Government caps trade margins on cancer drugs at 30% of MRP; Supreme Court questions exclusion of other medicines

Key facts

• The Central Government has decided to cap trade margins on cancer drugs at 30% of the Maximum Retail Price (MRP), a move expected to make cancer treatment more affordable.
• The National Pharmaceutical Pricing Authority (NPPA) approved the proposal during a meeting on October 8, and Solicitor General Tushar Mehta informed the Supreme Court of the decision on Monday.
• The government says the cap could reduce cancer drug MRPs by 20% to 70%, potentially saving patients around Rs 2,500 crore every year.
• An expert committee headed by the Director General of Health Services has been constituted to finalise the list of medicines covered, with recommendations due within 10 to 15 days.
• The Supreme Court bench of Justice Vikram Nath and Justice Sandeep Mehta questioned why trade margins are being regulated only for cancer drugs and not other medicines and medical devices.
• The court cited examples including a cardiac stent supplied at about Rs 5,000 with an MRP of Rs 25,000, and a saline drip line sold for Rs 270 despite an MRP of Rs 11.
• The Centre opposed a uniform margin cap, arguing that manufacturing, storage and distribution costs vary and that uniform limits could affect supply of low-cost medicines in remote areas.
• Under the Drugs Price Control Order, 2013, ceiling prices have been fixed for 935 formulations and retail prices for 3,881 new drugs, with a 16% retailer margin added in ceiling price determination.
• The next hearing in the matter is scheduled for October 27.