Government Caps Cancer Drug Margins at 30%, Patient Savings Under Scrutiny

The government has moved to cap trade margins at 30% of the maximum retail price (MRP) on 137 cancer drugs, encompassing over 1,000 medicine brands. This measure, notified on October 17, aims to reduce medical bills for patients, though public health and industry experts are questioning its actual impact on overall healthcare costs.

Experts speaking to TOI indicated that while the cap could narrow the gap between hospital supply prices and MRPs, hospitals might seek to offset lower margins by increasing charges on consumables, diagnostics, or procedures. A similar trend was observed in 2017 following the capping of cardiac stent prices, which led several private hospital chains to raise angioplasty package rates. Consequently, hospital stocks on the BSE saw a decline on Monday after the government’s notification.

Wider rationalization of margins across all medical products and closer scrutiny of hospital charges may be necessary for substantial reductions in medical bills, according to experts. The MRP of certain cancer drugs, including combinations like pertuzumab and trastuzumab, atezolizumab, teclistamab, inotuzumab ozogamicin, and daratumumab, can reach up to Rs 5 lakh per vial or pack.

Girdhar Gyani, director general at the Association of Healthcare Providers, stressed the importance of timely implementation across manufacturers, distributors, and hospitals. He clarified that a 30% trade margin is not synonymous with a 30% profit margin for hospitals, as it applies across the distribution chain. Oncology represents a significant revenue stream for hospitals, and Mayur Sirdesai, co-founding partner at Somerset Indus Capital, emphasized viewing affordability across the entire cancer-care pathway. Sudarshan Jain, secretary-general of the Indian Pharmaceutical Alliance, stated the impact on affordability requires evaluation. KM Gopakumar of Third World Network warned that medicine prices might still remain out of reach for many, and hospitals could find alternative ways to hike charges.

What to watch: The effectiveness of the cap in reducing patient bills and potential adjustments in hospital billing practices.

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