Cancer drug mark-ups hit 700% despite 2019 cuts

The government's recent efforts to lower the prices of 137 cancer drugs have provided patients with some temporary relief, yet a 2019 comparison reveals that the long-term benefits may be limited. An analysis of drugs included in the earlier price-cut initiative shows that the mark-ups on most of these medicines rose to between 100% and 700% by 2026. This has sparked concerns among patient groups about the sustainability of affordability following one-time reductions in maximum retail prices (MRPs).

The All-India Drug Action Network (AIDAN), which advocates for accessible medications, highlighted the trend, arguing that merely capping maximum retail prices (MRPs) without a sustained mechanism to control trade margins could lead to the same issue resurfacing. According to a TOI report, 34 out of the 137 anti-cancer drugs on the National Pharmaceutical Pricing Authority's (NPPA) recent list were part of the 2019 list of 42 cancer drugs.

Of these overlapping medicines, most had mark-ups exceeding the 30% trade margin cap set in 2019. While five brands from the 2019 list had mark-ups at 43%, four had mark-ups ranging from 43% to 100%, and the majority had mark-ups from 100% to over 700%.

The findings underscore the disparity between the immediate price reductions and the capacity of a one-time intervention to maintain trade margins under control over time. The gap between these immediate reductions and the ability of a short-term measure to sustain affordability in the long run is evident. The 2019 price cuts, while reducing the MRPs of several medicines, failed to prevent subsequent mark-ups from increasing substantially.

This discrepancy arises from the difference between how trade margins and mark-ups are calculated. A trade margin, measured as a percentage of the final MRP, is equivalent to a mark-up on the price at which a stockist or distributor purchases the medicine. Therefore, a 30% trade margin on the final price is roughly akin to a mark-up of about 42.86% on the stockist's price.

The TOI report cited the example of Pemetrexed, a cancer drug whose MRP dropped from Rs 7,000 to Rs 800 in 2019, but only saw a smaller reduction in 2026, from Rs 1,095 to Rs 297. Moreover, several multinational companies that substantially lowered prices in 2019 made only minor reductions or none in the latest exercise. Some original patent-holders, known as originator companies, also made limited price cuts on both occasions.

NPPA refers to this as trade margin capping, but this is misleading as it is merely a one-time MRP reduction through restricting mark-ups, according to Malini Aisola of AIDAN. She noted that the intervention would not prevent mark-ups from rising again, as seen after the 2019 exercise.

The NPPA's latest move, covering 137 non-scheduled anti-cancer drugs and aiming to cap trade margins at 30% of the MRP (excluding GST), is set to take effect from November 9. The government anticipates that this measure could reduce the MRPs of these medicines by up to 70%, depending on their price structures. The regulation also instructs manufacturers to maintain current production levels to avoid supply disruptions post-price reductions.

Companies must submit revised prices within seven days of the notification. However, the actual magnitude of the price reductions and their impact on patient savings remain a matter of question. The Economic Times report found that 159 out of 643 drug packs in the revised list had no price change, including some high-cost patented medicines.

The average price reduction across this list was 38.22%, according to data from KC Jain, a petitioner in the Supreme Court proceedings on medicine pricing. Notably, some medicines, including Keytruda, Tagrisso, and Koselugo, saw no reduction in price.