The Supreme Court’s October 8 direction to the Centre to examine statutory regulation of pharmaceutical marketing practices, followed by its October 12 hearing on the limited scope of cancer-drug trade-margin controls, has brought two regulatory questions into focus: corporate accountability for unethical promotion and the affordability of medicines.
The two issues fall under separate legal frameworks, but both concern the effectiveness of state regulation in protecting patients.
In Federation of Medical and Sales Representatives Association of India v Union of India (2026), the Supreme Court asked the Centre to constitute a committee to recommend an appropriate statutory framework for pharmaceutical marketing. The proceedings concern alleged inducements to medical practitioners and the adequacy of the Uniform Code for Pharmaceutical Marketing Practices (UCPMP), 2024. The Court’s order leaves the choice of legislative or regulatory measures to the government.
UCPMP: The gap between ethical standards and corporate liability
The Department of Pharmaceuticals introduced the UCPMP in 2015 as a voluntary code. The UCPMP 2024, issued on March 12, 2024, and amended in September 2025, is now compulsory. It has also strengthened the framework through ethics committees, designated ethics officers, complaint redress, appeals, self-declarations and disclosure of prescribed marketing expenditure. However, the existence of these mechanisms does not, by itself, create enforceable statutory penalties for every breach.
This is the gap that the Supreme Court has asked the Centre to examine: whether India needs a statutory framework capable of addressing contemporary unethical marketing practices in the pharmaceutical industry.
“The current form of the UCPMP lacks statutory teeth as it has been published by the Department of Pharmaceuticals, a body primarily tasked with drug pricing control,” Biplab Lenin, partner at Cyril Amarchand Mangaldas, told Business Standard.
As an executive code not issued under any specific legislation, it cannot support meaningful penalties or effectively deter defaulters, he said. Statutory backing would provide clear prohibitions, graded sanctions, accountability for both companies and doctors, and a proper enforcement body.
The distinction is important because 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 can attract professional disciplinary action. The petitioners before the Supreme Court have argued that pharmaceutical companies do not face a corresponding, comprehensive statutory regime for providing inducements.
The Supreme Court’s decision in Apex Laboratories Pvt Ltd v Deputy Commissioner of Income Tax (2022) shows that existing laws can impose consequences on pharmaceutical companies. The court upheld the disallowance, under Section 37(1) of the Income Tax Act, 1961, of expenditure on freebies given 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.
However, Apex Laboratories was a tax decision. It did not create a general criminal offence for every violation of the UCPMP.
The government’s wider decriminalisation policy makes the design of any new regime particularly important. 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 aim is to promote ease of doing business by making compliance simpler and less burdensome. The policy seeks to rationalise minor regulatory offences; it does not automatically remove criminal liability for unethical pharmaceutical marketing, nor does it amend the UCPMP simnply by virtue of being a decriminalisation measure.
The relevant legislative question, therefore, is not whether every breach should attract imprisonment. It is whether the law clearly identifies prohibited corporate conduct, the authority competent to investigate it, the applicable standard of proof and proportionate consequences. Monetary penalties may be appropriate for technical or reporting failures, while deliberate inducements, repeated violations and conduct involving serious public-health risks may require stronger sanctions backed by statutory mandate.
Drug pricing: What do existing laws provide?
The Supreme Court’s October 12 hearing questioned why trade-margin caps on certain non-scheduled cancer medicines should not be extended to other medicines and medical devices.
Section 3 of the Essential Commodities Act, 1955, empowers the Centre to regulate essential commodities in the public interest. Under this provision, the Drugs (Prices Control) Order (DPCO), 2013, provides for ceiling prices of scheduled formulations under Paragraph 4 and regulates prices of non-scheduled formulations under Paragraph 20. Paragraph 21 provides for price monitoring and intervention in specified circumstances, with the National Pharmaceutical Pricing Authority (NPPA) administering the framework.
“On drug pricing, the government already has powers under the DPCO 2013 to intervene in the public interest, including in relation to certain non-scheduled medicines. However, using an exceptional power as the basis for a permanent, across-the-board trade-margin regime may be legally less sustainable than introducing a clearer and more transparent framework through amendment,” said Hardeep Sachdeva, senior partner at AZB & Partners.
Sachdeva also said the policy challenge was to curb excessive margins without creating shortages or disincentivising supply. A differentiated approach, supported by transparent benchmarks, periodic review and a predictable regulatory framework, would help balance affordability and access with the pharmaceutical industry’s ability to invest in innovation, while ensuring corporate accountability and continued medicine availability.
Article 21, which protects the right to life, and Article 47, which directs the State to improve public health, provide the constitutional context. 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 with Gaucher disease. Though neither case mandates a universal drug-price cap, both are relevant to the State’s responsibility to protect access to health care.
The legal question is whether existing price-control powers adequately address affordability and whether any expansion is supported by lawful authority and enforceable rules.
A common test: enforceability and accountability
The two proceedings raise different enforcement questions. Under the UCPMP, the issue is whether corporate promotional misconduct can be investigated and penalised through a clear legal mechanism. Under the DPCO, it is whether price controls adequately address market conditions and whether violations can be detected and remedied.
The distinction matters because unethical marketing and high prices are not interchangeable problems. A prescription influenced by an improper benefit may raise questions of professional conduct and corporate liability even if the medicine’s price complies with the DPCO. Conversely, an excessive price or prohibited trade margin may require intervention even without evidence of inducements to doctors.
“The regulator should require reliable price and supply data, publish the basis for each intervention, monitor shortages and adjust a cap promptly if it threatens availability,” said Mohit Mansharamani, counsel at SKV Law Offices.
Hospitals should disclose medicine and consumable prices before billing, he said. For suitable non-emergency products, patients should have a workable option to buy outside the hospital, subject to authenticity and clinical safety checks. Enforcement against misleading promotion and inducements should proceed alongside price regulation. Affordability is achieved only when patients actually receive the medicine at the lower price, so stock levels and access must be measured as carefully as the maximum retail price.
Statutory backing alone will not guarantee compliance. Its value will depend on clearly defined obligations, competent enforcement authorities and remedies proportionate to the breach. The larger legal challenge is to ensure that pharmaceutical companies remain accountable for their promotional practices while price regulation protects patients without undermining the availability of essential medicines.
