Cancer care can be cheaper: 6 steps to cut drug costs

India records about 1.5 mn new cancer cases and 0.9 mn cancer deaths annually. Over 70% of patients are diagnosed late owing to healthcare disparities and socioeconomic barriers. Financial toxicity delays or ends treatment and creates generational poverty. Cancer medicines account for almost 45% of it.

On Oct 17, National Pharmaceutical Pricing Authority (NPPA) capped trade margins at 30% on 137 non-scheduled anti-cancer drugs, effective Nov 9. MRP can be no more than March 2026 price to stockist (PTS), or to distributor (PTD) divided by 0.7. A drug sold to trade at Rs 70 can carry an MRP of at most Rs 100, plus GST. The order covers every strength, dosage form and combination, including patented drugs.

Patients have long paid MRP unrelated to the price at which the product entered the market. The 2019 pilot on 42 drugs cut MRPs by up to 90% across 526 brands. This round is broader, including immunotherapies and targeted agents. A 30% margin on an expensive molecule is still expensive. But the cap removes the most arbitrary part of the price and helps out-of-pocket (OOP) patients most.

A hospital supplied directly by a manufacturer is treated as stockist. Hospitals must monitor MRPs, display revised prices and report violations to NPPA. For public hospitals, this is administrative. For private hospitals whose pharmacies depend on margin, it's a business model question.

The cap is anchored to the manufacturer's own March 2026 PTS/PTD. So, it trims distribution margins, not manufacturer revenue. Indian companies, whose branded generics often competed on generous trade margins, must now compete on quality, reliability and tender performance. MNCs hold many patented products, which get no exemption. The effect will be limited where margins are modest, and larger where imports pass through layered channels.

Price intervention raises fears of stock-outs and slipping quality. The order safeguards supply by requiring current production levels, prior permission before cutting output, and six months' notice before discontinuation. Distributors and retailers are the likelier short-term source of friction. So, state drug controllers must watch for rationing, hoarding or quiet withdrawal.

National Cancer Grid's (NCG) pooled procurement complements trade margin rationalisation. While the latter narrows the gap between manufacturers' prices and patients' bills, pooling prioritises quality and uses aggregated demand to negotiate lower prices. The 2019-20 pilot across 23 centres covered 40 drugs worth Rs 15.6 bn at MRP, saving Rs 13.2 bn through discounts averaging 85%. It used quality-based reserve pricing, firm volume commitments and a 3-stage evaluation, with prices fixed for 2 yrs.

NPPA's historic step needs 6 more steps to ensure that costs of cancer medicines are within reach:

Standardisation of cancer treatment across India to ensure appropriate treatments are prescribed.

Evaluate cancer medicines by health technology assessment to ensure only cost-effective drugs with meaningful clinical benefit are part of health benefit packages.

Stringent quality control measures for approval of generics and biosimilars, with periodic mandatory quality checks through a transparent system.

Cost treatment pathways and drug manufacturing, with necessary quality control measures, so they are sensitive to cost-drivers (e.g., raw material or packaging cost rise).

Pooled procurement with quality as the first screening criterion. National-level negotiation would help bring down costs not just for generics and biosimilars, but for innovator molecules, too.

For innovator and sole-source drugs, negotiations should draw on the pilot's recommendation to assess clinical benefit and cost-effectiveness, ideally at national scale. Common price ceilings, contracts and specs would help remote hospitals procure medicines on the same terms as metropolitan ones. For effective, low-cost drugs with limited commercial appeal, reserve prices should reflect inflation and raw material costs to ensure adequate supply.

Same approach is needed for antibiotics, as they account for considerable cost of supportive care after anti- cancer treatment.