Centre to cap trade margins on non-scheduled cancer drugs at 30% of MRP

The Union government has decided to cap trade margins at 30% of the maximum retail price (MRP) for all non-scheduled anti-cancer drugs, citing the need to make cancer treatment more affordable and reduce patients’ out-of-pocket expenditure.

The measure will apply to branded and generic drugs, domestically manufactured and imported medicines, and patented and non-patented products.

An expert committee under the Directorate General of Health Services (DGHS) will finalise the list of medicines that will come under the measure.

High mark-ups in the cancer medicines market

The decision follows an analysis by the National Pharmaceutical Pricing Authority (NPPA), which found that the average trade mark-up on non-scheduled anti-cancer medicines was around 170%.

In some cases, the mark-ups reached up to 700%, according to the NPPA’s analysis of market data.

The regulator also found substantial differences between the prices charged through retail, hospital and online pharmacies.

The government said the intervention was prompted by the high financial burden of cancer treatment.

Around 75% of cancer treatment expenditure is estimated to be borne out of pocket, making the prices of medicines a significant part of the financial burden faced by patients.

The anti-cancer medicines market comprises around 225 drugs and 500 formulations, with an annual turnover of approximately ₹12,500 crore.

Scheduled cancer medicines account for about ₹2,250 crore of this market.

Government expects savings of ₹2,500 crore

The Union government is drawing on the experience of a similar intervention carried out in 2019, a senior official said.

At that time, the NPPA capped trade margins on 42 selected non-scheduled anti-cancer drugs by invoking its extraordinary powers under Paragraph 19 of the Drug Price Control Order, 2013.

That exercise had reportedly resulted in price reductions of up to 91%, with annual savings of ₹984 crore across 526 brands.

The latest intervention is expected to result in price reductions of up to 70% of MRP, the government said.

It is also expected to generate annual savings of around ₹2,500 crore.

The government’s estimates place the latest measure within the broader effort to reduce the margins retained across the distribution chain rather than to change the scope of medicines used in cancer treatment.

Manufacturers told to maintain production

Under the new framework, the trade margin will be capped at 30% of MRP, which is equivalent to 42.86% of the price to stockist.

The government said the measure will regulate trade margins rather than manufacturers’ selling prices or revenue.

Its stated aim is to reduce the margins retained across the distribution chain while ensuring that medicines remain available.

“To ensure availability, manufacturers will be required to maintain their existing production level,” said the official.

The requirement to maintain existing production levels is part of the new framework announced alongside the trade-margin cap.

The government’s intervention therefore combines a limit on trade margins with a direction intended to protect the availability of non-scheduled anti-cancer medicines.

Source: The Hindu