Govt examining high margins beyond cancer drugs

The Centre has told the Supreme Court that while it decided to cap trade margins on anti-cancer drugs at 30 per cent as the most significant cases of high margins are in oncology, it is also actively examining other high margins and malpractices in medicine and hospital consumable pricing.

In the affidavit filed on October 12 in a petition by Dr Sanjay Kulshrestha, the Department of Pharmaceuticals stated it is “cognizant” of systemic malpractices driven by patients’ weak bargaining power and lack of information. While the government has so far acted only on oncology drugs, the filing noted that “other such cases of high margins/malpractices are being examined” in consultation with stakeholders. However, it did not outline specific timelines or additional drug categories.

The affidavit highlighted extreme pricing asymmetries, particularly in hospital supplies:

The government said India’s drug market is competitive and generally keeps prices low. But healthcare involves “information and bargaining asymmetries” between patients on one side and hospitals, doctors and pharmacies on the other, which it said result in “various malpractices” despite competition among manufacturers.

The affidavit noted that hospitals buy medicines from manufacturers offering the highest trade margin and sell them to patients at MRP. In oncology, it said, margins range from 170 per cent to 700 per cent or more. It linked this to the fact that most medical advances in the last 10 to 20 years have come in oncology, especially biological drugs, so high-margin, expensive drugs are more often sold through hospitals. Prices in other therapeutic areas are “relatively much lower,” it said.

On hospital consumables, the Centre said margins of 100 per cent to 1,000 per cent or more are prevalent, with hospitals tending to buy items that have a high MRP but a low purchase price. Under government schemes and insurance, it said, supplies are included in negotiated package rates, but patients paying directly are billed separately at MRP. It noted the petition cites instances of this.

The government also argued that trade margins can legitimately differ. Low-value products, rural markets with low sales, items needing cold chain or fragile packaging, slow-moving drugs and products without return-of-expired-stock arrangements may all need higher margins to stay available, it said. For consumables, which range from very cheap items to ₹350 or more, it said a uniform percentage margin would not work and that billing for nursing and administrative charges varies by hospital, so setting a margin “requires extensive consultation.” It also said retailers use high margins to push local brands in specific areas, which would be hard to regulate.

The anti-cancer cap

The government said it has decided to cap trade margins on anti-cancer drugs at 30 per cent of MRP, the same level used in a 2019 exercise. It expects MRPs to fall by roughly 20 per cent to 70 per cent and patients to save about Rs 2,500 crore a year. The aim, it said, is to keep a reasonable margin while preventing excessive ones, and manufacturers’ selling prices are not being reduced directly.

The affidavit said the 2019 notification capped margins on 42 non-scheduled anti-cancer drugs. It lowered MRPs of 526 brands and saved about ₹984 crore a year.

Published on October 25, 2026