Supreme Court Directs States to Frame Policies on Private Hospital Pricing, Citing It as a Policy Matter Under Article 21 - 2025-03-04

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Supreme Court Puts Onus on States to Curb 'Exorbitant' Private Hospital Charges

New Delhi: In a significant judgment addressing the alleged exploitation of patients by private hospitals, the Supreme Court has directed all State Governments to consider and formulate appropriate policy decisions to regulate the practice of compelling patients to purchase medicines and consumables at inflated prices from hospital-run pharmacies.

While acknowledging the "plight of the public at large," a bench led by Justice Surya Kant refrained from issuing mandatory, nationwide directives, classifying the issue as a policy matter best handled by individual states. The Court disposed of a Public Interest Litigation (PIL) that sought to restrain private hospitals from forcing patients to buy medicines and devices exclusively from their in-house or affiliated pharmacies at exorbitant rates.

Background of the Case: A Personal Ordeal Sparks a Public Cause

The PIL was filed by petitioners who shared a personal and unfortunate experience. The first petitioner's mother was diagnosed with breast cancer in 2017, and during her extensive treatment, the family realized an "organized system" by private healthcare institutions to fleece patients. They alleged that medicines and medical devices were sold at highly inflated prices compared to the open market, and that the Union and State governments had failed to implement regulatory measures to stop this exploitation.

The petitioners argued that this practice violates the fundamental "right to a healthy life" guaranteed under Article 21 of the Constitution . They urged the Court to direct the formulation of a national policy, invoking the Directive Principles of State Policy under Articles 38, 39, and 47 , which obligate the State to ensure public health and welfare.

Arguments from the Centre and States

The Union of India, represented by the Ministry of Health and Family Welfare, countered that there is no official compulsion for patients to buy medicines from hospital pharmacies. They pointed to the existence of the National Pharmaceutical Pricing Authority (NPPA) and the Drug Price Control Order, 2013 , which regulate the prices of essential drugs.

Various State Governments filed counter-affidavits, highlighting state-run schemes like Jan Aushadhi Kendras and Amrit Drug Stores that provide subsidized medicines. They largely echoed the Centre's stance, asserting that existing mechanisms were in place to ensure the availability of drugs at reasonable prices.

Court's Rationale: A Balance Between Regulation and Growth

The Supreme Court framed three key questions for consideration: whether private hospitals' pricing can be regulated, to what extent, and by whom.

The bench reaffirmed that providing medical facilities is a crucial component of the right to life under Article 21. However, it also acknowledged the vital role of the private sector in supplementing the public health infrastructure. The judgment noted:

> "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 reasoned that healthcare is a subject on the State List (List-II) of the Constitution, making State Governments the appropriate bodies to legislate and form policy. Justice Surya Kant observed that imposing stringent, uniform measures from the judiciary could inadvertently discourage private investment in the healthcare industry.

> "All these issues are undoubtedly of paramount public importance. It, however, seems to us that such issues primarily involve policy decisions, for which the policy-makers are the best equipped to take a holistic view and formulate the guidelines as may be required," the judgment stated.

Final Decision and Its Implications

Ultimately, the Supreme Court disposed of the writ petition with a specific direction to all State Governments to examine the issue and take necessary policy actions tailored to their local conditions. The Court clarified that it had not expressed any opinion on the merits of the allegations but had highlighted the constitutional framework within which the grievances of a "huge class of consumers of health services" must be redressed.

The decision places the responsibility squarely on state legislatures and executives to protect patients from financial exploitation while ensuring the continued growth and operation of private healthcare facilities. It signals a judicial preference for deferring to executive and legislative wisdom on complex policy matters involving economic and social regulation.