Cancer drug prices fell in 2019 too, but mark-ups of up to 700% are
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The government's latest cancer drug price cuts may offer patients some relief, but the impact could be short-lived. An analysis of medicines covered in the 2019 exercise found that mark-ups had risen to as much as 700% by 2026, raising questions about whether one-time price cuts can keep cancer treatment affordable.
The government's latest move to reduce prices of 137 cancer drugs may offer patients some immediate relief, but a look at what happened after a similar intervention in 2019 raises questions about how long those savings will last.An analysis of drugs covered by the earlier exercise shows that mark-ups on a majority of the medicines had climbed to 100%-700% by 2026, prompting patient groups to question whether one-time reductions in maximum retail prices (MRPs) can keep medicines affordable.
Also Read: NPPA list brings little relief: No price cut for 25% cancer drugs
The All-India Drug Action Network (AIDAN), which works on access to affordable medicines, has flagged the trend, arguing that restricting MRPs without a continuing mechanism to control trade margins could allow the same problem to resurface.
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Only five brands from the earlier list had mark-ups of 43% before the latest price revision, while another four had mark-ups between 43% and 100%. The mark-ups on most of the other brands were considerably higher, ranging from 100% to over 700%, the report said.
The findings point to a gap between the immediate reduction in medicine prices and the ability of a one-time intervention to keep trade margins under control over the longer term.
Why the 2019 price cuts did not last
In February 2019, the NPPA introduced a 30% trade margin cap on 42 non-scheduled anti-cancer drugs. The exercise led to significant reductions in the MRPs of several medicines.However, the latest analysis suggests that mark-ups on many of these brands increased substantially over the following years.
Also Read: Cancer drug price cuts leave costly brands untouched
A key distinction lies in how trade margins and mark-ups are calculated. A trade margin is measured as a percentage of the final MRP, while a mark-up is calculated on the price at which a stockist or distributor buys the medicine. A 30% trade margin on the final price is equivalent to a mark-up of around 42.86% on the price to stockist.
This means that a one-time reduction in MRP does not necessarily prevent companies and distributors from increasing prices and mark-ups later, subject to the applicable pricing rules.
The TOI report cited the example of Pemetrexed, an anti-cancer drug. The MRP of one brand fell from Rs 7,000 to Rs 800 in 2019. In the latest exercise, its price has come down from Rs 1,095 to Rs 297.
The latest reduction is smaller in percentage terms than the cut made in 2019. The report also noted that several multinational companies that had reduced prices substantially in the earlier exercise have made smaller reductions or none this time. Some originator companies, which originally held the patents for the medicines, had made limited price cuts on both occasions.
"NPPA is calling it trade margin capping, as they did in 2019 also. That's misleading because it is not a cap. It is just a one-time reduction of MRP by restriction of the mark-up," Malini Aisola of AIDAN told TOI.
She said the intervention would not be enough to prevent mark-ups from rising again, as happened after the 2019 exercise.
NPPA's latest move and the expected price relief
The latest intervention covers 137 non-scheduled anti-cancer drugs and seeks to restrict trade margins to 30% of the MRP, excluding GST. The revised prices are scheduled to take effect from November 9.The government expects the exercise to reduce the MRPs of the identified medicines by up to 70%, depending on their existing price structures. The measure covers widely used cancer medicines, including immunotherapy drugs used to treat more than 20 types of cancer.
The NPPA has also directed manufacturers to maintain existing production levels to prevent supply disruptions following the price reductions. Companies must submit revised prices within seven days of the notification.
However, the scale of the actual price reductions has also raised questions about how much patients will save.
The Economic Times report from October 30 found that 159 of the 643 drug packs in the revised price list had no reduction in MRP. This included several expensive patented medicines.
The average price reduction across the 643 packs stood at 38.22%, according to the analysis, which cited data from advocate KC Jain, a petitioner in the Supreme Court proceedings on medicine pricing.
Some of the medicines whose prices remained unchanged included Keytruda (pembrolizumab), priced at Rs 2.16 lakh for a 100 mg injection pack; Tagrisso (osimertinib), at Rs 4.16 lakh for 30 tablets; and Koselugo (selumetinib), at more than Rs 10 lakh for 60 capsules.
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Figures reflect the source report and its stated period. This article is for information and is not investment advice.
