UPSC Prelims Practice Questions — Top court flags steep mark-ups on essential drugs
Q1. With reference to the regulation of medicine prices under the Drugs (Prices Control) Order, 2013, consider the following statements: Which of the statements given above is/are correct?
- The National Pharmaceutical Pricing Authority decides which medicines are to be included in the National List of Essential Medicines and then fixes their ceiling prices.
- It is the inclusion of a medicine in the National List of Essential Medicines that brings it under binding ceiling-price control.
- A company that sells a scheduled formulation at a price below its notified ceiling price contravenes the Order.
- A. 2 only
- B. 1 and 3 only
- C. 1 and 2 only
- D. 2 and 3 only
Q2. With reference to Trade Margin Rationalisation (TMR) as used by the National Pharmaceutical Pricing Authority, consider the following statements: Which of the statements given above is/are correct?
- TMR caps the margin between a specified point in the supply chain, such as the price to distributor, and the MRP, instead of notifying a ceiling price.
- TMR can be applied to a medicine only after the medicine has been placed in the National List of Essential Medicines.
- Medical devices that are regulated as drugs can also be brought under TMR.
- A. 2 and 3 only
- B. 1 and 3 only
- C. 1, 2 and 3
- D. 1 only
Q3. Consider the following statements: Which of the following is correct in respect of the above statements?
- A manufacturer who raises the price of a regulated drug beyond what the Drugs (Prices Control) Order, 2013 permits can be made to deposit the overcharged amount with interest, in addition to paying a penalty.
- Such liability for overcharging can arise only for scheduled formulations, because non-scheduled products are outside the Drugs (Prices Control) Order, 2013.
- A. Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
- B. Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
- C. Statement-I is correct, but Statement-II is incorrect
- D. Statement-I is incorrect, but Statement-II is correct
Q4. Consider the following facts: I. Under the Drugs (Prices Control) Order, 2013, the ceiling price of a scheduled formulation is derived from the simple average of the price to retailer (PTR) of all its brands with a market share of one per cent or more, and no brand's MRP may exceed the ceiling price plus taxes. II. Non-scheduled formulations have no ceiling price; only the annual increase in their MRP is restricted. III. In a 2026 hearing, the Supreme Court cited an essential cancer drug supplied to retailers at about ₹3,000 and sold to consumers at about ₹27,000. Which of the following inferences can be drawn from the above facts?
- Where most leading brands of a formulation have high PTRs, the ceiling price of that formulation will also be high.
- A brand whose PTR is far below the market average may still be priced up to the ceiling, so its trade margin can exceed the margin built into the ceiling.
- Large gaps between PTR and MRP can persist lawfully for formulations that lie outside Schedule-I.
- The cancer drug cited by the Court must be a non-scheduled formulation, since a scheduled drug could never sell at about nine times its PTR.
- A. 1 and 2 only
- B. 1, 2, 3 and 4
- C. 2, 3 and 4 only
- D. 1, 2 and 3 only