Govt to cap cancer drugs trade margins

New Delhi: The government is preparing to identify the anti-cancer medicines that will come under a proposed 30% trade-margin cap, with an expert committee under the Directorate General of Health Services (DGHS) expected to submit its report by October 14, according to minutes of a recent meeting of the National Pharmaceutical Pricing Authority (NPPA).The Department of Pharmaceuticals (DoP) has asked the Ministry of Health and Family Welfare to constitute an expert committee to recommend the list of anti-cancer medicines to be covered under the proposed trade margin rationalisation (TMR) exercise. “The positive list may be updated periodically based on market developments and public health considerations, the minutes said.Also read | Govt set to cap trade margins on more cancer drugs before SC hearingThe NPPA has approved in principle the proposal to cap trade margins at 30% for identified non-scheduled anti-cancer medicines under Paragraph 19 of the Drug Price Control Order (DPCO), 2013.The minutes said the authority had “deliberated upon the need to address excessive trade mark-ups in non-scheduled anti-cancer medicines” and observed that “extraordinary circumstances warrant intervention under Paragraph 19 of DPCO, 2013 in public interest.”The authority further observed that “extraordinary circumstances existed warranting urgent action under Paragraph 19” to address market distortions, curb profiteering and ensure fair and affordable prices.The proposal follows an NPPA analysis which found that non-scheduled anti-cancer medicines carry an average trade mark-up of around 170%, with mark-ups reaching as high as 700% in some cases. The minutes also noted substantial variations in transaction prices across retail, hospital and e-pharmacy channels, including significant differences in discounts from MRP.“The Authority accordingly noted that high trade margins, particularly in non-scheduled anti-cancer formulations are a significant factor contributing to the high prices of such medicines,” the minutes further said.The anti-cancer medicines market comprises around 225 drugs and 500 formulations, with an annual turnover of about Rs 12,500 crore. Scheduled cancer drugs account for around Rs 2,250 crore, while the balance comprises non-scheduled medicines. Non-scheduled formulations are monitored to ensure that their prices do not increase by more than 10% in a year.The NPPA noted that 63 anti-cancer drugs are included in the National List of Essential Medicines (NLEM), 2022 and are already subject to price control through the ceiling-price mechanism.The DoP had directed NPPA to implement TMR on non-scheduled anti-cancer drugs under Para 19 in public interest, as was done in 2019. The proposed exercise is based on the earlier intervention, when the government capped trade margins at 30% for 42 non-scheduled anti-cancer drugs.The 2019 exercise resulted in substantial reductions in MRP, including reductions of up to 91% for 526 brands, and annual savings of around Rs 984 crore, the minutes said.The NPPA expects the proposed intervention to reduce MRP by broadly 20–70%, depending on the existing trade structure and mark-up of individual medicines, and estimates annual savings of around Rs 2,500 crore.The authority said the move would reduce patients’ out-of-pocket expenditure, improve affordability and accessibility, curb excessive trade mark-ups and increase transparency in prices applicable to patients.“The expected benefits include reduction in out of pocket expenditure, improved affordability and accessibility, reduction of excessive trade mark ups and greater transparency in prices applicable to patients,” it said.The proposal has been approved in principle subject to finalisation of the list of anti-cancer medicines to be covered.