Cancer drug margins rebound despite 2019 price intervention

Seven years after the government first stepped in to curb excessive trade margins on cancer medicines, it is attempting another intervention. The latest move follows a push by the Supreme Court for the government to examine ways to rein in the cost of cancer treatment, including the margins charged across the drug supply chain.But the numbers behind the latest exercise raise an uncomfortable question: why have margins climbed so sharply despite the 2019 intervention, and will another round of price cuts offer patients lasting relief?On October 17, the National Pharmaceutical Pricing Authority (NPPA) notified a second round of trade margin rationalisation (TMR), covering 137 non-scheduled anti-cancer drugs.The revised prices, which take effect on November 9, cover 643 brand-strength-pack entries, including 34 drugs that were part of the 2019 exercise. An analysis of the revised list by the Third World Network (TWN), which works on access to affordable medicines in developing countries, shows that nearly three-fourths of the listed entries will see price reductions.The average cut across the list is about 38%, while 124 entries will become more than 70% cheaper. The steepest reduction is for Samtepa, a 100 mg thiotepa injection, whose price falls from Rs 80,072 to about Rs 7,150 per vial.The scale of these reductions, however, also exposes how much room there was for prices and margins to rise after the previous intervention.India's growing cancer burden makes the issue particularly urgent. The country recorded around 1.5 million new cancer cases in 2022. An Indian Council of Medical Research (ICMR) study published in The Lancet Regional Health – Southeast Asia projects that annual cases could approach 2.7 million by 2050. Cancer deaths are also projected to rise substantially, from around 990,000 to 1.83 million.With treatment often involving prolonged chemotherapy, targeted therapies and expensive immunotherapy, the price of medicines can determine whether patients can continue treatment or are forced to interrupt it.THE 2019 PROMISEIn 2019, the government introduced TMR as a pilot covering 42 anti-cancer drugs. The NPPA limited trade margins to 30%, effectively allowing a maximum markup of 42.8% over the price to the stockist. The exercise brought down the maximum retail prices of 526 brands, with some reductions reaching 90%.The intervention was intended to address the large difference between the price at which medicines entered the distribution chain and what patients eventually paid.But an assessment by the All India Drug Action Network (AIDAN), a patient advocacy group, suggests that the intervention did not create a lasting check on margins.Comparing 50 cancer drugs covered in both rounds, AIDAN found that the prices of 38 had risen after the 2019 exercise. Some of the increases were substantial. Pegex, a pegfilgrastim brand, became 81% more expensive, while prices of brands containing epirubicin, everolimus and mitomycin also climbed sharply.More tellingly, before the latest intervention, 45 of these 50 medicines had markups exceeding the 42.8% threshold used in 2019. In 41 cases, the markup was above 100%, while 38 had markups ranging from over 100% to as high as 700%.Cizumab, a 400 mg bevacizumab injection, was estimated to carry a markup of about 709%. Its price has now been reduced by more than 82%, from Rs 57,816 to Rs 10,211.For AIDAN, these figures point to a fundamental weakness in the government's approach.The network argues that describing the exercise as a price cap is misleading because the government has conducted one-time interventions rather than establishing a system of continuous margin regulation. Companies are not required to maintain the prescribed margin when they subsequently revise their maximum retail prices.Under existing rules, prices of non-scheduled drugs can be increased by up to 10% annually. AIDAN argues that this, combined with the absence of systematic monitoring, allows excessive margins to return.There are also questions about how the calculations are made. The government does not have independent access to transaction prices at different points in the supply chain and relies substantially on information submitted by pharmaceutical companies. AIDAN says this makes independent verification difficult.The network also flags the exclusion of medicines supplied free of cost under patient assistance programmes from the calculations. It argues that this can obscure the actual margins and commissions operating in the market, particularly those involving hospitals and dealers. Hospitals, it says, can also demand exceptionally high margins on medicines sold through their pharmacies.EXPENSIVE DRUGS ESCAPEThe second concern is that the latest exercise has not brought down the prices of several high-cost medicines, particularly those marketed by multinational pharmaceutical companies.According to TWN's analysis, nearly a quarter of the listed entries have seen no reduction at all. Another third have received price cuts of 10% or less.Some of the medicines that remain untouched are among the most expensive cancer treatments available in India. The price of Koselugo (selumetinib) remains above Rs 10 lakh, while Tagrisso (osimertinib) continues to cost over Rs 4 lakh and Keytruda (pembrolizumab) remains at Rs 2.16 lakh.The company-wise pattern is also striking. All 53 listed entries from Eli Lilly, Novartis, Roche and AstraZeneca remain unchanged. Across 18 selected multinational pharmaceutical groups, 90% of the listed entries have seen no price reduction.By contrast, every listed entry from Intas, Zydus, Samarth Life Sciences and RPG Life Sciences has received a cut, with reductions averaging between 36% and 71%.The difference is visible even when the same molecule and strength are compared. Roche's Avastin, a 400 mg bevacizumab injection, remains priced at Rs 1.23 lakh, while Reliance's competing brand BevaciRel has become about 83% cheaper, falling to Rs 12,668.Similarly, Eli Lilly's Alimta, containing pemetrexed 500 mg, remains unchanged at around Rs 29,531, while Dr Reddy's Pemgem has received a cut of over 51%.TWN points out that regulating distribution margins does not necessarily bring down the price at which a manufacturer sells a drug. If the manufacturer's base price is already high, a reduction in trade margins may leave the final price largely untouched. The analysis also notes that the published list does not provide all the reference prices required to independently establish why particular brands have escaped reductions.The point has got resonance because a reduction in the margins earned by distributors and retailers is not the same as a reduction in the underlying cost of an expensive patented medicine.Jan Swasthya Abhiyan India has welcomed the latest intervention but cautioned against treating it as evidence of a sustainable price-regulation framework."A one-time exercise that brings down prices, without establishing continuing obligations and independent monitoring, cannot prevent excessive margins from returning," the organisation said.- Ends