India: 30% Cancer Drug Trade Margin Cap Set, SC Questions Scope

• The Indian Central government has capped trade margins on anti-cancer drugs at 30% of their Maximum Retail Price (MRP).
• This decision was communicated to the Supreme Court during the case of Kishan Chand Jain vs Ethics And Medical Registration Board (EMRB), an autonomous board under the National Medical Commission.
• The Supreme Court questioned why the cap was limited to anti-cancer drugs, highlighting exorbitant margins on other medical items.
• Justices cited examples like cardiac stents with a ₹5,000 PTR and ₹25,000 MRP, and Azithromycin with a ₹78.29 MRP.
• The Court had previously criticized a cancer drug sold at ₹27,000 with a ₹2,700 cost, labeling it "broad daylight dacoity".

The Central government in India has officially set a trade margin cap of 30 percent on anti-cancer drugs, calculated against their Maximum Retail Price (MRP).

The Central government in India has officially set a trade margin cap of 30 percent on anti-cancer drugs, calculated against their Maximum Retail Price (MRP). This significant regulatory change was communicated to the Supreme Court on a recent Monday, addressing concerns about inflated drug costs in the country. The move comes as a direct response to ongoing judicial scrutiny regarding pharmaceutical pricing practices.

This decision was announced during proceedings for the case of Kishan Chand Jain vs Ethics And Medical Registration Board (EMRB), an autonomous board under the National Medical Commission, And Ors. The government's action aims to bring down the final cost of crucial anti-cancer medications for patients, following widespread criticism over the exorbitant prices at which these life-saving drugs were being sold across the market.

Despite the government's announcement regarding the India cancer drug trade margin cap, a Supreme Court bench comprising Justices Vikram Nath and Sandeep Mehta expressed reservations, questioning why this new price-margin cap was exclusively applied to anti-cancer drugs. The justices highlighted the prevalence of excessive profit margins on various everyday medical items, suggesting a need for broader regulatory intervention across the pharmaceutical and medical device sectors.

Weeks prior to this hearing, the apex court had already pointed out severe discrepancies in drug pricing, citing instances where a cancer drug with a manufacturing cost of ₹2,700 was being sold at an MRP of ₹27,000. The Court had previously condemned such practices as "broad daylight dacoity" and a significant fraud perpetrated against public health schemes. The bench continued to press the issue, asking why other segments of the healthcare industry remained exempt from upfront margin regulation, even after the government indicated that the specific issue of cancer drug pricing had been addressed.

The Supreme Court's questioning extended beyond cancer drugs, with justices providing concrete examples of other medical products with disproportionate pricing. They noted that an Indian-made cardiac stent, which has a Price to Retailer (PTR) of ₹5,000, often carries an MRP of ₹25,000. The bench suggested that implementing a cap of just 16 percent on such items could potentially reduce unnecessary medical interventions by as much as three-fourths, implying that high margins incentivize doctors to recommend procedures.

Solicitor General Tushar Mehta countered by stating that cardiac stents are already subject to price caps. However, the Court continued to challenge the law officers, presenting further evidence of significant price disparities in common medicines and consumables. An example cited was Azithromycin, a routine antibiotic, which had an MRP of ₹78.29 while its Price to Stockist (PTS) was considerably lower, underscoring the ongoing concerns about pharmaceutical trade margin regulation India and the need for comprehensive oversight across the entire drug supply chain.

Lawyers advising pharmaceutical companies, particularly those dealing with anti-cancer drugs, must ensure their clients adjust pricing strategies to comply with the new 30% trade margin cap. Compliance officers should update internal pricing policies. This development also signals a potential for broader price regulation across the pharmaceutical and medical device sectors in India, requiring ongoing vigilance.

Source: Original reporting via Bar and Bench