New Trade Margin Caps on Cancer Drugs Fail to Solve Treatment Affordability Crisis

The National Pharmaceutical Pricing Authority is capping trade margins on 137 non-scheduled anti-cancer drugs at 30%, taking effect on November 9, following an earlier 2019 cap on 42 drugs. The government estimates this order will save patients about ₹2,500 crore annually. However, public health experts call the measure tokenistic and short-term, noting that cancer remains India's leading cause of catastrophic health spending. Out-of-pocket costs account for 50% to 80% of direct treatment expenses in the country.

Market Impact

The order sets a trade-margin ceiling based on the price to stockist, allowing a markup that critics argue is still sizeable for expensive medications. While some brand prices show steep drops, experts point out that the policy caps dealer and hospital profits rather than the underlying manufacturing prices. Hospitals and dealers may not pass those savings on to patients, and actual hospital purchase prices often remain hidden. Meanwhile, other expensive components of care such as diagnostics, surgery, and hospital stays continue to drive up overall treatment bills.

Expert Criticism

Critics argue the government avoids using its legal powers under the Indian Patent Act and TRIPS to increase competition. Industry representatives also note that high hospital running costs and complex pricing structures leave institutions looking for other ways to recoup shortfalls. Legal experts warn that price controls are a poor solution to a demand-supply mismatch and could distort the market, suggesting instead that the government should rely on large-scale public procurement and free medicines for patients.

Context

Trade margin rationalisation is a regulatory tool used to curb excessive markups by middlemen in the pharmaceutical supply chain. While it directly targets the gap between wholesale purchase prices and maximum retail prices, industry analysts note it does not control basic manufacturing costs or upstream pricing by drug makers.