Regulation by Exception: How India's Emergency Pricing Power Became Its Main One

When the Emergency Clause Becomes the Main Rule Paragraph 19 of the Drugs (Prices Control) Order, 2013

was written for extraordinary circumstances. It lets the government fix the price of any drug in the public interest, whether or not that drug is on the controlled list. The text treats it as a backstop. In practice it has become India's main tool for regulating the medicines that matter most to the sickest patients.

Rule and Exception The

DPCO's normal mechanism is narrow. Drugs on the National List of Essential Medicines, which has 384 entries in its 2022 version, become scheduled formulations with government-fixed ceiling prices. Their trade margins are also capped: 16 per cent for retailers and 8 per cent for wholesalers under Paragraph 7.

Everything else is non-scheduled. Petitioners told the court that this covers roughly 90 per cent of medicines, which manufacturers and hospitals price largely as they choose. When that freedom produces markups the public will not tolerate, the government turns to Paragraph 19:

• In February 2019, it capped trade margins on 42 non-scheduled cancer drugs at 30 per cent. The government reported MRP cuts of up to 91 per cent across 526 brands.
• In October 2026, after the Supreme Court had criticised its slow response, the NPPA applied the same 30 per cent cap to 137 non-scheduled cancer drugs from 9 November. The pattern is clear. The exception is used repeatedly, but only for one disease category and only under pressure from the court. Justice Sandeep Mehta asked why the government had stayed silent for years and then acted suddenly. That is the right question and its answer is that Paragraph 19 is being used in place of a rule.

The Real Gatekeeper Is the List

The more important exchange at the hearing was about classification. The bench asked on what basis a drug is scheduled or non-scheduled and why every medicine should not count as essential. Justice Mehta suggested that this classification was exactly where the problem lay.

This is where the Constitution applies. Article 14 permits the State to classify, but only if the classification rests on a clear and intelligible basis with a rational link to the law's purpose. The DPCO's purpose is affordable access to medicines, an aim rooted in the right to health under Article 21 and the State's duty under Article 47.

A cancer drug left off the list and therefore open to unlimited markup, is hard to justify against that purpose. Justice Mehta cited an injection that reached a dealer at ₹11,000 and was priced at ₹1.30 lakh by a private hospital.

What the Court Should and Should Not Do The

Centre's concern is real. Additional Solicitor-General Aishwarya Bhati argued that total control could deter investment and the hospitals warned of financial strain. The bench dismissed the hospitals' argument, saying patients cannot be subjected to dacoity.

But the court's power has limits: it cannot set prices for thousands of formulations. The court can, however, require the government to explain itself. It can direct publication of the criteria for scheduling, require reasons whenever a drug is excluded and set a review cycle so that Paragraph 19 returns to being a true emergency tool.

That keeps policy-making with the executive while ending the classification's freedom from scrutiny. For the exam, the insight is that India's drug pricing problem lies less in the price caps themselves than in who decides which drugs are protected and on what basis.