On February 27, 2019, the National Pharmaceutical Pricing Authority or NPPA (hereinafter also referred as 'Authority') capped trade margins of 42 non-scheduled cancer drugs to curb profiteering on vital medicines notified in the Standing Order1. NPPA, an independent body of Department of Pharmaceuticals, (DoP) functions inter-alia fixation and revision of retail/ceiling prices of scheduled drug formulations under the Drugs (Prices Control) Order, 2013 (DPCO) aims to ensure that essential drugs are available to all at affordable prices.

Authority usually follows price capping for the National List of Essential Medicines (NLEM) which are adopted on the basis of essentiality and further listed in the First Schedule of DPCO as scheduled medicines2. Apart from this, Authority also monitors non-scheduled medicines by ensuring that the annual price increase shall not be more than 10 percent.

Now, the Authority for the first time has decided to undertake 'Trade Margin Rationalization Approach' for the matter of price control. The authority, in the exercise of the powers of extraordinary circumstances vested in provisions of Para 19 of the DPCO3, has recommended 42 non-scheduled Anti-Cancer medicines for price control on pilot basis. The Government has put a cap on trade margin of 30% and also -

  • Directs manufacturers to fix their retail price based on price at first point of sale of product (hereinafter referred as Price to Stockist), using this formula:
  • Retail price of the product = Price to Stockist (PTS) x {1 + (0−TM)}
    Where TM = Trade Margin not exceeding 30, Where PTS = PTS for the month of June 2018
  • This price cap will be applicable on the non-scheduled formulations containing any of the 42 drugs listed in the table below (whether individual or in combination, irrespective of dosage strength, dosage form and /or route of administration):
  • Sl. No. Name of the Drug
    1 Azacitidine
    2 Bendamustine Hydrochloride
    3 Bortezomib
    4 Crizotinib
    5 Cytarabine
    6 Dasatinib
    7 Decitabine
    8 Doxorubicin HCI Pegylated Liposomal Injection
    9 Enzalutamide
    10 Epirubicin
    11 Eribulin mesylate
    12 Erlotinib HCI
    13 Estramustine phosphate
    14 Everolimus
    15 Exemestane
    16 Fulvestrant
    17 Irinotecan HCI Trihydrate
    18 Lapatanib
    19 Leuprolide acetate depot for Inj.
    20 Lomustine
    21 Mitoxantrone
    22 Nilotinib
    23 Plerixafor
    24 Carfilzomib
    25 Cladribine
    26 Triptorelin
    27 Pomalidomide
    28 Osimertinib
    29 Pegasperagase
    30 Regorafenib
    31 Ribociclib
    32 Clofarabine
    33 Sunitinib
    34 Olaparib
    35 Olaratumab
    36 Paclitaxel (Protein-bound particles)
    37 Cabazitaxel
    38 Bevacizumab
    39 Lenalidomide
    40 Pegfilgrastim
    41 Mitomycin
    42 Pemetrexed
  • Further, the Government has also directed manufacturers to provide the information in respect of the non-scheduled formulations containing drugs mentioned in the above table, irrespective of whether there is any change in MRP or not, by March 06, 2019.

Why Trade Margin Rationalization Approach?

The Government has been examining options for rationalization of prices in this segment in a graded manner. One major factor that contributes to high drug prices in India, is the unreasonably high trade margins. Trade margin is the difference between the price at which the manufacturers sell the drugs to stockist / distributors (price to stockist) and the final price to patients (maximum retail price).

The policy note 'Making Market Work for Affordable Healthcare' published by Competition Commission of India (CCI) says "One major factor that contributes to high drug prices in India is the unreasonable high trade margin. The high margins are in form of incentive and an indirect marketing tool employed by drug companies." Subsequently, the expert committee report on 'High Trade Margin in the sale of drugs' inter-alia stated that 'It is neither the desire nor is it possible for the government to interfere in the day to day business activities of the industry. The committee observed capping of trade margins necessary and recommends that intra trade margins could be decided by the industry subject to a cap to be notified by the Government from time to time.

The Government then decided to undertake the matter of price control through a 'Trade Margin Rationalization Approach'. And therefore, in order to bring in regulation of drugs in the 'non-scheduled' segment the Government undertook a Pilot for Proof of Concept by capping prices of selected anticancer drugs, identified by the MoHFW as being essential for the treatment of this disease.

Why only cancer drugs for price control?

The Authority noted that 'Cancer is one of the leading causes of adult illness and death due to chronic and non-communicable diseases (NCD) in India. As per WHO estimate, there are approximately 18 million cases globally and 1.5 million in India alone. There were 8 lakhs cancer deaths in India in 2018. The number of new cases is estimated 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. It is estimated that almost more than 50% cancer patients avail the private sector facilities and out of pocket expenses in the healthcare including cancer care is about around 65%.

At present NLEM has 376 medicines out of which 59 drugs are already under the category of antineoplastic/ immunosuppressive, hormones & anti-hormones and medicines used for palliative care. Pricing of these medicines are controlled through DPCO as amended from time to time.

A disease centric approach on cancer assumes salience because of specific national policy commitments to ensure universal access to healthcare at affordable prices. Cancer patients in India incur heavy out-of-pocket expenditures. The cancer drugs need to be affordable so that whenever required the treatment can be provided at the earliest in the early stages when the cancer treatment is curable. The Authority noted that availability and affordability of cancer drugs will give impetus to treatment outcomes and will bring down the cost of common anti-cancer drugs thereby increasing affordability and accessibility of these drugs. The authority offers seven days period to drug manufacturers to recalculate the prices and inform back to NPPA.


The latest move is expected to bring down prices of listed anti-cancer drugs for patients buying them at hospitals, and retail store, which generally bill them at MRP. However, it may not be effective for retail chains buying the drugs through wholesalers or stockiest that already give them large discounts.


1. http://nppaindia.nic.in/ceiling/press27February19/Notification-25.02.2019(Final).pdf


3. Para 19 Fixation of ceiling price of a drug under certain circumstances – 'Notwithstanding anything contained in this order, the Government may, in case of extra-ordinary circumstances, if it considers necessary so to do in public interest, fix the ceiling price or retail price of any Drug for such period, as it may deem fit and where the ceiling price or retail price of the drug is already fixed and notified, the Government may allow an increase or decrease in the ceiling price or the retail price, as the case may be, irrespective of annual wholesale price index for that year'.

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