SUPREME COURT DIRECTS STATE GOVERNMENTS TO CONSIDER POLICIES FOR REGULATING PRIVATE HOSPITAL PRICING PRACTICES

The Judgment in the Case of Siddharth Dalmia & ANR vs Union of India & ORS.  CIVIL ORIGINAL JURISDICTION WRIT PETITION (C) No. 337 of 2018 was delivered by a Division Bench of the Supreme Court of India comprising Hon’ble Justice Surya Kant and Justice Nongmeikapam Kotiswar Singh on March 04, 2025. The case primarily deals with the alleged exploitation of patients by private hospitals through inflated pricing of medicines and consumables and the need for regulatory measures to prevent such practices.

Brief Facts of the Case:

The present Writ Petition was filed under Article 32 of the Constitution of India in public interest. The Petitioners sought to restrain private hospitals from compelling patients to purchase medicines, devices, implants and consumables exclusively from hospital pharmacies, which allegedly charge exorbitant rates compared to the notified market prices. The Petition was filed in 2018, following a personal experience of the Petitioners, where the mother of Petitioner No.1, diagnosed with breast cancer, was forced to buy expensive medicines from the hospital pharmacy during her treatment.

Issues Raised

1) Whether the pricing of medicines, medical devices and consumables in private hospitals and their associated pharmacies can be regulated through administrative or legislative measures?

2) If regulation is possible, what should be the extent of such measures?

3) What mechanism should be used to enforce such regulations and which authority should be entrusted with this responsibility?

Contentions by Both parties

Contentions by the Petitioners

1. Private hospitals have an organized system of compelling patients to buy medicines and consumables from their own pharmacies at highly inflated prices.

2. The Union of India and State Governments have failed to implement regulatory measures to control such exploitation.

3. Private hospitals do not disclose the MRP of medicines and other medical products, taking undue advantage of patients lack of alternatives.

4. The practice violates the right to a healthy life under Article 21 and goes against the Directive Principles of State Policy under Articles 38, 39 and 47.

5. The Petitioners requested the court to direct private hospitals to allow patients the freedom to purchase medicines from any source and to instruct the Government to formulate policies preventing this exploitation.

Contentions by the Respondents

1. The Union of India argued that the National Council for Clinical Establishments has issued minimum standards for hospitals, ensuring the availability of drugs, consumables and medical services.

2. It was stated that there is no compulsion for patients to buy medicines from hospital pharmacies.

3.  State Governments highlighted the existence of Jan Aushadhi Kendras and Amrit Drug Stores in government hospitals, which provide medicines at subsidized rates.

4. The Drug Price Control Order 2013, under the Essential Commodities Act 1955, regulates the prices of essential drugs.

5.  The National Pharmaceutical Pricing Authority (NPPA) ensures price control and availability of medicines in the country.

6. Several States mentioned state-run schemes and cashless treatment programs for weaker sections of society.

Supreme Court

The Supreme Court acknowledged that access to medical facilities is an essential component of the right to life under Article 21. The Court recognized the necessity of private hospitals in the healthcare system due to inadequate public medical infrastructure. The Court noted that regulating every aspect of private hospitals may discourage investment in the healthcare sector. The Court refrained from issuing mandatory directions but emphasized the need for State Governments to consider appropriate policy measures to prevent patient exploitation. The Court disposed of the petition, directing all State Governments to examine the issue and formulate policies as they deem appropriate. The Court clarified that it had not expressed any opinion on the merits of the case but had only highlighted the concerns of the public. All pending interlocutory applications were also disposed of.

Conclusion

The case raised important concerns about the exploitation of patients by private hospitals through inflated pricing of medicines and consumables. While the Supreme Court refrained from imposing direct regulatory measures, it recognized the issue and directed State Governments to consider appropriate policies. The judgment reflects a balance between protecting patient rights and maintaining a conducive environment for private investment in healthcare. Ultimately, the responsibility for addressing the issue rests with the policymakers at the state level.

Baddam Parichaya Reddy

Associate

The Indian Lawyer & Allied Services

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