Concerned over the rising cost of medicines outside the ambit of statutory price control, a parliamentary panel has asked the Department of Pharmaceuticals (DoP) to revisit the existing mechanism for monitoring prices of non-scheduled drugs, warning that the current framework leaves patients vulnerable to excessive trade margins and profiteering.
In its latest report, tabled in the Lok Sabha on July 27, the Department-related Parliamentary Standing Committee on Chemicals and Fertilisers observed that nearly 82 per cent of the pharmaceutical market by value comprises non-scheduled medicines, leaving around 70,000 Stock Keeping Units (SKUs) outside the ambit of direct price control under the Drug Price Control Order (DPCO). Scheduled medicines, whose prices are regulated by the NPPA, account for only about 18 per cent of the market.
Against this backdrop, the panel reiterated its earlier recommendation that the current practice of merely capping annual MRP increases at 10 per cent for non-scheduled medicines should be comprehensively reviewed.
"The Committee therefore reiterates its earlier recommendation that the existing mechanism of monitoring only annual MRP increase up to 10 per cent in respect of non-scheduled drugs be revisited to mitigate any adverse impact on patients, particularly in respect of chronic-care and life-saving medicines," the report said.
The committee was particularly critical of the Department's response to concerns over high trade margins. It noted that the reply did not adequately explain the apparent lack of control over distributor and retailer margins, which, according to the panel, leaves considerable scope for profiteering at the expense of patients.
It also expressed its dissatisfaction at the Department's reply, saying that it does not address the concerns of the Committee regarding the apparent lack of any control over trade margins, especially in the case of non-scheduled drugs.
“This leaves the door open for widespread profiteering at the cost of patients," the report observed.
The panel has also sought detailed information from the Department on non-scheduled medicines where the weighted average markup exceeds 100 per cent of the price charged to distributors.
The issue of trade margins has repeatedly figured in the committee's deliberations. In its previous report, the panel had flagged instances where commonly prescribed medicines for chronic diseases and everyday ailments were reportedly being sold with trade margins ranging from 600 per cent to 1,100 per cent. It had then urged the Department to undertake a comprehensive review of the price regulation framework to plug loopholes that enable excessive mark-ups in medicines used by ordinary citizens.
Responding to these concerns, the Department cited an analysis of the Pharmarack database for 2024-25, which covers nearly 98,000 SKUs. According to the Department, around 87 per cent of the non-scheduled medicines market has a weighted average trade markup of up to 45 per cent.
The Department further informed the committee that only about four per cent of the non-scheduled market has a weighted average markup exceeding 100 per cent of the distributor price. It argued that such high margins are confined to a relatively small segment of the market and should not be viewed as representative of the pharmaceutical industry as a whole.
However, the committee appeared unconvinced by this explanation, maintaining that even a limited number of medicines with exceptionally high mark-ups could significantly burden patients, particularly those requiring long-term treatment for chronic illnesses such as diabetes, hypertension and cardiovascular diseases.
The Department also highlighted measures already undertaken to contain prices in selected categories. It informed the panel that the prices of 106 non-scheduled formulations, comprising 22 anti-diabetic and 84 cardiovascular medicines, were capped in 2014.
In addition, under the Trade Margin Rationalisation (TMR) initiative introduced in February 2019, trade margins on 42 selected non-scheduled anti-cancer medicines were capped at 30 per cent. According to the Department, the intervention reduced the prices of 526 brands by an average of around 50 per cent, resulting in estimated annual savings of ₹984 crore for patients.
The Department further cited similar interventions during the COVID-19 pandemic, when trade margins on several medical devices were regulated under Paragraph 19 of the DPCO, 2013, to prevent profiteering and ensure affordability during the public health emergency.
Despite these interventions, the Parliamentary panel maintained that wider reforms to the pricing framework are imperative.
With more than four-fifths of medicines sold in the country remaining outside direct price control, it stressed the need to revisit the existing monitoring mechanism to curb excessive trade margins, enhance price transparency and protect patients from escalating out-of-pocket expenditure.
