Stating that lack of government regulatory control over “non-scheduled drugs” might lead to widespread profiteering, a Parliamentary Standing Committee on chemicals and fertilisers, which is looking into the rising prices of medicines, has asked the Department of Pharmaceuticals and the National Pharmaceutical Pricing Authority (NPPA) to come up with a policy to plug the loophole at the earliest.
According to the committee’s report titled “Price rise of medicines in the pharmaceutical sector impacting the lives of ordinary citizens adversely”, the department had informed the panel they were working on a trade margin rationalisation policy, earlier used for very select drugs in case of health emergencies, and for a limited period.
According to the Standing Committee’s report, the allergy medicine Cetrizine manufactured by a multinational pharma company which carried an MRP of Rs 21.06 reaches the stockists at Rs 2, making the markup 953%; Pentoprazole, an acidity drug, with an MRP of Rs 102, reaches the stockists at Rs 10, making the markup 920%.
The committee also examined the price to stockist vs the MRP for several drugs used commonly and found margins were as high as 600%, 1200%, and 1800%, the report said. The committee also pointed out that the price to stockists remains undisclosed to the people.
A trade margin rationalisation policy usually fixes the margin of profit for manufacturers and the supply chain on specific products.
The government has already used this to regulate the prices of 42 formulations of anti-cancer medicines, bringing down the prices of nearly 500 brands of medicines by 50%, accruing savings of around Rs 984 crore to patients.
Trade margin of oxygen concentrators, pulse oximeters, blood pressure monitoring machines, nebulisers, digital thermometers, and glucometers was capped in 2021 during the Covid-19 pandemic, which translated into around Rs 1,000 crore savings for patients.
The committee, according to the report, said that it has been five years since the pilot trade margin policy and a new policy should be introduced at the earliest. “The Committee, therefore, desires that the Department of Pharmaceuticals in consultation with NPPA should come forward for a policy review in the matter at the earliest so that medicines are available to the ordinary citizens at affordable prices,” the report said.
At present, the mechanisms used to control the drug prices include the Drug (Prices Control) Order 2013, which allows the NPPA to set the ceiling price for scheduled drugs—those listed in the essential medicine list by experts. This list is updated from time to time by an expert committee.
The ceiling prices are revised every year based on the wholesale pricing index (WPI). However, many companies choose not to hike prices. When it comes to drugs not on the list of essential medicines, there is a 10% limit on the annual increase. The department informed the committee, as per its report, that over the five-year period between April 2020 and March 2025, the price of these non-scheduled drugs increased only by 5.6% on average each year, broadly in line with the WPI and much less than the permissible 10% limit. However, there is no way for the NPPA to fix the initial price of the drug.
This, the committee said, as per its report, creates a loophole as the NPPA cannot control the trade margins on non-scheduled drugs, allowing companies to launch their products at whatever prices, even when huge markups may be evident.
The committee also raised the point of increasing prices of the stents and high prices of anti-cancer drugs. When it comes to anti-cancer medicines, inputs were sought from the industry body Indian Pharmaceutical Alliance (IPA), which cited hospital infrastructure cost and comprehensive care requirements, as per the report. “The Committee is of the considered view that the reliance on inputs from the Indian Pharmaceutical Alliance (IPA), an industry body with inherent commercial interests, is bound to affect objectivity,” it said.
The committee directed the pharmaceutical department to put in place a robust mechanism to collect pricing data on a real-time basis from manufacturers, hospitals, and distributors to ensure transparency in pricing. It also asked the department to set up strict monitoring of online platforms selling cancer drugs at steep discounts to ensure that products are genuine. When it comes to bare metal stents, the panel noted that the prices increased by 44% between 2017 and 2024 and 29% for drug-eluting stents, which are vascular prostheses used by interventional cardiologists to reopen and maintain patent coronary arteries narrowed by arteriosclerosis. The committee recommended that NPPA as well as the pharmaceuticals department look into it to bring down the stent prices.
The government has already used trade margin rationalisation policy to regulate the prices of 42 formulations of anti-cancer medicines, bringing down the prices of nearly 500 brands of medicines by 50%. (File Photo) 
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