A cancer medicine bought by a retailer for around Rs 2,700 carrying a printed maximum retail price (MRP) of Rs 27,000 has brought India's drug-pricing system under renewed scrutiny. Needless to say, the tenfold difference has raised a larger question: how much should distributors, retailers and other players in the supply chain be allowed to earn from medicines, particularly those needed by patients fighting life-threatening diseases?
The debate has intensified after the National Pharmaceutical Pricing Authority (NPPA) capped trade margins on 137 non-scheduled anti-cancer drugs at 30% of their MRP in October. The move is expected to reduce prices of selected medicines by up to 70%. However, the revised price list has exposed another concern: while several generic cancer medicines have become substantially cheaper, some expensive patented and innovator drugs continue to carry unchanged MRPs.
The issue has also reached the Supreme Court, which has questioned why the 16% retailer margin used in the pricing formula for scheduled medicines cannot be applied more widely.
In fact, the court's intervention has drawn attention to a fundamental gap in India's drug-price regulation: most medicines remain outside the ambit of direct government price controls.
What Is The NPPA–TMR Issue?
The NPPA, an independent government regulatory authority under the Department of Pharmaceuticals, Ministry of Chemicals and Fertilisers, is responsible for fixing and monitoring medicine prices and ensuring that manufacturers comply with the Drugs (Prices Control) Order, 2013.
Under the existing system, medicines are broadly classified as scheduled and non-scheduled formulations. Scheduled medicines, largely those included in the National List of Essential Medicines, are subject to government-fixed ceiling prices. For these medicines, the pricing formula includes a 16% retailer margin.
Non-scheduled medicines, however, are not subject to the same direct ceiling-price mechanism. Manufacturers generally have greater freedom to determine their initial prices, although annual MRP increases are ordinarily restricted to 10% under the DPCO.
This is where Trade Margin Rationalisation (TMR) comes in the picture. It seeks to regulate the difference between the price at which a manufacturer sells a medicine to a stockist or distributor and the MRP charged to the patient.
The government can invoke Paragraph 19 of the DPCO, 2013, in extraordinary circumstances and in the public interest to regulate the price of medicines and their trade margins.
In October 2026, the NPPA used this provision to cap trade margins at 30% of MRP for 137 identified non-scheduled anti-cancer drugs. The revised prices are scheduled to take effect from November 9.
Price Reductions, But Not Across The Board
The government initially projected that the exercise could reduce the MRP of selected cancer medicines by up to 70%. However, the revised list released by the NPPA on October 28 showed reductions of up to 93.27% in some brands and formulations.
For instance, the price of Palbopro, a brand of palbociclib 125 mg capsules, fell from Rs 40,421.33 to Rs 2,720 for a 21-capsule pack. Another brand, Isogen, saw its price fall by more than 91%.
However, several high-priced innovator medicines did not see any reduction. Pembrolizumab, marketed as Keytruda, continued to be priced at Rs 2.16 lakh per 100 mg vial, while Phesgo, a combination of pertuzumab and trastuzumab, remained at Rs 4.93 lakh per vial.
The NPPA's data on revised MRP covered 1024 brands and pack sizes based on company-reported data. The sharp variation in price reductions has prompted patient-rights groups to question whether the methodology is delivering sufficient relief to those using the most expensive cancer therapies.
Why Is The 30% Margin Being Questioned?
A major point of contention is the way the 30% margin has been calculated.
Although the government has described the intervention as a 30% cap on MRP, the formula translates into a 42.86% markup over the price to stockist or distributor, excluding applicable GST.
Patient-rights groups argue that this is excessive, particularly when cancer medicines are supplied directly to hospitals or pass through only one or two intermediaries.
Malini Aisola, co-convenor of the All India Drug Action Network (AIDAN), has questioned the methodology, arguing that the high markup could leave substantial room for intermediaries to earn from high-value medicines.
She said, "The supply chain for cancer medicines is limited to very few middlemen or direct sales to hospitals. Given the high value of these medicines, the markup that would go to 1-2 entities alone was legitimising profiteering."
She also questioned the exclusion of certain quantities supplied free to patients under manufacturers' Patient Assistance Programmes (PAPs) from the price calculations. According to her, excluding these volumes could understate the actual trade margins and dilute the benefit of price rationalisation.
K. M. Gopakumar, co-convenor of the Working Group on Access to Medicines and Treatments, also questioned whether the latest intervention would make patented cancer drugs affordable.
"The measure has not helped to bring in even a single change in the latest and most important anti-cancer drugs, which are of high price. This shows that the measures to make cancer drugs affordable are inadequate," he said.
The NPPA's revised prices are based on sales data submitted by manufacturers, prompting patient groups to call for greater independent verification of prices at different stages of the supply chain.
Doctors Seek A Wider Approach To Medicine Pricing
The debate is not restricted to cancer drugs. It has also reached the Supreme Court through a public interest litigation filed by Agra-based paediatric surgeon Dr Sanjay Kulshrestha and transparency activist advocate Kishan Chand Jain.
Dr Kulshrestha has argued that restricting price intervention to selected anti-cancer medicines will leave excessive markups on several other medicines and hospital consumables unaddressed.
In his submission to the Supreme Court, he questioned the government's explanation for limiting the intervention to cancer medicines and sought a broader review of the drug-pricing framework.
Dr Kulshrestha described the government's reasoning as "far from reality", arguing that newer and expensive medicines are emerging in several therapeutic areas, not just oncology.
Dr Gopal Dabade, a doctor based in Karnataka associated with AIDAN, has also supported the need for reasonable margins across the pharmaceutical supply chain.
"Pharmaceutical companies and others in the supply chain can be allowed reasonable profits, not huge," he told a media house early this month.
The Supreme Court's questions about extending the 16% retailer margin more widely have added urgency to the debate. However, this figure is part of the existing pricing formula for scheduled medicines and should not be confused with a comprehensive cap on manufacturers' profits or the entire cost of producing and distributing a drug.
Why The Issue Matters Beyond Cancer
The wider concern is that a large proportion of medicines sold in India remain outside direct ceiling-price regulation. A parliamentary committee reviewing the functioning of the NPPA in August 2026 noted that non-scheduled formulations account for approximately 82% of the market.
The committee also criticised the delay in establishing a permanent TMR framework under the DPCO, 2013, and recommended that the government finalise a policy after consultations with stakeholders.
The pharmaceutical industry, meanwhile, has supported the cancer-drug intervention while emphasising the need to maintain adequate supply-chain margins and ensure uninterrupted availability of medicines.
The Indian Pharmaceutical Alliance has said the move could help optimise pricing while allowing reasonable margins to channel partners. The Organisation of Pharmaceutical Producers of India has also stressed the importance of monitoring implementation and patient access.
The real challenge for the government, therefore, is to strike a balance between protecting patients from excessive pricing and ensuring that legitimate distribution costs and medicine availability are not compromised.
For patients, however, the question is more immediate: whether a medicine prescribed by a doctor can be purchased without pushing the family into financial distress.
