The Centre has capped trade margins at 30% of the maximum retail price for all non-scheduled anti-cancer drugs, responding to concerns over excessive mark-ups and high treatment costs highlighted by Karnataka’s health department.
Karnataka health officials welcomed the move, describing it as a significant policy change following an inspection that examined the gap between procurement costs and prices charged to patients. The department had found that some medicines and medical consumables were being sold at mark-ups ranging from around three times to more than 50 times their procurement cost.
The findings were raised with the Union health ministry by Karnataka Health Minister UT Khader in a letter sent in September. Khader sought national-level intervention not only for cancer medicines but also for medical devices and consumables procured by hospitals at discounted institutional rates and subsequently billed to patients.
The state asked the Centre to create an inter-ministerial expert group, conduct a national study of high-value medicines and devices, impose tighter trade-margin caps, and require hospitals and suppliers to disclose procurement costs and patient billing prices. It also sought expanded price regulation by the National Pharmaceutical Pricing Authority, or NPPA.
“The Centre’s decision to cap trade margins at 30% of the MRP is a significant policy change following Karnataka’s investigation,” health department officials said, according to the Times of India report.
The issue had earlier been raised by Karnataka’s Food Safety and Drug Administration. FDA Commissioner Srinivas K wrote to the Centre on two occasions, according to the report. The first communication flagged the large difference between the landing cost and the maximum retail price of medicines. The second sought price regulation for essential medical devices to reduce patients’ out-of-pocket expenditure.
The distinction between scheduled and non-scheduled medicines is central to the decision. While scheduled medicines are subject to existing price controls, the new measure covers non-scheduled anti-cancer drugs, which had been identified by Karnataka as an area where trade margins could substantially increase the final bill.
For cancer patients, the impact of medicine pricing extends beyond the cost of a single prescription. Treatment often involves repeated purchases, hospital-administered medicines and related consumables. Karnataka’s inspection also pointed to the role of institutional procurement: hospitals may obtain products at discounted rates, while patients are billed at prices linked to the maximum retail price or other hospital pricing practices.
The Centre’s announcement addresses the trade-margin component of that chain. However, the measures sought by Karnataka also include disclosure of procurement and billing prices and broader regulation of medical devices. The supplied report does not specify whether those additional requests have been accepted or what implementation mechanism will be used for them.
The next step will be the implementation of the 30% cap for non-scheduled anti-cancer drugs. Further action on medical devices, hospital billing disclosures and the proposed national study remains subject to decisions by the Centre and the relevant regulatory authorities.
