Centre plans 30% trade-margin cap on non-scheduled cancer drugs

New Delhi: The Centre is preparing to cap trade margins on all non-scheduled anti-cancer medicines at 30% of their maximum retail price (MRP), a move that could cut retail prices by as much as 70% and save cancer patients an estimated ₹2,500 crore to ₹3,500 crore a year, according to three senior government officials familiar with the matter.

The order is expected soon, ahead of a Supreme Court hearing on 12 October, where the government is expected to present its framework for making cancer therapies more affordable.

The proposed cap would cover branded and generic drugs, domestically produced and imported medicines, and patented and non-patented drugs, the officials said. It would target trade mark-ups between manufacturers and retail points such as hospitals rather than manufacturers’ selling prices, they said.

The move comes as cancer treatment remains a major burden on Indian households, with out-of-pocket spending accounting for about 75% of total cancer treatment expenses. Cancer incidence in India is approximately 60 per 100,000 population, according to data cited by the government.

The broader anti-cancer medicines market comprises approximately 225 drugs and 500 formulations, with annual turnover of around ₹12,500 crore, according to industry data. Scheduled medicines account for nearly ₹2,250 crore.

The proposed trade margin rationalization (TMR) targets non-scheduled anti-cancer drugs, which fall outside the direct price ceiling under the National List of Essential Medicines (NLEM).

“Studies by market data groups and the National Pharmaceutical Pricing Authority (NPPA) revealed staggering trade margins ranging from an average of 170% to up to 700% on cancer therapies, leaving patients vulnerable to excessive retail mark-ups by distributors and private hospitals,” one of the three officials cited earlier said.

The officials said serious concerns over steep disparities between procurement prices and consumer MRPs were also raised by multiple state authorities, including Maharashtra, Rajasthan and Karnataka, as well as patient groups and civil society, over significant price variations across hospital, retail and online pharmacies.

“The government has identified around 110 additional cancer formulations, including roughly 35 patented oncology drugs, bringing the total pool of regulated cancer molecules to well over 150 when combined with previously monitored medicines. In the open market, cancer treatments span approximately 225 core molecules and hundreds of branded combinations,” the official added.

Queries emailed to the spokesperson of the department of pharmaceuticals and ministry of health and family welfare were not answered immediately.

A broader reach

The proposed measure builds on a February 2019 intervention, when the Centre capped trade margins on 42 non-scheduled anti-cancer medicines across 526 brands under Paragraph 19 of the Drugs (Prices Control) Order (DPCO), 2013.

That intervention delivered price cuts of up to 91% on MRP and estimated recurring annual savings of ₹984 crore for patients, according to the officials.

This time, the government is seeking to extend the mechanism to a much broader pool of non-scheduled cancer medicines.

To ensure swift execution, the Centre has invoked Paragraph 19 of the DPCO, 2013, which empowers authorities to regulate drug prices under extraordinary circumstances in public interest, another official said.

Following the government’s direction, an expert committee under the Directorate General of Health Services (DGHS), comprising oncology specialists, has been constituted to finalise the comprehensive list within three to four days.

“The government is adopting a ‘positive list approach’ rather than a blanket notification to avoid ambiguity among manufacturers and distributors regarding formulations, strengths, and multi-use molecules,” the second official said.

Once the committee finalizes the positive list, the NPPA will formally notify the 30% margin cap and outline implementation modalities, including price submission timelines and public transparency guidelines, this official added.

To safeguard patient access and prevent supply disruptions, manufacturers will be mandated to maintain their current production levels.

Officials said manufacturers’ selling prices and topline revenues will not be impacted because the cap strictly curbs intermediate trade mark-ups and addresses supply-chain profiteering.

The department will submit its comprehensive pricing report before the Supreme Court bench on 12 October, officials said, while stressing that the administrative process operates independently. The primary focus, they said, is consumer welfare and ensuring that lower prices do not trigger market shortages or supply shocks.

Devices and consumables next

The government also plans to address margins on medical devices and consumables, officials said, with the issue expected to be taken up within weeks, shortly after Dussehra.

The urgency follows a Mint report on 15 September on a Maharashtra Food and Drug Administration study that found mark-ups of up to 2,800% on medical consumables, including IV sets bought by hospitals for ₹11 and billed at an MRP of ₹325.

Acknowledging that steep intermediary margins drive systemic hospital mis-selling and inflate patient bills, the first official indicated that the government plans to bring measures to rationalize trade margins and rein in predatory pricing on consumables and devices soon.