“Policy Makers Are Best Equipped”: Supreme Court Urges States to Address Private Hospital Pricing Practices, Declines to Issue Directives
Sanchayita Lahkar
The Supreme Court has disposed of a petition seeking restrictions on private hospitals from compelling patients to purchase medicines and consumables exclusively from hospital-run pharmacies. The Bench comprising Justice Surya Kant and Justice Nongmeikapam Kotiswar Singh declined to issue mandatory directions, observing that the matter requires policy consideration by State Governments. The Court stated that policy makers are best positioned to frame regulatory frameworks that balance protection of patients from exploitation and ensuring continued private investment in healthcare infrastructure.
The Court directed all State Governments to consider the issue and take appropriate policy decisions, while leaving the matter to the discretion of the States. It recorded that no specific directives were being issued that could potentially hamper private healthcare sector growth. The petition was accordingly disposed of, along with any pending applications.
The petition was filed under Article 32 of the Constitution by two petitioners claiming to act in public interest. They sought directions to prevent private hospitals and medical establishments from mandating that patients purchase medicines, devices, and consumables solely from their in-house or affiliated pharmacies. The petitioners alleged that such practices resulted in inflated prices being charged for critical medical supplies, depriving patients of access to market-competitive prices.
The petition arose from personal circumstances, wherein the mother of one petitioner underwent treatment for breast cancer. During her treatment, it was alleged that the hospital compelled the family to purchase medicines and consumables exclusively from the hospital’s pharmacy, where prices were substantially higher than the Maximum Retail Price (MRP) notified by competent authorities. The petitioners argued that this practice of charging artificially inflated prices was prevalent across private healthcare institutions in India and that both the Union and State Governments had failed to take corrective measures.
The petitioners further contended that the conduct of private hospitals amounted to a violation of patients' fundamental right to health under Article 21 of the Constitution, as well as contravening the State’s obligations under Articles 38, 39, and 47, which mandate the State to secure the welfare of its citizens. The petition sought directions requiring the States and Union of India to frame policy guidelines preventing hospitals from restricting the purchase of medical supplies to in-house pharmacies, along with other regulatory safeguards.
In response, multiple States and Union Territories, including Chandigarh, Odisha, Chhattisgarh, Arunachal Pradesh, Manipur, Andaman & Nicobar Islands, Uttar Pradesh, Bihar, Tamil Nadu, Kerala, Uttarakhand, Punjab, Haryana, Rajasthan, Nagaland, Himachal Pradesh, Jammu & Kashmir, and Gujarat, filed counter affidavits. The Union of India also submitted a counter affidavit through the Ministry of Health and Family Welfare.
The Union of India stated that the National Council for Clinical Establishments had issued minimum standards applicable to hospitals, including pharmaceutical services. It submitted that no compulsion exists requiring patients to procure medicines solely from hospital pharmacies. The Union referred to the National Pharmaceutical Pricing Authority (NPPA) under the Ministry of Chemicals and Fertilizers as the body mandated to regulate prices of controlled drugs and ensure affordability.
Several State Governments referred to public schemes like Jan Aushadhi Kendras and Amrit Drug Stores operating in government hospitals, which offer medicines at subsidized rates. They highlighted the Drug Price Control Order, 2013, issued under the Essential Commodities Act, 1955, which fixes the prices of essential drugs to ensure availability at reasonable prices. Some States also outlined cashless treatment schemes for disadvantaged groups, including specially-abled persons, widows, and those holding Below Poverty Line (BPL) cards.
The Supreme Court recorded that the issues raised pertained to regulation of private hospital practices and fell within the domain of policy making. It observed that while Article 21 guarantees the right to life and medical care forms an essential component thereof, States have not yet developed sufficient infrastructure to meet public healthcare needs and continue to rely on private healthcare entities.
The Court stated, “there can be no doubt that the provision of medical facilities to one and all is an essential component of the right to life guaranteed under Article 21 of the Constitution.” It noted that private hospitals and healthcare institutions play a critical role in supplementing public healthcare infrastructure.
The Court observed that introducing restrictive policies regulating every activity within private healthcare establishments could discourage private investment in the sector. The Bench stated, “would it be prudent for the Union of India or the States to introduce a policy which regulates each and every activity within the compound of these private hospitals? Will such a policy discourage persons to come forward and invest in the health industry throughout the country?”
It further noted that healthcare, hospitals, and public health fall under the State List in the Constitution’s Seventh Schedule and therefore, regulatory steps must be taken at the State level, tailored to local conditions. The Court stated, “it may not be advisable for this Court to issue mandatory directions which may hamper the growth of hospitals in the private sector; but parallelly, it is necessary to sensitize the State Governments re: the problem of unreasonable charges and exploitation of patients in private hospitals.”
The Court declined to frame specific regulatory norms, observing that such matters were best left to policymakers. It emphasized that States are expected to balance competing considerations while formulating policies that both safeguard patients from commercial exploitation and promote private participation in the healthcare industry.
The Court further recorded that it had not expressed any opinion on the merits of the allegations and confined its observations to the constitutional framework and competing interests that States would need to consider. It stated, “we have not expressed any opinion on the merits of the case. We have only briefly explained the plight of the public at large, who comprise a huge class of consumers of health services, along with the constitutional framework within which such policy decisions are required to be taken to redress their grievances.”
Accordingly, the Supreme Court disposed of the petition and directed that each State Government shall consider the issue independently and take appropriate policy decisions.
Advocates Representing the Parties
For the Petitioners: Mr. Siddharth Luthra, Senior Advocate, Mr. Pranav Sachdeva, Advocate, Mr. Hemant Phalpher, Advocate, Mr. Mahip Jain, Advocate, Mr. Kaustubh Shukla, Advocate
For the Respondents: Mr. N. Venkataraman, Additional Solicitor General, Mr. T. Singhdev, Advocate, Ms. Shubhangi Tuli, Advocate, Ms. Swati Ghildiyal, Advocate, Mr. V. M. K. Nataraj, Advocate, Mr. Sibo Sankar Mishra, Advocate, Mr. Piyush Gaur, Advocate, Ms. Akanksha Kaul, Advocate, Mr. R. V. Sinha, Advocate, Ms. Ritika Sood, Advocate
Case Title: Siddharth Dalmia & Anr. v. Union of India & Ors.
Neutral Citation: 2025 INSC 351
Case Number: Writ Petition (C) No. 337 of 2018
Bench: Justice Surya Kant, Justice Nongmeikapam Kotiswar Singh
[Read/Download order]
