India caps profit margins on cancer drug trade to curb soaring costs

India’s government has introduced a rule that limits the profit margin of sellers—such as stockists, distributors and hospital pharmacies—on non‑scheduled cancer medicines to 30% of the maximum retail price. This follows concerns that intermediaries were adding an average markup of around 170% to drug costs, prompting patients to delay or abandon treatment.

The regulation targets trade margins only and does not control the prices set by manufacturers when they sell to distributors or hospitals. Consequently, if the initial price set by manufacturers remains high, the overall cost to patients may stay prohibitive despite the new cap.

Analysts note that patented cancer drugs often lack generic competition, giving manufacturers greater pricing power. An example cited is ribociclib, whose monthly price rose from Rs 58,000 to Rs 78,000 even after profit‑margin limits were applied in 2019.

Officials warn that manufacturers could use selective discounts to corporate hospitals, obscuring true market prices and complicating regulator oversight. They suggest that tighter scrutiny of manufacturer pricing and transparent reporting of discounts are needed to complement the margin cap.

The policy’s impact will depend on careful implementation to avoid supply disruptions, especially in underserved areas, and to prevent hospitals from shifting costs to patients through other fees. Experts recommend pairing the margin cap with stronger public‑health services, broader insurance coverage, and increased generic drug research.