Context: The National Pharmaceutical Pricing Authority (NPPA) has capped trade margins at 30% for 137 non-scheduled anti-cancer drugs, reducing the prices of nearly 900 cancer medicine brands by 70–93% in some cases.
- However, affordable medicines alone cannot ensure affordable cancer care, which also involves diagnostics, surgery, hospitalisation, travel and follow-up treatment.
Impact of NPPA's Price Regulation
- Price reduction: Of 1,024 brands analysed:
- 45.4% recorded price reductions exceeding 50%.
- 19.6% recorded reductions exceeding 70%.
- 0.8% recorded reductions exceeding 90%.
- Only 16.5% recorded absolute price reductions exceeding ₹10,000.
- Palbociclib: Price of one brand declined from approximately ₹40,000 to ₹2,720, although 767 other brands were already available in the ₹2,800–9,000 range.
- Enzalutamide: Price of one company's brand declined from ₹3.14 lakh to ₹1.17 lakh, despite cheaper alternatives already being available.
- Limitedimpact: Nearly 194 of the 1,024 brands recorded no price reduction, with prices ranging from over ₹1 lakh to ₹10 lakh.
Why Medicine Price Reduction May Not Ensure Affordability
- High-priced patented medicines: Several newer cancer drugs and immunotherapies remain prohibitively expensive despite trade margin rationalisation.
- Ribociclib: A breast cancer drug subjected to trade margin rationalisation in 2019, but its MRP remained unchanged in the latest exercise.
- Pembrolizumab: An important cancer immunotherapy and a WHO-designated essential medicine, for which the intervention did not deliver a price reduction.
- Trade margin limitations: Capping margins does not necessarily reduce the underlying price of expensive medicines or ensure access to newer treatments.
- Hospital margins: Hospitals have considerable bargaining power due to bulk procurement but may benefit from high MRPs rather than negotiating lower procurement prices.
- Risk to generic medicines: A uniform 30% trade margin may encourage hospitals to stock expensive brands because the absolute monetary return is higher than on cheaper generic alternatives.
- Healthcare market failures: Information asymmetry between doctors, healthcare providers and patients limits patients' ability to question prescriptions and treatment costs.
Need to Balance Pharmaceutical R&D and Patient Affordability
- Pharmaceutical R&D: Developing new medicines requires substantial investment, and companies need opportunities to recover their investments to sustain future research and innovation.
- Preventing excessive margins: A disproportionate share of medicine prices should not be captured by traders, intermediaries and hospitals.
- Appropriate use of generics: Before prescribing branded medicines, doctors should consider whether effective, quality-assured generic alternatives are available.
- Regulatory responsibility: Union and State health authorities must ensure affordable treatment without compromising medicine quality or discouraging pharmaceutical innovation.
Need for Transparency and Accountability in Drug Pricing
- Independent price verification: Reliable price information should be available across pharmaceutical manufacturers, stockists, retailers, pharmacies and hospitals.
- NPPA's regulatory powers: Under the Essential Commodities Act, 1955, NPPA can use notifications to obtain price-related information and regulate drug prices and margins.
- Supply-chain accountability: Every stakeholder, from manufacturers to hospitals and retailers, must be accountable for pricing practices.
- Independent database: The government should develop its own pharmaceutical pricing database instead of depending entirely on private agencies.
- No new legislation necessarily required: Existing legal powers can be used to strengthen price transparency and regulation.
High Out-of-Pocket Expenditure on Cancer Treatment
- Treatment expenditure: One study estimates median cancer treatment expenditure at approximately ₹4.1 lakh, of which around ₹3.3 lakh (nearly 80%) is paid out of pocket by patients.
- Financial distress: A 2022 Parliamentary Standing Committee on Health report noted that nearly 40% of cancer patients borrow money or pledge assets to finance treatment.
- Ayushman Bharat: Provides health coverage of ₹5 lakh, offering an important financial safety net, although this may be insufficient for certain cancer treatments.
- State-level support: State health insurance schemes, Chief Minister's relief funds and other financial assistance programmes supplement central government support.
- Inadequate insurance coverage: Existing schemes often cover only specific components of treatment rather than ensuring comprehensive cancer care.
- Limited public healthcare capacity: Advanced cancer treatment facilities remain concentrated largely in the private sector, increasing financial barriers for patients.
India's Cancer Survival Gap
- Breast cancer survival: Around 90% of women diagnosed with breast cancer in high-income countries survive for at least five years, compared with approximately 65.5% in India.
- This highlights the need to improve early diagnosis, timely treatment, healthcare infrastructure and financial accessibility, alongside reducing medicine prices.
Way Forward: Towards Comprehensive Cancer Care
- Dedicated National Cancer Mission: Establish a national mission covering cancer prevention, early detection, treatment and long-term care.
- Strengthen public healthcare: Expand public-sector cancer hospitals and advanced treatment facilities to reduce dependence on expensive private healthcare.
- Standard Treatment Protocols: Develop standardised, evidence-based treatment guidelines for different cancers to ensure appropriate and cost-effective care.
- Second-opinion systems: Establish mechanisms enabling patients to obtain independent medical opinions before undertaking expensive treatments.
- Strategic pooled procurement: Government institutions and health insurance schemes should aggregate medicine demand and negotiate lower prices through collective procurement.
- Cost-based price regulation: Introduce cost-based caps on cancer treatment linked to standard treatment protocols.
- Promote generic medicines: Utilise India's domestic pharmaceutical manufacturing capacity to improve access to affordable, quality-assured medicines.
- R&D transparency: Improve disclosure of actual pharmaceutical research and development costs and revenues generated from medicines.
- Comprehensive insurance: Expand insurance coverage to include medicines, diagnostics, surgery, hospitalisation, travel-related support and follow-up care.
Important Institutions and Concepts for UPSC
- National Pharmaceutical Pricing Authority (NPPA):
- An independent regulatory body under the Department of Pharmaceuticals, Ministry of Chemicals and Fertilizers.
- Implements and enforces provisions of the Drug Price Control Order (DPCO).
- Monitors drug prices, ensures availability of essential medicines and takes action against manufacturers charging prices above permissible limits.
- Drug Price Control Order (DPCO), 2013:
- Issued under the Essential Commodities Act, 1955.
- Provides the framework for regulating prices of scheduled formulations and monitoring prices of non-scheduled formulations.
- Scheduled medicines are subject to ceiling-price regulation, while prices of non-scheduled formulations are monitored under prescribed provisions.
- Scheduled vs Non-scheduled Drugs:
- Scheduled drugs: Included in Schedule I of DPCO and subject to government-fixed ceiling prices.
- Non-scheduled drugs: Not included in Schedule I; their price increases are monitored and regulated under applicable DPCO provisions.
- Out-of-Pocket Expenditure (OOPE): Healthcare expenditure paid directly by households without reimbursement through insurance or government financing. High OOPE can push vulnerable households into poverty.
- Generic Medicines: Medicines containing the same active pharmaceutical ingredient as the corresponding branded medicine, generally marketed at lower prices after patent or regulatory exclusivity restrictions permit.
