Supreme Court’s Guidance on Regulating Private Hospital Pharmacies under Article 21

1. Introduction

In the matter of Siddharth Dalmia & Anr. v. Union of India & Ors. (2025 INSC 351), the Supreme Court of India addressed a public interest litigation (PIL) concerning the pricing practices in private hospital pharmacies. The petitioners—who had undergone a personal tragedy in the family—alleged that private hospitals often compel patients to purchase medicines, devices, and consumables at inflated prices from their own or affiliated pharmacies, thereby operating in an exploitative manner. This case raised crucial questions about the regulation of such practices and whether the Court should issue mandatory directions to the States or Central Government to curtail these activities.

The principal parties involved were:

• The Petitioners: Mr. Siddharth Dalmia and another family member, who brought forth the issues of overcharging and lack of transparency during the cancer treatment of their mother.
• Union of India & Ors.: The respondents, including the Central Government and various State Governments/Union Territories, who contested the issues raised and presented existing regulatory frameworks.

Ultimately, the Supreme Court declined to issue blanket directives, instead directing the States to consider and formulate policies that balance accessible healthcare with encouraging private sector participation.

2. Summary of the Judgment

The Court was asked to determine:

1. Whether private hospitals’ pricing of drugs, implants, and other consumables could or should be regulated by law or policy.
2. The extent and manner of such regulation, if permissible.
3. The enforcement mechanism and the appropriate authority to oversee such measures.

In disposing of the Writ Petition, the Court concluded that while healthcare is a fundamental right protected under Article 21 of the Constitution, the issue of private hospital pricing largely falls within the arena of policy-making. Emphasizing that “public health and sanitation, hospitals, and dispensaries” is a State subject (List-II), the Court directed the State Governments to consider and adopt measures that would prevent unreasonable exploitation without stifling private investment in healthcare. It refrained from imposing uniform rules through judicial intervention, underlining that policy decisions require detailed sectoral and financial considerations which are best undertaken by legislatures and administrative bodies.

3. Analysis

A. Precedents Cited

The Court referred to certain landmark rulings to underscore the fundamental nature of the right to health, particularly under Article 21 of the Constitution. Notable among these were:

• State of Punjab v. Ram Lubhaya Bagga (1998) 4 SCC 117: Affirmed that the right to health and medical care is an integral facet of the right to life under Article 21.
• Paschim Banga Khet Mazdoor Samity v. State of W.B. (1996) 4 SCC 37: Recognized the State’s obligation to provide adequate medical facilities for citizens.
• Vincent Panikurlangara v. Union of India (1987) 2 SCC 165: Emphasized that maintenance and improvement of public health is a primary duty of the State.

These precedents guided the Court toward reaffirming the State’s responsibility in ensuring that vulnerable patients are not exploited by commercial medical setups. However, the Court was cautious about judicially micromanaging the private sector, relying instead on State-led policy frameworks.

B. Legal Reasoning

The Court’s reasoning took into account the following considerations:

1. Right to Health within Article 21: The judgment reiterated that the right to life extends to the right to access healthcare services. Where exploitation and exorbitant pricing impede this access, the State may step in with suitable interventions.
2. Division of Legislative Competence: Public health and sanitation being entries in List-II (State List) of the Constitution implies that States have the primary responsibility and authority to regulate health infrastructure, including private entities.
3. Policy over Judicial Decree: The Court underscored that broad directions for regulating private healthcare practices should be determined by “policy-makers,” who are equipped to consider financial, infrastructural, and local realities. Judicial overreach in economic and policy matters can have unintended consequences, potentially deterring private investors from setting up hospitals.
4. Balancing Interests: While the Court acknowledged the need to protect patients from inflated costs, it also recognized the importance of not stifling private sector participation and innovation in healthcare. Thus, a middle path—where State Governments frame balanced policies—was deemed more prudent.

C. Impact

This ruling has the potential to shape regulatory frameworks in the following ways:

• Guidance to State Governments: The judgment strongly nudges States to devise policies that can oversee private hospital pricing dynamics without creating a disincentive for private healthcare expansion.
• Transparent Pricing Mechanisms: Private hospitals may need to bolster transparency in drug pricing and procurement to avoid potential scrutiny and future litigation.
• Greater Public-Private Dialogue: Encourages closer collaboration between State health departments and private sector health providers. This collaboration could result in standard operating procedures for fair pricing while maintaining viable business models.
• Role of the Central Government: Although the Court recognized the Central Government’s existing regulations (e.g., the Drug Price Control Order, the National Pharmaceutical Pricing Authority), it emphasized that the ultimate solutions will largely be state-specific. However, central-level guidance and oversight may still inform consistent national minimum standards.

4. Complex Concepts Simplified

The judgment references certain constitutional and legal concepts that are worth clarifying:

• Article 21 of the Constitution: Guarantees the fundamental right to life and liberty, which has been judicially interpreted to include the right to quality healthcare.
• Directive Principles of State Policy (Part IV): Non-enforceable constitutional guidelines for government policy-making. Articles 38, 39, and 47 mention that the State should work towards securing a social order that promotes welfare, ensuring appropriate healthcare, nutrition, and a decent standard of living.
• State List (List-II): Under India’s federal structure, legislative subjects are divided into Lists. “Public health and sanitation; hospitals and dispensaries” fall under the State List, giving States the authority to legislate and regulate in this domain.
• Judicial Restraint in Policy Matters: Courts typically refrain from imposing specific guidelines on technical or policy issues best left to executive and legislative bodies, unless such policy decisions clearly violate fundamental rights.

5. Conclusion

The Supreme Court’s order in Siddharth Dalmia v. Union Of India reaffirms the State’s duty to protect the public from exploitative pricing by private healthcare institutions while simultaneously acknowledging the importance of private sector participation in enhancing healthcare infrastructure. Although the Court recognized the urgent need to address inflated hospital pharmacy charges, it ultimately held that broad-based, mandatory instructions should emanate through legislation or administrative policy rather than judicial fiat.

This development is significant because it underscores the constitutional balance between judicial intervention and legislative or executive prerogative in matters of healthcare regulation. States now have both the impetus and flexibility to devise innovative solutions that safeguard patient rights while encouraging further investment and advancement in medical facilities. In short, the judgment serves as a directive for States to take proactive steps, ensuring transparent and fair healthcare practices under the umbrella of the fundamental right to life and health guaranteed by the Constitution.

With this guidance, the healthcare landscape in India may see more coordinated efforts by individual States to regulate private hospital pricing structures and maintain accountability—thereby protecting citizens’ right to health without dissuading private entities from contributing to the nation’s healthcare system.