The government’s move to cap trade margins on non-scheduled cancer drugs at 30% could pave the way for similar price controls on other medicines and healthcare products, according to Ashwin Sapra, Partner – Corporate, Pharmaceuticals, Healthcare & Life Sciences at Trilegal. He said the key question is whether the current move is a targeted intervention or part of a broader strategy to reduce drug prices across selected treatment categories.
Sapra said the government’s recent actions suggest a shift towards targeted price and trade margin reductions, but the next steps remain uncertain. The Supreme Court’s October 12 hearing will be important in determining how the government proceeds and whether additional drug categories are brought under the proposed framework.
“If this is how the government is going to go forward, and they’re going to keep on putting more and more drugs under trade margins with rationalisation of, say, 30%, I think the industry would need to take a concerted call,” Sapra said.
He noted that the government may seek more time from the court to study the range of drugs available in the market and consider bringing more non-scheduled formulations under price controls. However, the outcome of the hearing remains uncertain, as the court must weigh concerns over high treatment costs against the industry’s arguments.
Sapra also cautioned against setting prices for one part of the healthcare system without considering the impact on the rest of the supply chain. He cited the example of cardiac stents, whose prices were capped by the National Pharmaceutical Pricing Authority (NPPA), but said the overall cost to patients did not decline and instead increased.
“An act of fixing prices in isolation is really going to have an effect elsewhere in the chain,” he said, arguing that policymakers need to assess the broader implications of price controls rather than focus on individual products.
He said the process should involve drug importers, manufacturers, supply chain intermediaries, hospitals and patients. The government may need to consult these stakeholders to develop a balanced framework, as the challenges faced by each segment differ.
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After cancer drugs, could other medicines face margin caps? Trilegal’s Ashwin Sapra
Sapra added that hospitals could face further financial pressure if government intervention eventually extends beyond cancer drugs to treatment charges and other services. Some hospitals are already dealing with cash-flow challenges arising from delays in payments for services provided under the Central Government Health Scheme (CGHS).
The industry is still assessing the implications of the 30% cap, he said. The October 12 hearing could offer greater clarity on whether the government will be given more time to consult stakeholders and consider additional categories for price regulation.
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