Cancer drug price caps: Why India needs more than price control

The decision to regulate trade margins on non-scheduled cancer medicines is a welcome step. It responds to a genuine concern. In a welfare state, the government has a responsibility to ensure that healthcare is both accessible and affordable, while creating an environment in which quality care can be delivered sustainably. When the difference between the price at which a product enters the supply chain and what a patient ultimately pays becomes difficult to justify, the government cannot remain a passive observer.

But a good first step should not be mistaken for a complete solution. The present debate raises three questions. Is the exercise comprehensive enough? Is it based on adequate evidence? And can it be implemented effectively across a healthcare market as large and varied as India’s?

The Centre has informed the Supreme Court that trade margins on specified cancer drugs will be capped at 30 per cent. An expert committee will identify the medicines to be covered, after which the National Pharmaceutical Pricing Authority will examine its recommendations. The court has also asked why similar scrutiny should not extend to other medicines and medical products.

That is a legitimate question. If excessive trade margins are the problem, India should examine the issue comprehensively rather than regulate one category at a time. A fragmented approach can shift distortions from one part of the market to another, create uncertainty and make enforcement needlessly difficult. But evidence must come before the prescription. The same medicine or medical product may cost different amounts to administer at two hospitals within the same city. The difference can arise from the patient’s condition, the complexity of the treatment, the expertise of the clinical team, the infrastructure available, infection-control requirements, the level of monitoring involved and the emergency support that must remain available. A routine medicine administered in an outpatient setting cannot be equated with a complex therapy delivered under specialist supervision.

The procurement price of a medicine or device, therefore, tells us only one part of the story. A robust framework must distinguish between the trade margin on a product and the legitimate cost of storing, handling and administering it safely. It should also consider the infrastructure required to maintain quality and patient safety, and the possible effect of regulation on availability and access. Without this distinction, regulation intended to address excessive margins could inadvertently affect the delivery and quality of care.

The government’s own experience supports this approach. The 2019 trade-margin rationalisation pilot covered 42 selected non-scheduled anti-cancer medicines. Since then, consultations have raised concerns about production costs, the viability of smaller manufacturers and the cost of maintaining supplies in remote areas. The answers to these can help determine how future intervention should be designed. India should now consider a comprehensive examination of trade margins across medicines, medical devices and consumables. This does not mean imposing the same formula on every product. It means using a common and scientifically credible method to identify where intervention is required and what form it should take.

Meaningful stakeholder consultation must form part of this exercise. Manufacturers, distributors, hospitals, clinicians, insurers, patient groups and state governments each hold important evidence on how healthcare products are manufactured, supplied, priced and used. Drawing on their experience will help the government design a framework that is both effective and workable. It can ensure that unjustified margins are addressed while recognising legitimate differences in clinical settings, infrastructure, safety requirements, geographical reach and the cost of delivering quality care.

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Success cannot be measured merely by the number of products brought under control. The more meaningful test is whether patients pay fairer prices without experiencing shortages, reduced access or any compromise in the quality and safety of care.

India needs continued investment in healthcare as its disease burden increases and demand for quality care grows. Hospitals must expand infrastructure, adopt newer technologies, strengthen clinical capabilities and improve access across the country. Blanket controls that do not recognise legitimate differences in cost and complexity could discourage precisely this investment. They could also make it harder for hospitals to maintain quality and safety standards or adopt medical advances that can improve patient outcomes. This is not an argument against price regulation. It is an argument for getting it right.