Trade margins on non-scheduled anti-cancer medicines can range from 170% to 700% or more, the Centre has told the Supreme Court in an affidavit outlining its plan to cap them at 30% of the maximum retail price. The government expects the proposed measure to bring down the prices of cancer medicines by 20% to 70% and save patients around Rs 2,500 crore a year.
The Department of Pharmaceuticals, under the Ministry of Chemicals and Fertilisers, filed the affidavit on Oct. 12, that was viewed by NDTV Profit. It sets out how the government plans to identify the medicines covered by the cap and implement the proposed changes.
Medicines List
The Ministry of Health and Family Welfare constituted an expert committee on Oct. 9 to recommend which medicines should be covered. The committee is chaired by the director general of health services and has been asked to submit its recommendations within 10 to 15 days.
The proposed list will include "all drugs approved for the treatment of cancer, except those which are inexpensive", according to the affidavit. The government may revise the list as market conditions change or public health considerations arise.
Once the committee submits its recommendations, the National Pharmaceutical Pricing Authority will consider the list and issue a price notification. It will also set out instructions for manufacturers, including procedures to ensure that patients benefit from the measure.
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Earlier Exercise
The Centre expects the proposed cap to reduce maximum retail prices by 20% to 70%. The estimated annual savings of around Rs 2,500 crore are projections, not savings already realised.
The government has pointed to its 2019 intervention as a precedent. Under Paragraph 19 of the Drugs (Prices Control) Order, 2013, the National Pharmaceutical Pricing Authority had capped trade margins at 30% for 42 selected non-scheduled anti-cancer medicines.
The affidavit says the earlier measure led to substantial reductions in the maximum retail prices of 526 brands. It puts the resulting annual savings at around Rs 984 crore, citing information provided by companies.
The proposed intervention is intended to curb high trade mark-ups without directly reducing manufacturers' selling prices. It would leave the distribution channel with a margin of 30% of the maximum retail price, the affidavit says.
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Other Sectors
The affidavit also flags high margins on hospital consumables, which it says can range from 100% to 1,000% or more. The government said these products would need a separate approach because their costs and uses vary.
The Department of Pharmaceuticals said it had consulted stakeholders on trade-margin regulation since 2022. The affidavit records concerns from industry associations, including representatives of micro, small and medium enterprises, about the possible effects of a cap on employment, distribution networks and the availability of medicines in remote areas.
The government said it had considered these concerns before deciding to proceed. It added that it was examining other instances of high margins and possible malpractice, with any intervention to be considered in consultation with stakeholders. The Centre also undertook to comply with any further directions issued by the Supreme Court.
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