Cancer drug pricing: Test is in actual patient bills, supply, Pg11

Key Highlights:

• The National Pharmaceutical Pricing Authority (NPPA) has decided to implement Trade Margin Rationalisation (TMR) for 137 non-scheduled anti-cancer drugs, effective November 9.
• This measure caps trade margins at 30% of the Maximum Retail Price (MRP), excluding GST, and is expected to reduce MRPs by up to 70%.
• The decision was prompted by NPPA findings of mark-ups as high as 700% on some anti-cancer medicines.
• The initiative includes patented biologics such as pembrolizumab and durvalumab, which are typically not under direct price regulation.
• A 2019 pilot by NPPA on 42 drugs resulted in MRP reductions of up to 90% for 526 brands, saving approximately ₹984 crore annually.
• The move aims to improve affordability and access to critical cancer treatments for patients.

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Detailed Insights:

• India faces a significant challenge with high out-of-pocket expenditure (OOPE) on healthcare, which stands at 43.4% of total health expenditure, with medicines accounting for roughly 70% of these costs.
• The TMR policy focuses on reducing intermediary margins, leaving the manufacturer's realization unchanged, thereby not directly impacting innovation incentives at the production level.
• Analysis by NPPA revealed substantial price disparities, with per-dose prices of drugs like pemetrexed ranging from ₹546 to over ₹72,000, and bevacizumab from ₹6,900 to ₹1.18 lakh.
• Hospitals are anticipated to experience a manageable but noticeable impact on profitability, with large chains potentially seeing a 1-5% fall in EBITDA.
• Concerns exist regarding potential stock-outs of low-cost older drugs and hospitals possibly offsetting lost revenue through increased charges for consultations, diagnostics, or bundled packages.
• The Supreme Court has also questioned the government on broader drug price regulation, highlighting the two-tier system where only Scheduled drugs under the Drugs (Prices Control) Order (DPCO) have price ceilings.
• Effective implementation requires a robust monitoring framework to track actual patient bills, medicine availability, hospital billing practices, and overall treatment access.

Key Concepts Involved:

• National Pharmaceutical Pricing Authority (NPPA): A government regulatory body under the Ministry of Chemicals & Fertilizers responsible for fixing and revising drug prices and ensuring medicine availability and affordability.
• Trade Margin Rationalisation (TMR): A policy mechanism to cap the profit margins of distributors and retailers on pharmaceutical products to reduce their Maximum Retail Price (MRP).
• Drugs (Prices Control) Order (DPCO): An order issued by the Government of India under the Essential Commodities Act, 1955, empowering it to fix and regulate the prices of essential bulk drugs and their formulations.
• Scheduled vs. Non-scheduled Drugs: Scheduled drugs are those included in the National List of Essential Medicines (NLEM) and are under direct price control, while non-scheduled drugs are not directly price-controlled but are subject to certain regulations like annual price increase caps.