AI-BASED PHARMACEUTICAL PRICING AND ALGORITHMIC CARTELS: REGULATORY CHALLENGES UNDER INDIAN COMPETITION LAW

Abstract

Artificial Intelligence (AI) has substantially transformed India’s pharmaceutical sector, with AI-driven drug delivery, algorithmic pricing, predictive analytics and digital healthcare platforms now woven into the industry fabric. E-pharmacies and AI-enabled supply chains increasingly use machine learning to optimize inventory, forecast demand and streamline distribution, thereby boosting efficiency and accessibility. Yet with these advances comes a complex legal puzzle. AI-driven pricing systems can sometimes result in similar prices across companies even when there’s no explicit agreement. This is a genuine challenge for the regulatory body that is trying to ensure fair competition, since traditional competition law tends to focus on human-driven collusion or communication.

The Competition Act 2002 prohibits anti-competitive agreements and abuse of dominance, but it was written for a world where people, not algorithms, set the rules. Today, regulators face new dilemmas about how to assign liability or spot collusion when decisions are made by autonomous systems. This concern is especially urgent for the pharmaceutical sector, where pricing has real consequences for public health and affordability. This study explores how AI might facilitate tacit collusion and whether India’s current competition law is up to the task. The analysis draws on statutes, policy documents, judicial precedents, and comparative examples from the United States and European Union, combining legal rigor with a practical focus on the new realities of AI.