Union Government to Limit Profits on Cancer Medicines to Lower Treatment Costs

Price Cap on Medicines

The Union government will limit trade margins on all non-scheduled anti-cancer drugs to 30% of the maximum retail price. The rule applies to branded and generic products, domestic and imported items, and patented and non-patented medicines. An expert committee under the Directorate General of Health Services will choose the specific list of drugs for this step.

Market Findings

The National Pharmaceutical Pricing Authority studied market data and found that the average profit mark-up on these medicines was near 170%, with some cases reaching 700%. The study also noted big differences in prices across retail, hospital, and online pharmacies. Around 75% of total cancer treatment costs are paid directly by patients out of pocket. The anti-cancer medicine market includes about 225 drugs and 500 formulations with a yearly turnover of roughly ₹12,500 crore.

Expected Savings

The new rule is expected to cut prices by up to 70% of the maximum retail price and save patients about ₹2,500 crore every year. The government previously capped margins on 42 non-scheduled anti-cancer drugs in 2019, which cut prices by up to 91% and saved ₹984 crore. Manufacturers must keep their current production levels to ensure medicines stay available in the market. The policy regulates supply chain margins rather than what makers earn from their selling prices.

Context

High out-of-pocket medical costs remain a major financial challenge for patients receiving treatment for serious illnesses like cancer. Regulatory bodies often step in to control excessive mark-ups added by intermediaries in the distribution chain. Similar price control frameworks are used by authorities to keep essential medical care affordable for the public.