Panel to finalise cancer drugs for 30% trade margin cap; Rs 2,500 crore annual savings possible

New Delhi: A group of experts is to finalise the list of cancer medicines that will be covered under the government’s proposed 30% trade margin cap by Wednesday, people familiar with the matter told ET.

The experts, including doctors from Tata Memorial Centre and officials from the National Pharmaceutical Pricing Authority (NPPA), Department of Pharmaceuticals (DoP) and Directorate General of Health Services (DGHS), held meetings on Friday and Monday to expedite the exercise, the people said.

Also read: Cancer drugs may get up to 70% cheaper as govt fixes trade margins on non-scheduled medicines at 30%

Last week, the government decided to cap trade margins on non-scheduled anti-cancer medicines at 30%, a move that could reduce the maximum retail prices (MRPs) of some cancer drugs by up to 70% and save patients an estimated ₹2,500 crore annually.

cancer medicines trade margin for companies

Move could save patients `2,500 cr annually; list may be updated periodically

The move came after an NPPA analysis found that non-scheduled anti-cancer medicines carried an average trade markup of around 170%, with markups on some drugs reaching up to 700%. It also found substantial variations in prices across retail pharmacies, hospitals and e-pharmacies, including differences in discounts from MRP.

The trade margin rationalisation (TMR) exercise will apply to branded and generic drugs, domestic and imported products, and patented as well as non-patented medicines, officials said.

The October 14 deadline for the expert committee under DGHS to recommend the list of medicines was recorded in the minutes of a recent NPPA meeting.”The positive list may be updated periodically based on market developments and public health considerations,” the minutes said.

The authority expects manufacturer and marketing companies to reduce MRPs by between 20-70%, depending on the existing trade structure and markup of individual medicines, to comply with the new cap, which translates into a trade margin of 42.86% on the price to stockists. This is estimated to lead to annual savings of about ₹2,500 crore for patients.

Manufacturers of medicines included in the list will be required to maintain their current production levels to prevent supply disruptions, officials said. Since the measure regulates trade margins rather than manufacturers’ selling prices, it is not expected to directly affect their revenues.

Also read: SC asks govt to broaden inflated pricing review beyond oncology

NPPA invoked Paragraph 19 of the Drug Price Control Order (DPCO), 2013, which empowers the government to fix or regulate drug prices in extraordinary circumstances and in the public interest. The minutes said the authority had deliberated on excessive trade markups in non-scheduled anti-cancer medicines and concluded that extraordinary circumstances warranted intervention to address market distortions, curb profiteering and ensure fair and affordable prices.

The move comes after the Supreme Court raised concerns over the pricing of cancer medicines and questioned the Centre over a drug reportedly supplied to retailers for around ₹2,700 but sold at an MRP of ₹27,000.

The anti-cancer medicines market comprises around 225 drugs and 500 formulations, with an annual turnover of about ₹12,500 crore. Scheduled cancer medicines account for around ₹2,250 crore, while the remainder comprises non-scheduled drugs.

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