New Delhi, Oct 12 The Centre told the Supreme Court on Monday that it has taken a decision to regulate the trade margins of anti-cancer drugs, which will be capped at 30 per cent of the Maximum Retail Price (MRP), and the annual savings for patients will be approximately Rs 2,500 crore.
A bench of Justices Vikram Nath and Sandeep Mehta was told by Solicitor General Tushar Mehta that the said decision was considered at the 151st meeting of the National Pharmaceutical Pricing Authority (NPPA) on October 8.
"It is respectfully submitted that a comprehensive statutory and policy framework is in place for regulating the prices of drugs in the country and that the government has, in public interest, been taking calibrated and consultative steps, including by invoking its extraordinary powers under Paragraph 19 of the DPCO, 2013, to curb excessive trade margins, without compromising the availability of medicines.
"In particular, the government has taken a decision to cap the trade margin on anti-cancer drugs at 30 per cent of the MRP, the implementation whereof is presently underway...," the Centre said in a detailed 551-page affidavit.
The court is hearing petitions concerning the regulation of medicine prices, generic prescriptions and controls on medical devices under the Drugs (Prices Control) Order (DPCO), 2013.
Two petitions, including one by Kishan Chand Jain, have highlighted that while scheduled medicines face ceiling prices, the bulk of non-scheduled formulations, estimated at around 80 per cent or more by number and value in the market, allow manufacturers greater freedom in setting MRPs, subject to annual increase limits of 10 per cent.
The affidavit further said it has been decided that the Centre would announce a list of drugs approved for the treatment of cancer in the country, to which the cap on the trade margin would be applicable.
"The said list may be updated periodically to include additional anticancer medicines as warranted by market developments and public health considerations," it said.
The government said the Ministry of Health and Family Welfare formed an expert committee on October 9 under the chairmanship of the director general of health services for recommending such a list of anti-cancer drugs and to submit the said list within 10 to 15 days.
The list will include all drugs approved for the treatment of cancer, except those which are inexpensive, it said, adding that upon receipt of the list from the expert committee, the NPPA will place the matter before the authority for deliberation and suitable directions for the implementation of the trade-margin rationalisation of non-scheduled anti-cancer drugs, and will thereafter issue the price notification, along with a set of instructions and procedures to be followed by the manufacturers, so as to ensure that the benefits are passed on to the patients.
It said the proposed Trade Margin Rationalisation (TMR) is expected to result in significant reductions in the MRP of anti-cancer drugs, broadly estimated to be in the range of 20 per cent to 70 per cent.
"The Union of India had taken cognisance of the high trade margins in anti-cancer medicines earlier. However, the government was also conscious that an intervention affecting the prices may have implications for the availability of and access to drugs. Accordingly, as a pilot, the NPPA, vide Notification dated February 27, 2019, notified the imposition of a cap of 30 per cent on the trade margin at the first point of sale in respect of 42 select non-scheduled anti-cancer medicines. The said margin was based on an industry-practice assumption of 10 per cent for the distributor and 20 per cent for the retailer," it said.
The government added that the said intervention of 2019 resulted in a substantial reduction in the MRP of 526 brands, with annual savings of approximately Rs 984 crore for patients, based on the information provided by the companies.
It said the exercise undertaken in 2019, therefore, provides a relevant policy and operational precedent for the consideration of a broader trade-margin-rationalisation framework for non-scheduled anti-cancer medicines.
It said the proposal for a TMR approach for anti-cancer drugs or formulations is supported by a number of pharmaceutical industry associations and consumer groups, with certain recommendations on various aspects, such as the formula, the percentage of trade margin, the period of sales data, to be taken into consideration and the implications for lower value and lower volume products.
However, concerns have also been raised by some stakeholders regarding certain implementation aspects, including the span and extent of TMR, it said, adding that associations of MSME pharmaceutical manufacturers have expressed concern regarding the applicability of TMR to nonscheduled formulations.
"They have expressed the concern that the TMR approach would be detrimental to MSMEs, resulting in loss of employment, and would affect the outreach of medicines to remote areas, owing to reasons such as different marketing or trade channels and manufacturing set-ups, dependence on small traders to sell their products mostly in remote areas, and the need to pay out margins at every stage, resulting in high trade margins, while at the same time, making medicines available at competitive prices," it said.
