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?

  1. 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.
  2. It is the inclusion of a medicine in the National List of Essential Medicines that brings it under binding ceiling-price control.
  3. 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?

  1. 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.
  2. TMR can be applied to a medicine only after the medicine has been placed in the National List of Essential Medicines.
  3. 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?

  1. 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.
  2. 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?

  1. Where most leading brands of a formulation have high PTRs, the ceiling price of that formulation will also be high.
  2. 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.
  3. Large gaps between PTR and MRP can persist lawfully for formulations that lie outside Schedule-I.
  4. 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