Centre to cap trade margins on non-scheduled cancer drugs at 30%

Move could cut MRPs by up to 70%, save patients ₹2,500 crore annually; comes amid SC scrutiny of high mark-ups

The Centre has decided to cap trade margins for all non-scheduled anti-cancer drugs at 30 per cent of the maximum retail price (MRP), according to senior officials aware of the matter.

 

“This would cover 110 non-scheduled cancer drugs, including branded, generic, domestic and imported drugs. 35 of these are patented cancer medicines,” one of the officials in the know said.

 

The move is expected to reduce MRPs of cancer drugs by up to 70 per cent and generate estimated annual savings of ₹2,500 crore, another official told Business Standard on condition of anonymity.

 

The decision aims to curb excessive trade mark-ups and improve affordability while ensuring the continued availability of these life-saving medicines, officials said.

 

A committee of the Directorate General of Health Services (DGHS) is estimating the number of brands that will come under the proposed cap. “Cancer drug brands that are expensive for the consumers are being considered for margin capping,” the official quoted above said.

 

The committee has found trade margins ranging from 170 to 700 per cent for cancer drugs at various outlets, the official added.

 

Non-scheduled drugs are pharmaceutical formulations not subject to price ceilings under the Drugs (Prices Control) Order (DPCO), 2013. Manufacturers of such formulations and devices can increase prices by up to 10 per cent over a rolling 12-month period. These drugs account for an estimated 82 per cent of India's domestic pharmaceutical market.

 

The decision marks a first step towards trade margin rationalisation (TMR), even as the Department of Pharmaceuticals (DoP) and the National Pharmaceutical Pricing Authority (NPPA) hold industry consultations on price mark-ups for essential medicines.

 

Under TMR, the difference between the price charged by a manufacturer to a distributor and the price paid by a consumer could be regulated, unlike conventional price controls that fix a ceiling price for a formulation.

 

The move also comes amid Supreme Court scrutiny of high mark-ups on essential medicines. A Bench comprising Justices Vikram Nath and Sandeep Mehta has questioned the regulatory distinction between scheduled and non-scheduled medicines under the DPCO and whether medicines classified as non-essential should remain outside price control mechanisms. The next hearing is scheduled for October 12, 2026.

 

Several state drug regulatory bodies, including those in Maharashtra, Karnataka and Uttar Pradesh, have flagged high local price mark-ups. Last month, the Maharashtra Food and Drug Administration wrote to the NPPA highlighting mark-ups of almost 1,000 per cent in the MRPs of certain medical consumables sold at hospital pharmacies, compared with their procurement costs.

 

The Centre had earlier capped trade margins for 42 cancer drugs in 2019, resulting in reported annual savings of ₹984 crore across 526 brands.

 

Officials said margin capping could eventually be extended beyond cancer drugs to other non-scheduled formulations, medical consumables and devices such as intravenous (IV) kits and catheters.

 

The DoP had told the Parliamentary Standing Committee on Chemicals and Fertilisers in August that it was examining a proposal to incorporate TMR into the DPCO. No timeframe had been set for the broader framework.

 

While pharmaceutical industry associations and consumer groups have supported the proposed TMR framework, they have recommended changes to the method of calculating margins, the proposed cap, phased implementation and the period of sales data to be considered.

 

Rajiv Nath, forum coordinator, Association of Indian Medical Device Industry, had earlier told Business Standard that hospitals and importers should first agree with the DoP on what constitutes a rational margin before manufacturers are brought into the discussion.

 

However, associations representing micro, small and medium enterprises (MSMEs) have warned that extending TMR to non-scheduled formulations could disproportionately affect smaller companies, lead to employment losses and disrupt medicine availability in remote areas.

 

“In the case of some MSMEs, expenditure on developing a market was borne by the trade channel rather than by the manufacturer,” the DoP said in its response to the parliamentary committee in August.