Hyderabad: Patients, hospital chains and the pharmaceutical industry have welcomed the National Pharmaceutical Pricing Authority’s (NPPA) decision to cap trade margins at 30 percent on 137 life-saving cancer drugs. The move is expected to lower medicine prices and ease treatment costs for patients. It could also strengthen India’s position in the global oncology drug market.
In an order dated 17 October, the NPPA directed manufacturers to submit revised maximum retail prices (MRPs) within seven days. The new prices will take effect from 9 November, according to the gazette notification. Drug companies must also publish revised price lists on their websites and circulate them to retailers and hospitals.
The NPPA, an independent regulatory body under the Department of Pharmaceuticals in the Ministry of Chemicals and Fertilizers, is responsible for fixing and revising drug prices to ensure that medicines remain affordable and accessible.
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A statement by the Department of Pharmaceuticals (DoP) said hospitals and medical institutions, which account for a substantial share of anti-cancer drug purchases, would be responsible for ensuring that the revised prices were implemented from the effective date. “State Drug Controllers will take necessary steps to ensure compliance by manufacturers, dealers, including retailers, hospitals and medical institutions,” it added.
The intervention follows sharp criticism from the Supreme Court over steep markups on medicines. In a hearing on 29 September, a bench of Justices Vikram Nath and Sandeep Mehta questioned how a drug sold to retailers for Rs 2,700 could carry an MRP of Rs 27,000, describing the disparity as “broad daylight dacoity” and “carnage”.
The court also questioned why restrictions on excessive margins should be confined to cancer drugs rather than extended to other essential medicines. The bench scheduled the next hearing for 27 October to examine wider pharmaceutical pricing.
The NPPAs’ order is expected to reduce MRPs on non-scheduled drugs by up to 70 percent, with the extent of the reduction depending on existing price structures. The margin reduction will be reflected at the first point of sale, either when the pharma company sells to the distributor or to a hospital. By capping margins across the distribution chain, the intervention seeks to curb excessive markups and reduce the financial burden of cancer treatment.
The drugs covered include immunotherapies used against more than 20 types of cancer, denosumab for certain breast and prostate cancer patients, pegfilgrastim to prevent neutropenia in cancer patients, and bevacizumab, used to treat cancers including those of the colon, ovaries and cervix. The list also covers widely used medicines such as pembrolizumab, durvalumab and osimertinib.
An expert committee under the Directorate General of Health Services, comprising oncologists, medical specialists, hospital experts and government officials, recommended the expanded list. It will be updated periodically.
According to the Department of Pharmaceuticals, India’s anti-cancer drug market comprises nearly 225 drugs and 500 formulations, with an annual turnover of around Rs 12,500 crore. Scheduled cancer drugs already subject to price controls account for approximately Rs 2,250 crore, while the remainder falls under the non-scheduled category.
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How the price cap works
The NPPA invoked Paragraph 19 of the Drugs (Prices Control) Order (DPCO), 2013, to impose the margin cap. The move builds on a 2019 pilot exercise in which the authority capped trade margins at 30 percent on 42 anti-cancer drugs. That intervention reduced the MRPs of 526 brands of non-scheduled cancer medicines by up to 90 percent.
Cancer drugs fall under the non-scheduled category, which includes pharmaceutical formulations that are not listed in Schedule-I of the Drugs (Prices Control) Order (DPCO), 2013, or the National List of Essential Medicines (NLEM). Unlike scheduled medicines, whose prices are subject to specific government controls, non-scheduled drugs generally allow manufacturers greater flexibility in setting launch prices based on production costs and market demand.
The latest intervention is significant as cancer cases continue to rise across India. States including Tamil Nadu and Telangana have classified cancer as a notifiable disease. Estimates from the Ministry of Health and Family Welfare (MoHFW) and the Indian Council of Medical Research’s National Cancer Registry Programme put the annual number of new cancer cases at approximately 15.3 lakh to 15.6 lakh.
A release issued by the Press Information Bureau estimates that the new price regulation could save Indian patients Rs 2,500 crore annually.
Beyond immediate savings, industry analysts say the intervention could help reduce domestic pricing distortions and encourage manufacturers to operate on more competitive cost structures, potentially improving their position in international markets.
Industry sees export potential
India is among the top three manufacturers of oncology drugs, with companies such as Natco Pharma and Dr Reddy’s Laboratories among the prominent players. Industry experts told ThePrint that tighter domestic pricing could encourage manufacturers to compete more aggressively in overseas markets, strengthening India’s position as a leading global supplier of medicines. Two experts declined to be quoted because their companies were in the mandatory silent period ahead of their third-quarter results.
Dr MV Narasimham, chief financial officer of Dr Reddy’s Laboratories, told ThePrint that he viewed the regulation positively.
“We are certain that this will lead to an increase in exports of oncological drugs. However, we are studying the regulation as a whole, and we believe this is a step in the right direction,” he said.
However, the impact on pharmaceutical companies may vary depending on how the margin cap affects their distribution arrangements and negotiations with hospitals.
Rashmi Sancheti, Pharma Analyst at Dolat Capital, told ThePrint that the restrictions applied to formulations containing any of the listed drugs, whether used alone or in combination, across strengths, dosage forms and routes of administration. They also applied when the drugs were prescribed for other therapeutic uses.
“The impact on pharma companies will be minimal because the margin cap is calculated from the Price to Stockist up to MRP; manufacturers do not inherently have to take a direct cut on their ex-factory realisations. However, they will face stiff margin-sharing renegotiations from hospital pharmacy procurement teams in the coming 12 months at least,” she said.
(Edited by Chingkheinganbi Mayengbam)