- Union of India proposed capping trade margins of certain anti-cancer drugs at 30%
- Proposal aims to reduce MRP by 20-70% and save Rs 2500 crore annually
- Supreme Court wants pricing review to include all drugs, not just cancer drugs
The Union of India has shared a proposal to cap trade margins of certain listed anti-cancer drugs at 30%, which they say will reduce MRP by 20-70% and accrue annual savings of Rs 2500 crore. The Supreme Court, hearing a petition against high-pricing of cancer and critical care drugs, said that anti-cancer drugs are just the “tip of the iceberg” and a proposal should include the entire gambit of drugs on the market.
Solicitor General Tushar Mehta said the government's proposal to cap trade margins will apply to anti-cancer drugs as listed by an expert committee formed by the Ministry of Health & Family Welfare. Mehta called the proposal a “dispassionate” assessment to balance consumer interest with industry interests.
Listing of drugs for margin capping will be based on factors including viability, availability and ability to distribute. Taking the example of Paracetamol, the Centre submitted that margins cannot be capped as this would make the drug unavailable in rural areas.
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The expected benefits would include a price reduction of 20-70% on MRP, expected annual savings of Rs 2500 crore, reduction in costs for consumers, greater affordability and availability of drugs. The Centre also submitted that 30% would constitute a reasonable margin cap for these drugs.
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In a previous hearing the Supreme Court had suggested applying the standard 16% retail margin (prescribed under the Drugs [Prices Control] Order, 2013 for scheduled drugs) to apply uniformly to all non-scheduled and hospital-dispensed medicines.
A bench of Justices Vikram Nath and Sandeep Mehta took note of the proposal and called caps on anti-cancer drugs “the tip of the iceberg." “We want to look at pricing on entire market for drugs, not just cancer drugs,” the bench opined.
Taking certain examples, the court asked for reasons as to why, for certain drugs, MRP was fixed at 400 times prices to sellers. The court also notified the Centre that reasons for capping and leaving certain drugs uncapped should be justified through reasons beneficial for the consumer.
The centre argued that the approach to be taken needs to balanced. “There has to be a balance between pricing and availability,” submitted Mehta. This is to ensure that some form of market is available for drugs.
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“We do not want to control the entire range of drugs,” Mehta argued on behalf of the Centre, pointing out that India already has the among the lowest prices for medicines. The CEntre warned that increased intervention will lead to the market suffering, lack of drug availability and unviability of distribution.
The Supreme Court has fixed the matter for hearing on October 27, where they have urged the Centre to revert after stakeholders consultations on the proposal submitted as well as reasons for not covering a larger gambit of drugs available on the market.
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