Hospital Stocks Slide Up to 6% After Supreme Court Raises Concerns Over Medicine Mark-Ups

Shares of major hospital operators came under pressure on Wednesday after the Supreme Court raised concerns over the prices charged for medicines at private hospitals and questioned the practice of asking patients to buy drugs from hospital-run pharmacies. 

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Apollo Hospitals, Yatharth Hospital and Max Healthcare were trading between 4% and 6% lower at around 10:40 am. Fortis Healthcare fell 5.2%, Aster DM Quality Care was down 4.2%, while Krishna Institute of Medical Sciences declined 3.8%. 

The stock-market reaction came as a Supreme Court bench comprising Justices Vikram Nath and Sandeep Mehta heard petitions dealing with medicine pricing, generic prescriptions and the regulation of medical devices under the Drugs (Prices Control) Order, 2013. 

During the hearing, the court drew attention to the difference between the retail purchase price and the maximum retail price of some medicines. One example discussed before the court involved an essential cancer drug carrying an MRP of ₹27,000 despite a price to retailer of ₹2,700. 

The bench also questioned whether medicines should continue to be treated differently based on their classification as essential or non-essential. It asked the Centre to consider whether a uniform margin of 16% on the MRP of medicines could be an option. 

Another issue before the court was the practice of hospitals requiring admitted patients to purchase medicines through their own pharmacies. The bench expressed concern about the impact such arrangements can have on patients and asked the government to examine the matter. 

Solicitor General Tushar Mehta, appearing for the Centre, told the court that a balanced solution would need to be found. He also indicated that the issues raised during the hearing would need to be discussed with government officials. 

The proceedings put hospital stocks under selling pressure during morning trade, with several of the country’s listed healthcare providers recording declines as investors reacted to the court’s observations on medicine pricing and hospital pharmacy practices.