices for scheduled formulations. Paragraph 20 addresses the pricing of non-scheduled formulations, while Paragraph 21 provides for price monitoring and intervention in specified circumstances. The National Pharmaceutical Pricing Authority (NPPA) administers the framework.

The existing system therefore gives the government tools to regulate certain medicine prices. The current debate concerns whether those powers are adequate to address excessive margins and affordability challenges across a wider range of medicines and medical devices.

Hardeep Sachdeva, senior partner at AZB & Partners, told Business Standard that the government has powers under the DPCO to intervene in the public interest, including in relation to certain non-scheduled medicines. He cautioned, however, that using exceptional powers as the basis for a permanent, broad-based trade-margin regime may be less legally sustainable than introducing a clearer framework through amendments.

The issue is therefore both economic and legal: policymakers must determine which products require intervention, how margins should be calculated and what legal mechanism can support the rules consistently.

Cancer Medicines Bring Affordability Into Focus

Cancer treatment can involve expensive medicines, prolonged treatment schedules, diagnostic procedures and hospital-related expenses. For patients and families, the cumulative cost may create a significant financial burden.

The Supreme Court’s October 12 hearing questioned why trade-margin caps applied to certain non-scheduled cancer medicines should not be extended to other medicines and medical devices.

Trade margins represent the difference between the price at which a product is purchased and the price at which it is sold through the distribution chain, subject to the applicable pricing framework. High margins can contribute to the final amount paid by patients, although the impact varies by product, distribution channel and commercial arrangement.

A broader margin-control policy could potentially reduce costs for some patients. However, the effect would depend on the design of the cap, the products covered, compliance and whether savings are passed on to consumers.

The policy must also account for supply risks. If a margin limit makes distribution commercially unviable for certain products, suppliers may reduce availability or withdraw from the market. Such outcomes could undermine the objective of improving access.

The challenge is to reduce excessive margins without disrupting the supply of medicines needed by patients.

Right to Health: The Constitutional Dimension

Medicine affordability is also linked to the constitutional responsibility of the State to protect public health.

Article 21 of the Constitution protects the right to life, while Article 47 directs the State to improve public health. Judicial decisions have helped establish the legal significance of these principles in healthcare policy.

In Consumer Education & Research Centre v Union of India (1995), the Supreme Court recognised the right to health as part of Article 21. In Mohd Ahmed (Minor) v Union of India (2014), the Delhi High Court considered access to expensive treatment for a child suffering from Gaucher disease.

Neither decision creates a universal requirement for a fixed drug-price cap. Nevertheless, both are relevant to the broader principle that access to healthcare and protection from preventable harm are important public responsibilities.

The legal question is how existing powers should be used, and whether additional legislation is required, to ensure that medicines remain accessible without creating uncertainty or unintended shortages.

Why Marketing Regulation and Price Controls Must Remain Distinct

Although unethical promotion and excessive medicine prices can both affect patients, they are not the same problem.

A prescription influenced by an improper benefit raises questions about professional independence and corporate conduct even if the medicine is sold at a legally compliant price. Conversely, a medicine may be unaffordable or subject to an excessive trade margin even when there is no evidence of improper inducement to doctors.

Regulators therefore need separate but coordinated approaches.

For pharmaceutical marketing, priorities include defining prohibited benefits, monitoring promotional expenditure, investigating complaints and holding responsible parties accountable. For pricing, the priorities include transparent benchmarks, reliable market data, enforceable price limits where justified and monitoring the effect of interventions on availability.

Combining these objectives into one broad rule could obscure the distinct evidence, legal powers and remedies required for each problem.

Transparency, Supply Monitoring and Patient Protection

Mohit Mansharamani, counsel at SKV Law Offices, told Business Standard that regulators should collect reliable price and supply data, disclose the basis for interventions, monitor shortages and adjust a cap promptly if it threatens availability.

He also highlighted the role of hospitals in improving transparency. Disclosing the prices of medicines and consumables before billing could help patients understand their treatment costs. Where appropriate and safe, patients should have a workable option to purchase medicines outside the hospital, subject to checks on authenticity and clinical suitability.

These measures could make regulation more effective by ensuring that lower regulated prices translate into actual savings for patients rather than remaining only on paper.

Hospitals and pharmacies would need clear disclosure requirements, while regulators would require reliable systems to detect overcharging and investigate complaints. Monitoring should also examine whether medicines remain available across locations and whether patients face delays in obtaining prescribed treatment.

Ultimately, affordability should be measured by the amount patients actually pay and their ability to obtain the medicine when needed—not merely by the maximum retail price printed on a package.

What an Enforceable Regulatory Framework Should Include

A stronger pharmaceutical regulatory system would require more than statutory backing alone. It would need clearly defined obligations, capable enforcement institutions and a transparent process for handling violations.

For pharmaceutical promotion, the framework could establish explicit rules on inducements, disclosure, corporate responsibility and the investigation of complaints. Penalties should reflect the seriousness and frequency of violations, while protecting due process.

For drug pricing, any broader intervention should specify the products covered, the methodology used to determine margins or prices, the review period and the circumstances in which adjustments may be necessary. The regulator should assess the consequences for availability, distribution and patient costs.

Both frameworks would benefit from public reporting on enforcement outcomes, accessible complaint mechanisms and regular evaluation of whether the rules are achieving their intended objectives.

The government must also consider the effect on innovation and investment. Pharmaceutical companies need incentives to develop new treatments and maintain reliable supply chains, but these objectives must be balanced against the public interest in ethical conduct and affordable healthcare.

Market Outlook

The Supreme Court’s scrutiny has placed two important questions at the centre of India’s pharmaceutical policy debate: whether unethical marketing practices require a stronger statutory enforcement mechanism and whether existing drug-pricing powers are sufficient to improve affordability.

The UCPMP provides an established ethical framework, while the DPCO gives the government mechanisms to regulate and monitor medicine prices. The challenge is to ensure that both systems operate with clear legal authority, credible enforcement and measurable outcomes for patients.

For the pharmaceutical industry, a predictable regulatory framework could reduce uncertainty by clarifying acceptable conduct, pricing obligations and the consequences of non-compliance. At the same time, poorly designed rules could create supply disruptions or discourage investment, making transparent consultation and evidence-based implementation important.

The key developments to watch are the Centre’s response to the Supreme Court’s direction on pharmaceutical marketing, any proposed statutory changes, and the outcome of the debate on extending trade-margin controls.

The broader objective is to build a healthcare system in which doctors can prescribe independently, pharmaceutical companies are accountable for their conduct and patients can obtain safe medicines at prices they can afford.