The Centre has informed the Supreme Court that capping trade margins on anti-cancer medicines at 30 per cent of their maximum retail price (MRP) is expected to save patients approximately ₹2,500 crore annually, with the proposed measure projected to reduce the MRP of such drugs by 20 to 70 per cent. The disclosure came through an affidavit filed by the Union government's Department of Pharmaceuticals in response to a pending public interest litigation seeking stricter regulation of medicine prices.

What the Proposed Cap Entails

Under the proposal, trade margins on anti-cancer drugs would be capped at 30 per cent of MRP — mirroring the structure of the Trade Margin Rationalisation (TMR) policy of 2019. The government stated in its affidavit that the objective is to 'retain a reasonable trade margin while preventing excessive margins,' ensuring that distributors and retailers continue to receive a workable share without burdening patients.

An expert committee was constituted on 9 October 2026 under the chairmanship of the Director General of Health Services by the Ministry of Health and Family Welfare. The panel is expected to submit its report within 10 to 15 days, recommending the specific list of anti-cancer medicines to which the cap will apply. The list will cover cancer-approved drugs, excluding inexpensive medicines, and may be periodically revised based on market conditions and public health needs.

How the NPPA Will Act on the Recommendations

Once the expert committee submits its report, the National Pharmaceutical Pricing Authority (NPPA) will place the recommendations before its authority for deliberation. Following that, the NPPA will issue a price notification and direct manufacturers to ensure patient-level benefits are actually passed on. The government said the measure was designed to reduce out-of-pocket expenditure for cancer patients, improve affordability and accessibility, and bring greater transparency to consumer pricing.

The 2019 Precedent and Its Impact

The Centre's affidavit pointed to the 2019 TMR intervention, when the NPPA capped trade margins at 30 per cent on 42 selected non-scheduled anti-cancer medicines. According to the affidavit, that measure led to an MRP reduction across 526 brands and generated annual patient savings of roughly ₹984 crore, based on company-reported data. The Centre characterised this as a policy precedent for the broader extension now under consideration.

The government also referenced earlier exercises of its extraordinary powers under Paragraph 19 of the Drugs (Prices Control) Order (DPCO), 2013, which have previously been used to cap prices of diabetes and cardiovascular medicines, fix ceiling prices for coronary stents and knee implants, and regulate trade margins on oxygen concentrators during the Covid-19 pandemic.

Industry Concerns and Implementation Challenges

The affidavit acknowledged that some industry associations have raised concerns about extending the cap, warning of potential impact on employment and medicine distribution — particularly in remote regions — given the dependence of smaller manufacturers on local traders and multi-tier distribution networks. The government noted that higher trade margins are sometimes commercially necessary for low-value medicines, drugs requiring specialised storage, fragile products, and medicines with low turnover.

'Implementation of Trade Margin Rationalisation affects different stakeholders differently and, hence, requires extensive consultation with all stakeholders and a well-calibrated approach,' the affidavit stated. The Centre stressed that differences in distribution costs and market conditions must be factored into any broader regulatory framework.

Background: The PIL and Existing Framework

The affidavit was filed in response to a public interest litigation by Dr Sanjay Kulshrestha, which flags concerns over medicine pricing and calls for effective regulation of trade margins in the pharmaceutical sector. The Centre maintained that a comprehensive statutory framework — including the DPCO, 2013 — is already in place, and that the government has been taking calibrated steps to address excessive margins without compromising the availability of essential medicines.

The government also highlighted ongoing access initiatives, including the Pradhan Mantri Bhartiya Janaushadhi Pariyojana, which provides generic medicines through approximately 19,000 Jan Aushadhi Kendras, and AMRIT pharmacies, which offer discounts on essential and life-saving drugs. The expert committee's report and the NPPA's subsequent notification will determine the timeline for implementation.