"Government Caps Trade Margins on Non-Scheduled Cancer Drugs"
Trade margin
the markup (meaning: price increase) added by distributors and retailers before a drug reaches the patient
MRP (Maximum Retail Price)
the highest price a seller can legally charge a consumer for a product
India controls drug prices under the Drugs (Prices Control) Order, 2013 (DPCO). This order was issued under the Essential Commodities Act, 1955. The National Pharmaceutical Pricing Authority (NPPA) enforces this law. DPCO divides medicines into two groups. Scheduled drugs appear in the National List of Essential Medicines (NLEM). NPPA sets the maximum price for these drugs directly. Non-scheduled drugs are not on this list. The market sets their price. However, non-scheduled drug prices cannot rise more than 10% in a year under DPCO rules.
For some non-scheduled drugs, price limits alone did not work well. Distributors and retailers added very high markups. The medicine became very expensive by the time patients bought it. To fix this problem, NPPA can cap the trade margin under Paragraph 19 of DPCO 2013. The trade margin is the markup (the difference between the price charged to the stockist and the final retail price) added after the drug leaves the factory. In 2019, NPPA used this power on 42 non-scheduled anti-cancer drugs. It capped margins at 30% of MRP. Prices fell by up to 91%. Patients saved about ₹984 crore each year.
Cancer treatment in India costs a lot for most families. This happens because there is weak competition. Patients cannot easily compare prices when buying life-saving medicines. When markets fail in this way, the state must step in to protect patients. This is one way to control the bad effects of marketisation in healthcare. Experts say this must happen alongside stronger public hospitals and primary health centres. Only then can access truly widen at the grassroots level.
The new decision expands the trade margin cap to all non-scheduled anti-cancer medicines. Before, only 42 drugs were covered in 2019. The cap is set at 30% of MRP. The margin between the price paid by the distributor and the price paid by the patient cannot exceed this limit. NPPA studied the market for these drugs. It found markups averaging about 170%. In some cases, markups reached 700% or more. The cap controls only the retail markup, not the manufacturer's base price. Firms can still set what they charge distributors. The final markup stays limited.
The process has two steps. …
In a crucial domain like the public healthcare system the Indian State should play a vital role to contain the adverse impact of marketisation of the system. Suggest some measures through which the State can enhance the reach of public healthcare at the grassroots level.
Match List I (Drug category) with List II (Pricing mechanism under DPCO, 2013) and select the correct answer using the codes given below:
List I:
1.Scheduled drugs (NLEM)
2.Non-scheduled drugs (general)
3.Non-scheduled anti-cancer drugs under trade margin rationalisation
List II:
A.Price increase capped at 10% per year
B.Ceiling price fixed directly by NPPA
C.Trade margin capped at 30% of MRP
Consider the following statements regarding the Drugs (Prices Control) Order, 2013 (DPCO):
1.Scheduled drugs are listed in the National List of Essential Medicines and have NPPA-fixed ceiling prices.
2.Non-scheduled drug prices can be increased without any limit each year.
3.NPPA can cap trade margins on non-scheduled drugs under Paragraph 19 of the DPCO, 2013.
How many of the above statements are correct?
Consider the following statements:
1.Compulsory licensing under the Patents Act, 1970 allows a generic manufacturer to produce a patented drug without the patent holder's consent.
2.Trade margin rationalisation under the DPCO, 2013 overrides a drug's patent to allow generic production.
Which of the statements given above is/are correct?
Which of the following statements about the National Pharmaceutical Pricing Authority (NPPA) is correct?
Which Act provides the legal basis for the Drugs (Prices Control) Order?
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