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Govt caps trade margins of 42 cancer drugs

Currently, 57 anti-cancer drugs are under price control as scheduled formulations.

February 27, 2019 / 10:10 PM IST

Viswanath Pilla
Moneycontrol News

In a move that could benefit over 1.5 million cancer patients by reducing their out-of-pocket expenses, the Union government on February 27 capped trade margins of 42 cancer drugs.

The government invoked paragraph 19 of DPCO, 2013, to fix trade margins at 30 percent and directed manufacturers to fix their retail price based on the price at first point of sale of product or Price to Stockist.

A trade margin is a difference between the price at which the manufacturers sell the drugs to stockist or distributors and the final price to patients (or maximum retail price)

The government notification shall be valid for one year from the date of notification.

"..considering the high trade margin in the sale of drugs leading to high out of pocket expenses on healthcare, the Government hereby, seeks to undertake the matter of price control through a ‘Trade Margin Rationalisation Approach’," the National Pharmaceutical Pricing Authority (NPPA) notification said.

"And therefore, in order to bring in the regulation of drugs in the ‘non-scheduled’ segment the Government hereby seeks to undertake a Pilot for Proof of Concept by capping prices of select Anti-Cancer drugs, identified by the MoHFW as being essential for the treatment of this disease," the notification added.

As per the WHO estimate, there are approximately 18 million cases globally and 1.5 million in India alone. There were eight lakh cancer deaths in India in 2018. The number of new cases is estimated to rise to double in India in 2040.

The financial burden associated with cancer can force patients and households to acute misery and even insolvency. It is also noted that out of pocket (OOP) expenditure on cancer hospitalization is about 2.5 times of overall average hospitalization expenditure. While catastrophic expenditure on cancer inpatient treatment is highest among all NCDs, poor health financing mechanisms and heavy reliance on out-of-pocket healthcare payments compel several cancer patients to resort to distressed means for treatment financing.

"It is estimated that almost more than 50% cancer patients avail the private sector facilities and out of pocket expenses in the Health care including cancer care is about around 65 percent," NPPA said.

The All India Drug Action Network (AIDAN) that represents a network of healthcare NGOs and activists said the retail prices are not likely to be significantly affected through this move.

"However, by imposing mandatory margin caps, patients will benefit in hospitals which were undoubtedly indulging in profiteering by taking massive cuts,” AIDAN said.
Viswanath Pilla is a business journalist with 14 years of reporting experience. Based in Mumbai, Pilla covers pharma, healthcare and infrastructure sectors for Moneycontrol.