India Caps Cancer Drug Margins at 30% to Cut Costs by 70%

Effective from November 1, 137 additional cancer medicines in India will see reduced prices as the government applies a 30% cap on trade margins. The policy aims to lower the out-of-pocket expenses for patients, a group that often falls into debt or sells family assets to afford treatment.

The Department of Pharmaceuticals stated that the measure is expected to reduce medicine prices by up to 70%. The department projected that cancer patients will save 2,500 crore rupees, or approximately 199 million pounds, annually. This expansion extends a margin cap that had previously applied to only 42 drugs for several years.

The regulatory action follows a legal challenge initiated by Sarojam Radhakrishnan, a former bank clerk from Kerala. Diagnosed with breast cancer in 2021, Radhakrishnan found the prescribed targeted treatments cost more than 63,000 rupees per month. In 2022, she petitioned the Kerala High Court to force the government to lower these costs. She died in September 2022 while the case was pending.

When the matter reached the Supreme Court, justices Vikram Nath and Sandeep Mehta examined the profit margins charged by hospitals and retailers. The judges described the pricing structure as carnage and extortion. They cited a specific example where a drug supplied to hospitals for 2,700 rupees was sold to patients for 27,000 rupees.

Data from the National Pharmaceutical Pricing Authority revealed that trade mark-ups on some cancer drugs averaged 170%, with extreme cases exceeding 700%. Krishan Kalra, a former council member at the Rajiv Gandhi Cancer Institute and Research Centre, noted that cancer drugs currently range from 38,000 to 380,000 rupees. He observed that many families leave clinics upon hearing these estimates because they lack the funds for treatment.

The financial strain is extensive. Studies by the Public Health Foundation of India indicate that healthcare spending pushes about 55 million Indians below the poverty line each year. While the government's Ayushman Bharat insurance scheme covers some cancers, it provides only 500,000 rupees in annual coverage per family. That amount equals the cost of a single dose of Kadcyla, a breast cancer drug for which patients may require up to 14 doses.

Dr. Ravi Kannan, a surgical oncologist in Assam, called the decision a welcome step for improving access. Jyotsna Singh, co-convener of the Working Group on Access to Medicines, urged for a total overhaul of healthcare regulation to prevent hospitals from offsetting lower drug prices with higher service charges. The Supreme Court has given the government until October 27 to explain why the cap applies only to cancer drugs and not all non-patented medicines.