Central Government considering imposing limits on trade margins of anti-infective drugs

After reducing the prices of cancer drugs, the Central Government is now planning to impose limits on the trade margins of anti-infective drugs. The government may take this step to reduce the prices of these drugs, which fall under the category of most widely sold medicines in the market. According to a report by News18, analysis by the National Pharmaceuticals Pricing Authority (NPPA), the body monitoring drug prices in the country, has revealed that the trade margin in anti-infective drugs is over 100 per cent, which was previously observed in cancer drugs.

Two government officials from the Ministry of Chemicals and Fertilizers and the Ministry of Health and Family Welfare have informed News18 regarding this development. A senior official well-versed in the matter stated, "Our upcoming focus is on non-oncology drugs, specifically the anti-infective category. Our preliminary analysis shows that the Trade Margin Rationalisation (TMR) in this category is also very high, exceeding 100 per cent, and therefore may need to be capped."

Anti-infective drugs are medicines that treat infections. This category includes antibiotics for bacterial infections, antivirals, antifungals, and antimalarials. In India, these drugs are among the most frequently prescribed in both hospitals and local pharmacies.

On the other hand, the government has clarified that it does not plan to extend trade margin rationalisation to more cancer drugs. The official stated, "We have completed the number of cancer drugs we could bring under the trade margin cap. In fact, 137 drugs have not yet entered the market, and about 10 to 15 drugs of that size have not yet been launched in India. Therefore, there are no more cancer drugs left that require trade margin rationalisation."

This new plan comes at a time when the NPPA recently, on 17 October, capped the trade margin at 30 per cent for 137 non-scheduled anti-cancer formulations. This limit was imposed as per paragraph 19 of the Drugs (Price Control) Order (DPCO), 2013. These revised prices will come into effect from 9 November, which will benefit patients and is expected to lead to a reduction of up to 93 per cent in MRP.

Trade margin refers to the difference between the price a drug company charges a stockist or distributor and the Maximum Retail Price (MRP) that a patient pays. For example, if the stockist price of a formulation is ₹70 under a 30 per cent trade margin cap, its maximum revised MRP (excluding GST) could be ₹100.

This year's order is an extension of a 2019 pilot project, in which the margins of 42 anti-cancer drugs were capped at 30 per cent. This intervention led to a reduction of up to 90 per cent in the MRP of 526 brands of non-scheduled anti-cancer drugs.