New Delhi: The Centre has told the Supreme Court that capping trade margins on anti-cancer medicines at 30 per cent of their maximum retail price (MRP) is expected to save patients around Rs 2,500 crore annually, with the proposed measure likely to reduce the MRP of such drugs by 20 to 70 per cent.
In an affidavit filed before the apex court in a pending plea seeking regulation of medicine prices, the Union government, through the Department of Pharmaceuticals, said it had decided to rationalise trade margins on anti-cancer drugs after extensive consultations with stakeholders and an assessment of the potential impact on the availability and affordability of medicines.
The proposed cap was intended to curb excessive trade mark-ups while retaining a reasonable margin for distributors and retailers, adding that an expert committee had been constituted to recommend the list of anti-cancer medicines to which the measure would apply, it said.
The Ministry of Health and Family Welfare constituted the committee on October 9 under the chairmanship of the Director General of Health Services, and it is expected to submit its report within 10 to 15 days.
“The trade margin is to be capped at 30 per cent of the MRP, on the same lines as was done in the TMR of 2019. The objective is to retain a reasonable trade margin while preventing excessive margins,” the affidavit stated.
The Centre said the list would cover drugs approved for the treatment of cancer, except inexpensive medicines, and could be periodically updated in view of market developments and public health considerations.
According to the affidavit, the National Pharmaceutical Pricing Authority (NPPA) would place the committee’s recommendations before its authority for deliberation and appropriate directions, following which it would issue a price notification and instructions to manufacturers to ensure that the benefits were passed on to patients.
The government said the proposed measure was expected to reduce out-of-pocket expenditure for cancer patients, improve affordability and accessibility of medicines, and bring greater transparency to the prices actually paid by consumers.
The affidavit was filed in response to a public interest litigation by Dr Sanjay Kulshrestha, which raises concerns over medicine pricing and the need for effective regulation of trade margins in the pharmaceutical sector.
The Centre maintained that a comprehensive statutory and policy framework was already in place to regulate drug prices, including the Drugs (Prices Control) Order, 2013, and that the government had been taking calibrated steps to address excessive margins without compromising the availability of essential medicines.
The government also referred to its earlier intervention in 2019, when the NPPA imposed a 30 per cent trade margin cap on 42 selected non-scheduled anti-cancer medicines.
According to the affidavit, the measure resulted in a reduction in the MRP of 526 brands and generated annual savings of approximately Rs 984 crore for patients, based on information provided by companies.
The Centre said the earlier intervention provided a policy precedent for extending trade margin rationalisation to a broader range of non-scheduled anti-cancer medicines.
However, it stressed that such interventions required careful consideration of their impact on different stakeholders, including small and medium pharmaceutical manufacturers, distributors and retailers, particularly those operating in remote areas.
The affidavit said some industry associations had expressed concerns that extending the cap could affect employment and medicine distribution in remote regions, given the dependence of smaller manufacturers on local traders and multiple distribution channels.
“Implementation of Trade Margin Rationalisation (hereinafter TMR) affects different stakeholders differently and, hence, requires extensive consultation with all stakeholders and a well-calibrated approach,” the affidavit stated.
The Centre said higher trade margins could sometimes be necessary for low-value medicines, drugs requiring specialised storage or handling, fragile products and medicines with low turnover, as retailers might otherwise find it commercially unviable to stock them.
It added that differences in distribution costs and market conditions had to be taken into account while framing a broader regulatory approach.
The government further referred to measures taken under its extraordinary powers under Paragraph 19 of the DPCO, 2013, including the capping of prices of certain diabetes and cardiovascular medicines, the fixation of ceiling prices for coronary stents and knee implants, and the regulation of trade margins on oxygen concentrators and other medical devices during the Covid-19 pandemic.
It also highlighted initiatives such as the Pradhan Mantri Bhartiya Janaushadhi Pariyojana, which provides generic medicines through around 19,000 Jan Aushadhi Kendras, and AMRIT pharmacies, which offer discounts on essential and life-saving medicines.
The affidavit said the government remained conscious of the need to balance affordability, accessibility and availability while regulating medicine prices.
“The Government has, in the public interest, been taking calibrated and consultative steps, including by invoking its extraordinary powers under Paragraph 19 of the DPCO, 2013, to curb excessive trade margins without compromising the availability of medicines,” it stated.
–IANS–
