Margin on anticancer drugs increased to 700% despite price caps set in 2019

The National Pharmaceutical Pricing Authority of India (NPPA) has made changes to the Maximum Retail Prices (MRP) of 543 cancer treatment drugs in India. As a result of these changes, the cost of some medicines has decreased by more than 90%, however, the impact of this reduction did not extend to some extremely expensive drugs, such as Keytruda.

According to the new prices set by NPPA, the price of one brand and package of Palbociclib, used for breast cancer treatment, was reduced from 40,421 rupees to 2,720 rupees. Similarly, the cost of a vial of the drug Tiotep, used in chemotherapy, decreased from approximately 80,072 rupees to 7,150 rupees. Furthermore, prices for drugs such as Dasatinib, Lenvatinib, and Olaparib were significantly lowered, although no price changes were made to a number of other anti-cancer agents.

Despite the overall price reduction, the cost of several very expensive cancer drugs remained unchanged. Among them is the immunotherapy drug Keytruda, which is used to treat over 21 types of cancer and retains its price at 216,500 rupees. The price of Rebosiclib, used in breast cancer treatment, also remains stable at 24,435 rupees. The MRP for drugs such as Tagrisso, Tcentric, Darzalex, and Imfinzi was also not altered.

Malini Asola from the 'All India Drug Action Network' (AIDAN), which advocates for patient interests, explained that one reason for the lack of price changes on patented medicines is that the government carefully excluded from the list those drugs provided free under the 'Patient Assistance Programs' (PAPs). Under PAPs, pharmaceutical companies offer prescription drugs free of charge or at a significant discount, for example, providing a third package free when two are purchased.

Asola expressed disagreement with the exclusion of PAP, noting that it allows hospitals and intermediaries to earn huge profits. She also pointed out that significant price reductions in many cases occur within a subsidized format that still allows the hospital or distributor to earn 42.8% profit. According to her, if the government did not allow such a high level of margin, the price reduction would be even more substantial.

The court is examining the issue of margins on cancer drugs. The Supreme Court is studying the possibility of setting margin limits for all drugs that exceed price restrictions in the country. A decision on this matter has not yet been issued by the court. It should be noted that the costs of cancer treatment are not limited to medications; they include surgeries, various types of examinations, and hospitalization. While the reduction in drug prices will bring relief to patients, it is necessary that these rules apply to all drugs. Following NPPA's decision to limit the trade markup on 137 non-patented anti-cancer drugs to 30% of the MRP, the new prices will come into effect on November 9.

Treating serious illnesses such as cancer is inherently an expensive process, and patients are forced to pay multiple sums for medications. The central government stated in its submission to the Supreme Court that hospitals charge excessively high prices for medicines and other consumables used in treatment, calling this practice incorrect. The government also announced its intention to take measures to limit this practice.

The central government informed the court that there is no equal bargaining position between patients and hospitals. Due to the necessity of treatment, patients are often forced to accept prices set by the hospital. In this regard, the government proposed limiting the trade markup on medications for rare cancers to 30 percent of the Maximum Retail Price (MRP). According to government estimates, this could lead to a reduction in drug prices by 20–70 percent, which is projected to save patients around 250 billion rupees annually.

Difficulties with pricing small medical goods

The government informed the Supreme Court that the cost of medical consumables used in hospitals ranges from 1 to 350 rupees and above. Establishing a single profit limit for all these goods appears to be a difficult task. Furthermore, the sale of inexpensive items also incurs costs, and setting a single limit may complicate covering these expenses.

Discussion of rules continues

The central government told the court that it is negotiating with all stakeholders to resolve this issue and is preparing to develop relevant regulations. The proposal to limit the trade markup on medications for rare cancers is a step in this direction, but for now, it is only a proposal. Real savings for patients and price reductions will only become apparent after this proposal is implemented.

The Center has approved the maximum trade markup sizes for 137 unregistered anti-cancer medicines, setting them at 30 percent of the Maximum Retail Price (MRP). This decision was made to ensure the accessibility of oncological treatments through publication in the official gazette.

According to the National Pharmaceutical Pricing Authority (NPPA), the list will include both patented and non-patented drugs, based on recommendations from the Expert Committee (EC) of the Directorate General of Health Services (DGHS).

The notification, dated October 17, lists drugs such as Nivolumab, Olaparib, Denosumab, and Topotecan. However, this measure does not apply to the quantity of medicines supplied under Patient Assistance Programs (PAP) implemented by manufacturers for individual patients.

NPPA clarified that this list will be updated regularly, and the trade markup restriction will be included in Paragraph 19 of the Drug Price Control Order (DPCO) 2013. This paragraph grants NPPA the power to review or fix ceiling and retail prices for any drug in exceptional circumstances and in the public interest.

In the minutes of the 284th meeting of NPPA, held on October 16, it was noted that 'the Authority deemed it necessary to set the trade markup limit at 30 percent of MRP, excluding GST, which corresponds to a markup of 42.86 percent on Price for Distributor/Price for Wholesaler (PTS/PTD), to maintain a reasonable trade markup, preventing excessive price hikes.'

The NPPA's intervention is expected to reduce the Maximum Retail Prices (MRP) of identified unregistered anti-cancer drugs to 70 percent, depending on their current pricing structure, and provide an estimated annual saving of 2500 crore rupees. The new prices will come into effect on November 9, 2026.

According to sources familiar with the matter, manufacturers are required to post price lists on their websites and widely distribute them among all retail outlets and hospitals. Furthermore, all manufacturers must notify NPPA of their revised prices within seven days of the official notification being published.

The October 17 notification emphasizes that since significant volumes of anti-cancer drugs are supplied directly to hospitals and medical institutions, they are obligated to monitor the MRP of formulations and ensure compliance. State drug controllers must take necessary steps to ensure compliance from manufacturers and dealers, including retail outlets, hospitals, and medical institutions.

Pharmaceutical companies will also be required to maintain current levels of production and supply for notified formulations to guarantee timely and uninterrupted access for patients. The notification warns that manufacturers who fail to comply with the provisions of this order may be liable to pay the overcharged amount along with interest in accordance with the provisions of DPCO 2013 combined with the Essential Commodities Act of 1955.

Previously, officials told Business Standard that the EC had found trade markups on unregistered anti-cancer drugs ranging from 170 to 700 percent at various points of sale. Unregistered drugs are pharmaceutical formulations that do not fall under the price restrictions of DPCO 2013. Manufacturers of such formulations and devices can increase prices by up to 10 percent over a 12-month period.

These drugs constitute approximately 82 percent of India's domestic pharmaceutical market. This decision is the first step towards rationalizing the Trade Markup Rate (TMR), even as the Department of Pharmaceuticals (DoP) and NPPA consult with the industry regarding price increases for essential medicines.

Under TMR, the difference between the price set by the manufacturer for the distributor and the price paid by the consumer is regulated, unlike traditional price control which fixes a ceiling price on the formulation.

Previously, the Center restricted trade markups for 42 types of cancer drugs in 2019, resulting in an announced annual saving of 984 crore rupees across 526 brands. Officials noted that future markup restrictions could be extended beyond anti-cancer drugs to other unregistered formulations, medical consumables, and devices such as intravenous (IV) kits and catheters.

This move also comes amid intense scrutiny from the Supreme Court regarding high markups on essential medicines. A bench comprising Justices Vikram Nath and Sandeep Mehta questioned the regulatory distinction between scheduled and unscheduled drugs under DPCO and whether drugs classified as non-essential should remain outside price control mechanisms.