Are lower MRPs on cancer drugs translating into affordable care?

Why in the News

The National Pharmaceutical Pricing Authority (NPPA) has capped trade margins at 30% for 137 non-scheduled anti-cancer drugs, cutting prices of nearly 900 brands by up to 70% to 93%. Yet large rupee cuts are rare and the costliest drugs are unchanged, so lower Maximum Retail Prices (MRPs) alone do not make cancer care affordable.

What is trade margin rationalisation, and why was it needed?

1. What it is: A trade margin is traders’ profit between the distributor’s price and the MRP. Trade margin rationalisation caps it, like a ceiling on a shop’s mark-up, so companies reset MRPs.
2. Legal route: Paragraph 19 of the Drugs (Prices Control) Order, 2013 lets the government cap any drug’s price in the public interest, even non-scheduled drugs, whose launch price companies set freely.
3. Why it was needed: Patients have paid inflated prices for years. Eg. One company’s Enzalutamide, a cancer drug, fell from ₹3.14 lakh to ₹1.17 lakh, though rivals already sold it far cheaper.
4. The takeaway: Hospitals buy in bulk but profit from high MRPs rather than bargaining prices down, so the cap seeks to move that margin to patients.

How much have prices really fallen?

1. Share of brands cut: Of 1,024 brands in one analysis of the list, almost half (45.4%) saw their price fall by more than half.
2. Rupee value of cuts: Patients feel a cut’s rupee size, not its percentage. Only about one in six brands (16.5%) fell by more than ₹10,000.
3. Palbociclib example: Palbociclib’s widely cited fall from about ₹40,000 to ₹2,720 covers just one brand. Many cheaper brands were already on sale, so the headline figure overstates the saving.

Why have the costliest drugs not become cheaper?

1. Unchanged high-end brands: Nearly 194 brands saw no cut. These are among the costliest, priced up to ₹10 lakh.
2. Named exceptions: Ribociclib, a breast cancer drug, came under margin caps in 2019, but its MRP is unchanged. Pembrolizumab, a World Health Organization (WHO) essential medicine, saw no cut either.
3. Patented medicines: Companies must recover heavy research costs, so a blanket cap is unwise. Patients still need protection from overcharging.
4. Risk to generics: A uniform margin earns a hospital more on an ₹8,000 drug than on a ₹2,000 one. Hospitals then have less reason to stock cheaper generic versions.

Is cheaper medicine enough to make cancer care affordable?

1. Treatment costs: Median spending on cancer treatment is about ₹4.1 lakh. Nearly 80% of it is paid out of pocket, from families’ own money.
2. Borrowing to pay: A Parliamentary Standing Committee on Health report in 2022 found nearly 40% of cancer patients borrow or pledge assets for treatment.
3. Insurance limits: The ₹5 lakh insurance cover under Ayushman Bharat does not suffice for every patient. Schemes often pay for only parts of treatment.
4. Unregulated charges: India regulates telecommunications and electricity charges but has no comparable mechanism for healthcare charges. Doctors decide the treatment, so patients cannot easily judge or question its price.

Challenges

1. Small absolute savings: Percentage cuts look large, but few brands fell by large rupee amounts.
2. High-value drugs untouched: Margin caps leave the costliest patented drugs and immunotherapies unchanged.
3. Private sector concentration: Most advanced cancer services sit in the private sector.
4. Costs beyond drugs: Diagnostics, surgery, travel and follow-up care keep out-of-pocket spending high.

Way Forward

1. Supply chain disclosure: The NPPA should use its Essential Commodities Act, 1955 powers to notify price disclosure and margin rules, without a new law.
2. Public pricing database: Build a government price database instead of relying on private agencies.
3. National cancer mission: Strengthen public facilities, set standard treatment protocols and create systems for second opinions.
4. Pooled procurement: Government institutions and health schemes should buy jointly to negotiate lower prices.
5. Cost-based caps: Cap treatment costs against standard protocols, and require disclosure of actual research costs.

Conclusion

Margin caps have lowered many cancer drug prices on paper, but the costliest drugs and the wider costs of treatment remain out of reach. Whether supply chain disclosure and a national cancer mission follow will decide if a cancer diagnosis stops pushing families into poverty.

Key numbers

1. Brands cut by over 70% and over 90%: 19.6% and 0.8% of brands analysed.
2. Other Palbociclib brands: 767 already on sale.
3. Price range of those brands: ₹2,800 to ₹9,000.
4. Cheapest unchanged brand: priced at over ₹1 lakh.
5. Out-of-pocket cancer spending: about ₹3.3 lakh per patient (median).
6. Five-year breast cancer survival: about 90% in high-income countries; about 65.5% in India.

Matching Previous Year Question

“[2022] With reference to Ayushman Bharat Digital Mission, consider the following statements : 1. Private and public hospitals must adopt it. 2. As it aims to achieve universal health coverage, every citizen of India should be part of it ultimately. 3. It has seamless portability across the country. Which of the statements given above is/are correct ? (a) 1 and 2 only (b) 3 only (c) 1 and 3 only (d) 1, 2 and 3 ANSWER: (b)”