Centre finalises 30% trade margin cap for 137 non-scheduled cancer drugs

The Centre has finalised a 30 per cent trade margin cap on the maximum retail price (MRP) for 137 non-scheduled anti-cancer drugs. This move, aimed at ensuring affordable oncology therapies, was announced via a gazette notification dated October 17. The list of drugs, which includes both patented and non-patented formulations like Nivolumab, Olaparib, Denosumab, and Topotecan, was recommended by an expert committee under the Directorate General of Health Services (DGHS), according to the National Pharmaceutical Pricing Authority (NPPA).

The NPPA, in its 284th meeting on October 16, deemed it necessary to cap the trade margin at 30 per cent of MRP, excluding GST, which corresponds to a mark-up of 42.86 per cent on the Price to Stockist/Price to Distributor (PTS/PTD). This intervention is projected to reduce the MRPs of these identified drugs by up to 70 per cent, depending on their current price structures, and generate an estimated annual saving of Rs 2,500 crore. These revised prices are set to become effective from November 9, 2026.

Manufacturers are mandated to display price lists on their websites and disseminate them widely to retailers and hospitals, also informing the NPPA of revised prices within seven days of the notification. State drug controllers, hospitals, and medical institutions are tasked with monitoring compliance. Non-compliance will result in manufacturers being liable to deposit the overcharged amount along with interest under the Drugs (Prices Control) Order (DPCO) 2013, read with the Essential Commodities Act, 1955. Drug quantities supplied under Patient Assistance Programmes (PAP) are excluded from this cap.

Officials indicated that the expert committee had previously found trade margins ranging from 170 to 700 per cent for non-scheduled cancer drugs. Non-scheduled drugs, which constitute an estimated 82 per cent of India's domestic pharmaceutical market, are not subject to price ceilings under the DPCO 2013 and allow manufacturers to increase prices by up to 10 per cent annually. This decision marks a significant step towards trade margin rationalisation (TMR), which regulates the difference between manufacturer-to-distributor prices and consumer prices, rather than fixing a ceiling.

The Centre had previously capped trade margins for 42 cancer drugs in 2019, leading to reported annual savings of Rs 984 crore across 526 brands. Officials suggest that margin capping could potentially extend beyond cancer drugs to include other non-scheduled formulations, medical consumables, and devices such as intravenous (IV) kits and catheters. This initiative also coincides with ongoing Supreme Court scrutiny regarding high mark-ups on essential medicines, with a Bench comprising Justices Vikram Nath and Sandeep Mehta questioning the regulatory distinction between scheduled and non-scheduled medicines.

Editor's note: The draft thoroughly covers the NPPA's decision, the background on trade margins, and the regulatory implications.