PolicyHealth
Centre to cap trade margins on cancer drugs at 30%, tells Supreme Court
Prices could fall by 20% to 70%, the government says. The bench pressed it on why the cap stops at cancer medicines when stents and saline lines carry huge mark-ups too.
Key points
- Trade margins on most cancer drugs will be capped at 30% of MRP, a decision taken by the NPPA on 8 October.
- Margins on cancer medicines now run from 170% to over 700%, the government's affidavit says.
- The court asked why the cap is limited to cancer drugs; the case returns on 27 October.
The Centre will cap trade margins on cancer medicines at 30% of the maximum retail price, the government told the Supreme Court on Monday, a step it expects to cut prices of these drugs by 20% to 70%.
The decision was taken at a meeting of the National Pharmaceutical Pricing Authority (NPPA) on 8 October, according to an affidavit by the Department of Pharmaceuticals. Solicitor General Tushar Mehta and Additional Solicitor General Aishwarya Bhati appeared for the government before Justices Vikram Nath and Sandeep Mehta.
What the cap covers
The cap will at first apply to all approved cancer drugs except inexpensive ones. An expert committee under the Director General of Health Services is to recommend the list within 10 to 15 days, and the government will update it from time to time.
The affidavit says hospitals tend to buy from manufacturers that offer the biggest trade margins and then sell to patients at MRP. Margins on cancer medicines range from 170% to more than 700%, it says. For scheduled medicines under the Drugs (Prices Control) Order, 2013, the ceiling price already includes a 16% retailer margin.
Why not everything
The bench asked why the government had stopped at cancer drugs. Justice Mehta pointed to an Indian-made cardiac stent with a price to retailer of ₹5,000 and an MRP of ₹25,000, and a saline drip line with an MRP of ₹11 that had been sold for ₹270. The court asked how manufacturers could set an MRP several times the price to retailer.
The government argued that one margin for all medicines would not work, since distribution costs differ by product and place, and cheap drugs, cold-chain products and remote areas may need higher margins. Hospital consumables, it said, carry margins of 100% to over 1,000%. Ms Bhati told the court India already has among the lowest medicine prices and that heavy intervention could hurt availability.
The case, filed by Kishan Chand Jain in 2023, returns on 27 October.