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Anti-cancer drugs: Capping trade margin is not enough

S Srinivasan | Updated on April 13, 2019

It doesn’t curb profiteering by manufacturers. Single units of many drugs are still costly

The National Pharmaceuticals Pricing Authority (NPPA) recently curbed trade margins on 42 branded anti-cancer medicines. The measure has brought in some reduction in the MRPs (Maximum Retail Prices) of various brands on this list, but the net result is that they still remain unaffordable to most Indians.

Capping trade margins is only attacking part of the problem. It does nothing to curb the profiteering by pharma manufacturers on these anti-cancer drugs.

The new trade margin cap formula pegs the MRP at price to stockist plus 42.8 per cent or MRP less 30 per cent will be the price to stockist.

There are several ironies to this exercise. It was done without consultation of stakeholders — cancer patients, in particular. The formula was developed by the Standing Committee for Affordable Medicines and Health Products (SCAMHP), chaired by the NITI Aayog, which claims expertise on a great many things.

The involvement of this new body SCAMHP is itself an infringement of the powers of a delegated entity like NPPA, even though the former seeks to make only ‘recommendations.’ That the NPPA accepted the formula without throwing it open to wider consultation adds to the dismal sense of dilution of its own powers.

Despite the trade-margin cap, single units of many drugs still cost patients anything from ₹2,000 to ₹30,000 to ₹50,000 and more. Multiply that by 30 or 365 for impact over a month or a year.

Why should the same trade margin be applicable for a drug sold at ₹3,000 and ₹1,00,000? Does the latter involve more strenuous effort? NPPA (or SCAMHP) does not seem to have had affordability in mind. Had that been so, they would have questioned the high prices to the stockists.

The manufacturer (or importer) has made his margin before the drug is released to the trade. Capping trade margins does not affect the manufacturers.

At least the ceiling could have been fixed at the lowest of the resultant new MRPs of the brands of the same drug.

Arbitrary choice of drugs

The choice of 42 drugs also seems to be arbitrary and non-transparent. Many equally high-priced anti-cancer drugs are not in the list. For instance, as the All India Drug Action Network (AIDAN) has pointed out, Axitinib, used to treat kidney cancer, has not been included.

A strip of 5-mg tablets costs ₹41,737. A 50-ml bottle of Cetuximab, used to treat head, colon, rectum and neck cancer, costs ₹94,544. It is also not on the list. Ixabepilone, which is used to treat advanced breast cancer, has also been left out. A 45-mg vial of this drug costs approximately ₹71,886.

Recently, the Drugs Prices Control Order was modified to give price control exemptions for five years to patented drugs and new forms of delivery. This seems to be at cross purposes with capping the trade margins of anti-cancer drugs. Various wings of the Central government seem to be talking in multiple voices regarding control of prices of patented drugs.

For instance, Vinod Paul, Member (Health) of NITI Aayog says, “The prices of patented drugs cannot be curbed and should not be curbed … In principle, it is a discovery and we should respect the innovation.”

So, we should not exercise the option of Compulsory Licence (CL) specified in the Patents Act? Also, the trade margin cap exercise has the same effect.

Arguments to impose CL on patented anti-cancer drugs for government use will now look shaky in the courts. One of the factors for grant of CL is unaffordable prices. But in this case the government has legitimised high prices — even after the trade margin cap.

The writer is co-convener of the All India Drug Action Network (AIDAN). Views are personal

Published on April 12, 2019

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