Centre's cancer drug margin cap draws mixed response from industry, groups

The NPPA's 30% trade margin cap on 137 oncology drugs, effective November 9, has drawn support from the pharma industry, while patient groups question its impact on affordability.

The Centre's decision to cap trade margins on 137 cancer drugs at 30% has raised questions over its impact on treatment costs and medicine affordability.

Sanket Koul New Delhi

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The Centre’s plan to cap trade margins for 137 cancer drugs has prompted divergent views among the industry and patient advocacy groups on the extent to which the move could benefit patients.

The National Pharmaceutical Pricing Authority (NPPA) had last week finalised a margin cap at 30 per cent of the maximum retail price (MRP) for oncology drugs, corresponding to a mark-up of 42.86 per cent on the price to stockist/price to distributor (PTS/PTD). The new MRPs are set to come into effect from November 9, 2026.

While the pharmaceutical industry has welcomed the move, patient advocacy groups suggest that effective implementation across the supply chain will be critical to ensure the intended benefits reach patients without disrupting the availability of critical medicines.

Welcoming the NPPA’s notification on trade margin rationalisation (TMR), Sudarshan Jain, secretary general of the Indian Pharmaceutical Alliance (IPA), said that it would help optimise pricing for oncology products while allowing adequate margins to channel partners.

However, certain industry representatives have argued that interventions regulating individual components of hospital bills without accounting for the broader cost of care could affect the healthcare sector's financial sustainability.

“Regulation should consider overall healthcare economics rather than merely the difference between procurement price and MRP,” Abhay Soi, chairman and managing director at Max Healthcare, had earlier told Business Standard during the debate regarding high mark-ups.

He had noted that hospitals traditionally embed several service costs within product pricing, including trained manpower, preparation, administration, monitoring and safety protocols.

“Such safeguards add costs that hospitals generally do not charge separately. A uniform cap that ignores these costs would put pressure on margins and could affect investment in capacity and infrastructure,” Soi added.

Commenting on this issue, Jain said that it was important to maintain a balance between affordability for patients and the interests of all stakeholders involved in oncology care, while ensuring the uninterrupted availability of medicines.

Despite the margin caps, the drugs will be eligible for an annual increase of up to 10 per cent in MRPs as they are still non-scheduled, or non-price-capped, formulations.

Meanwhile, patient support groups have asserted that trade margin capping is an inadequate policy response to making cancer treatment affordable. They also point to the exclusion of free drugs provided under patient assistance programmes (PAPs) from the pricing calculations.

Malini Aisola, co-convener of the All India Drug Action Network (AIDAN), said that PAPs are market expansion strategies that operate by providing discounts or "buy and get some free" deals. "Not factoring the total volume of product supplied under PAPs masks and underestimates the real trade margins and would significantly dilute any MRP reductions," she added.

There are also concerns that hospitals could try to offset potential revenue losses by increasing admission or chemotherapy-related charges.

An executive of a Delhi-NCR-based unlisted hospital chain told Business Standard that if one component (pharma margins) of hospital revenue was substantially reduced without addressing underlying costs, the economics would inevitably have to be recalibrated elsewhere.

Manufacturers are required to inform the NPPA of their revised prices within seven days of publication of the gazette notification, according to the NPPA’s notification dated October 17, 2026.