Background of the Case
The Karnataka High Court is examining a challenge to a circular dated October 1, 2026, issued by the Commissioner of Food Safety and Drugs Administration, Karnataka, requiring hospitals and other healthcare establishments to disclose the actual procurement or landing price of medicines, medical devices and consumables in bills issued to patients.
The circular was applicable to government, private and trust hospitals, nursing homes, clinics, day-care centres, diagnostic centres and entities involved in the pharmaceutical supply chain, including stockists, distributors, wholesalers and retailers.
Under the directions, healthcare establishments were required to disclose the landing or base price, Maximum Retail Price (MRP) and the actual selling price charged to patients in itemised bills from November 1, 2026.
The measure was intended to improve transparency in healthcare billing by enabling patients to understand the difference between the procurement cost of medicines and the amount charged by hospitals.
Challenge Before the High Court
Aggrieved by the circular, the Private Hospitals and Nursing Homes Association (PHANA), along with Pristine Hospitals and Research Centre Private Limited and Dr. Halagere Mallikarjuna Prasanna, approached the Karnataka High Court challenging its legality and constitutional validity.
The petitioners contended that the Food Safety and Drugs Administration lacked the statutory authority to impose such disclosure obligations on hospitals through an executive circular.
They argued that the circular introduced substantive legal obligations without any supporting provision under the applicable statutory framework governing medicines and healthcare establishments.
Arguments of the Petitioners
The petitioners submitted that the circular sought to derive authority from the Clinical Establishments (Registration and Regulation) Act, 2010, which has not been adopted by Karnataka under Article 252 of the Constitution of India.
They further argued that neither the Drugs and Cosmetics Act, 1940, nor the Karnataka Private Medical Establishments Act, 2007, contains any provision requiring hospitals to disclose their medicine procurement prices to patients.
The petitioners also relied on the Legal Metrology (Packaged Commodities) Rules, 2011, contending that these provisions do not authorise the State authorities to impose the disputed disclosure requirement.
It was further argued that the circular violated Article 19(1)(g) of the Constitution by imposing unreasonable restrictions on the right to carry on business.
Another objection concerned the absence of a clear definition of the expression "Landing/Base Price". According to the petitioners, the lack of clarity regarding this expression made the circular vague and difficult to implement.
Practical Difficulties in Implementation
The petitioners also highlighted the practical difficulties involved in implementing the circular within the prescribed period.
They submitted that compliance would require hospitals and other healthcare establishments to introduce new billing procedures, procure or modify software systems, update accounting and procurement records and train administrative and billing personnel.
According to the petitioners, these changes could not reasonably be completed within the short period provided by the authorities.
They further contended that procurement prices vary depending on suppliers, purchase quantities, discounts, rebates and credit arrangements. Compulsory disclosure of such information could expose confidential commercial arrangements between hospitals and pharmaceutical suppliers.
The petitioners also expressed concern that differences in procurement prices between hospitals could create confusion among patients and lead to unnecessary disputes.
State Government's Response
Opposing the request for interim relief, the State Government submitted that the circular merely required healthcare establishments to disclose the landing or base price of medicines and other medical products.
The State's counsel initially sought additional time to examine the objections raised by the petitioners and requested the Court not to pass an interim order staying the circular.
However, the counsel subsequently informed the Court, on instructions, that the concerned government officials were reconsidering the circular dated October 1, 2026.
The State Government accordingly assured the Court that implementation of the circular would not be insisted upon until the next date of hearing.
High Court's Observations and Order
Justice C.M. Poonacha took note of the petitioners' concern that healthcare establishments could face consequences for non-compliance once the circular was scheduled to come into effect on November 1, 2026.
The Court recorded the assurance given by the Additional Advocate General on behalf of the State Government.
The relevant portion of the Court's order reads:
"The Additional Advocate General appearing on behalf of the respondents would submit, on instructions, that the concerned officials are in the process of having a relook at the impugned circular dated 01.10.2026 and the implementation of the impugned circular dated 01.10.2026 will not be insisted upon till the next date of hearing."
In view of the State Government's submission, the Court directed that the circular would not be insisted upon until the next date of hearing.
The matter was accordingly adjourned to November 12, 2026.
Effect of the High Court's Order
The order provides temporary relief to hospitals and other healthcare establishments by ensuring that the State Government will not insist on compliance with the disputed disclosure requirement pending the next hearing.
However, the Court has not finally decided the constitutional validity or legality of the October 1 circular.
The State Government is reconsidering the directions, and the petitioners' challenge concerning the statutory authority of the FDA to impose such obligations remains open for consideration.
The matter is expected to be taken up again on November 12, 2026, when the Court may consider the subsequent developments and the question of interim relief.
Case Details
Case Name: Private Hospitals and Nursing Homes Association and Others v. Karnataka Food Safety and Drugs Administration
Court: High Court of Karnataka
Date of Decision: October 30, 2026
Case Number: Writ Petition No. 33279 of 2026 (GM-RES)
Coram/Judge: Justice C.M. Poonacha
