India caps trade margins on non-scheduled cancer drugs at 30 percent

The Union government has approved a 30 percent cap on trade margins for non-scheduled anti-cancer medicines, and says the move could cut the maximum retail price of affected drugs by up to 70 percent. The Department of Pharmaceuticals puts the annual saving to patients at Rs 2,500 crore. The cap is not yet a notified price order. An expert committee under the Directorate General of Health Services has to finalise the list of medicines, and the National Pharmaceutical Pricing Authority then has to issue the notification.

Non-scheduled drugs are medicines that do not have a ceiling price under the NPPA's scheduled list. They can still be regulated. The new cap covers branded and generic products, domestic and imported, patented and off-patent, as long as they are non-scheduled anti-cancer drugs. Scheduled cancer medicines, which already sit under ceiling prices, are outside this decision. Officials put the annual turnover of anti-cancer medicines in India at Rs 12,500 crore, of which scheduled drugs account for about Rs 2,500 crore. The larger pool, about Rs 10,000 crore, is the one this cap is aimed at.

The NPPA's market analysis is the evidence the department is using. It found an average trade mark-up of about 170 percent on non-scheduled anti-cancer medicines, and mark-ups of 700 percent or more on some drugs. Prices also differed sharply depending on whether a patient bought from a retail pharmacy, a hospital pharmacy or an online pharmacy. A 30 percent margin on MRP is a different object from a 170 percent average mark-up. If the cap is applied to the price at the first point of sale, the retail price has to fall. The department's figure of up to 70 percent is the upper end of that fall, not a guarantee for every brand.

A 2019 price-control move on cancer drugs cut prices by up to 91 percent across 526 brands, according to the department's account of that round. The new decision is built differently. It caps the trade margin rather than setting a ceiling price molecule by molecule. That is faster to write and harder to audit. A hospital that bundles the drug into a procedure bill, or a distributor that reclassifies a margin as a service fee, can blunt a margin cap. The notification will have to say which price the 30 percent is calculated on, and who checks hospital bills.

The Supreme Court has pressed the government on cancer-drug mark-ups, including figures reaching 700 percent. Wednesday's announcement, reported by The Telegraph and Outlook India, is the executive answer to that pressure. It is not yet the order a patient can take to a chemist. Until the expert committee names the drugs and the NPPA notifies them, the MRP on the strip does not change. The gap between approval and notification is where earlier margin caps have lost time.

For a family paying out of pocket, the relevant number is the retail price of the specific brand, not the Rs 2,500 crore national estimate. That estimate is 20 percent of the Rs 12,500 crore market, which is large if it arrives and invisible if the list is short. The committee's list is the next document that matters. A short list limited to a few high-mark-up brands would save less than the headline. A list covering the non-scheduled pool would reach the figure the department has used.

What patients can do now is limited. The cap is approved policy. It is not a notified price. The average mark-up the NPPA measured is 170 percent. The cap it has been told to enforce is 30 percent. The distance between those two numbers is the saving, once the notification exists.