There is good news for cancer patients undergoing treatment. The central government has decided to fix the trade margin i.e. profit limit of traders on cancer drugs at 30% without a fixed price limit. Due to this, the maximum retail price (MRP) of some cancer drugs can be reduced by 20% to 70%. The government estimates that the move could save patients around Rs 2,500 crore every year.

This decision comes at a time when the Supreme Court also expressed concern over the cost of cancer drugs. The court raised the question by giving an example of a medicine whose cost of supply to a retailer is around Rs. 2,700, while its MRP is Rs. 27,000 was.

According to an Economic Times report, following this decision, the pharmaceutical department has asked the health ministry to form a committee of experts. The committee will prepare a list of drugs on which the new limit of trade margin will be applicable. The committee constituted under the Directorate General of Health Services (DGHS) is expected to submit its list by October 14. This list may be changed from time to time as per need.

This rule will apply to both branded and generic drugs

The government’s decision may apply to branded and generic drugs, off-patent and off-patent drugs manufactured in the country and imported from abroad. The manufacturers of the drugs included in this system have to maintain the current production levels, so that patients do not face any problem in the supply of these life-saving drugs.

MRP may be lower

The government has made it clear that under this decision, margins in the drug trade will be curbed. It is not expected to have a direct impact on sales prices and earnings of drug manufacturing companies. However, the MRP of a drug is decided by the manufacturer or the marketing company. After implementing the trade margin limit, companies are expected to reduce the MRP, so that patients can benefit from it.

Trade margins on some drugs were up to 700%

According to an analysis by the National Pharmaceutical Pricing Authority (NPPA), cancer drugs outside the prescribed price range have an average trade margin of around 170%. In some drugs it reaches 700%. Apart from this, there was also a huge difference in the prices and discounts of the same medicine in medical stores, hospitals and online pharmacies. The NPPA admitted that the main reason for the high prices of these cancer drugs is the high margins of traders. The authority pointed out the need to invoke paragraph 19 of the Drugs Price Control Order (DPCO), 2013 in exceptional circumstances in public interest. This provision empowers the government to fix the maximum price of medicine in special circumstances.

How much will patients benefit?

As per NPPA estimates, the new system can reduce the MRP of various drugs by around 20% to 70%. This will reduce out-of-pocket costs for patients and make cancer treatment somewhat economical. According to officials, about 75% of the cost of cancer treatment is borne by patients themselves. However, the Working Group on Access to Medicines and Treatments (WGAMT), an organization working for affordable medicines, has questioned the decision. The organization says that simply setting trade margin limits will not make cancer drugs fully affordable.