Taping the Pipe: NPPA’s Trade Margin Cap on Anti-Cancer Drugs

Suppose there is a leak in your water supply pipe, and instead of replacing the pipe, you keep wrapping tape around the crack. The drip stops, for now but the pipe is still cracked, and you have only deferred the day it bursts. Policy-making on affordable medicines in India more or less follows the same approach, and the recent National Pharmaceutical Pricing Authority’s (NPPA) Trade Margin Rationalisation (TMR) order for anti-cancer drugs is its latest example. In this post, I attempt to break down what the order actually does and explain why it does not do enough. The order is technical, the process complicated, and my writing skills are still being developed, so apologies for the length of the post!

On 17 October 2026, the National Pharmaceutical Pricing Authority (NPPA) invoked Paragraph 19 of the Drugs (Prices Control) Order, 2013 (DPCO) to cap trade margins at 30% for 137 non-scheduled anti-cancer drugs (See here). A PIB release of 28 October presents this as a step to curb excessive margins, make cancer treatment more affordable and improve access. It lists revised MRPs for 543 brands, effective from 9 November (See here). The order deserves credit for trying to solve the problem of excessive increase in the retail price of anti-cancer drugs. But reading it alongside the ongoing case before the Supreme Court on the same issue, the revised price list, and a Standing Committee’s August report on NPPA, I think it is a narrow tool whose timing raises the question of whether it was meant to show that something is being done, and its achievement is overstated.

Understanding the Order

The order cites serious concerns raised by state authorities, patients and civil society about the gap between procurement price and MRP, and takes inspiration from the 2019 pilot program where the TMR was capped for 42 anti-cancer drugs, and a reduction in price was observed by 90%.

The 17 October order mechanism gives a formula to the manufacturers to fix the MRP for their products. The formula for is: MRP = PTS × [1 + 30/(100 − 30)] + GST, where PTS (price to stockist) is the manufacturer’s average selling price to distributors in March 2026. The 30% is a share of the MRP, so the MRP effectively becomes 1.43 times of the PTS. The March baseline stops companies from raising their PTS arbitrarily. A brand whose MRP is already lower than calculated through the formula, keeps the lower price. Patented drugs are also covered by the order, since paragraph 9 records that DPCO places no restriction on their pricing unless a paragraph 32 exemption applies. Simply put, a drug company can no longer print an MRP more than about 43% above what it charged its distributors in March 2026. If a product’s MRP is already below that, nothing changes. The order limits the gap between what the distributor paid and what the patient is charged, however, it does not limit what the drug costs to begin with.

Based on the revised price list of 5 November 2026, there has been a huge reduction in the MRP of the drugs in some cases by over 90%. For example, Arvincare’s abiraterone 250 mg had its MRP revised from rupees 41,250 to rupees 3,218. Samarth’s thiotepa 100 mg reduced from rupees 80,072 to rupees 7,150. RPG’s Palbopro reduced from rupees 40,421 to rupees 2,720. However, these huge MRP reductions were only true for drugs where there were many companies competing in the market. To be fair, though the order delivers real savings in the market for competitive generics, the question is not whether the tool works where there is competition, but whether that is where the problem is worst.

What Actually Gets Cheaper?

NPPA has claimed that the reductions are broadly in the range of 20% to 70%, yet patented drugs and some critical non-patented drugs like Bevacizumab still remain unchanged. I checked this against the revised list.

Keytruda, Tagrisso, Avastin, Opdyta, Tecentriq, Darzalex, Phesgo, Venclexta, Ribociclib, and Jakavi are all unchanged while Pfizer’s breast cancer drug, Palbace fell only about 6%. Now, there might be a possibility that these drugs might already sit below the 30% ceiling, which would explain the lack of price revision. But these are drugs priced from tens of thousands to lakhs where families face catastrophic out-of-pocket costs, and the patients who need relief get none.

A PIB factsheet, dated 6 November, mostly repeats the order’s mechanism and adds a long list of other cancer-care schemes, such as Ayushman Bharat, Jan Aushadhi and HPV vaccination. It explains nothing new about enforcement or about what patients actually pay. Its only new material is a set of figures as of 4 November: 70 companies had reported revised MRPs for 1,136 stock keeping units of 120 drugs, the largest cut was 96.45%, and estimated savings are 3,357.49 crore rupees. These figures need caution. The savings are the gap between old and revised MRP multiplied by sales volume from April 2025 to March 2026. This measures saving based on printed prices, not what patients actually paid, and any hospital discounts would make the real savings smaller. The factsheet also says MRP cuts average “20% to 70%” without saying what that range is an average of. Moreover, the 6th November revised price lists shows that only 120 of the 137 drugs have their prices revised, which shows that reporting is still incomplete, even though the prices need to come into effect from 9th November, 2026.

Another issue is that the same molecule is still priced at different MRPs as per the manufacturer. So, the order doesn’t provide any relief uniformly for one drug molecule. For example, Abiraterone 250 mg (120 tablets) ranges from about 3,218 rupees (Arvincare’s Abirone) to 12,187 rupees (Sun’s Zelgor) and 20,000 rupees (Lucien’s Abiraside), with the last two unchanged. That is nearly a sixfold gap for the same molecule, strength and pack. The order has a formula but no reference ceiling. Since, the formula only links a product’s MRP to that same product’s own PTS. It does not compare brands of the same molecule, so a manufacturer with a high PTS gets a high MRP.

Moreover, the MRP is also not what a buyer pays, always. The order in paragraph 5 notes that hospital and retail prices differ, with varying discounts on MRP. So, a lower MRP matters most to a patient paying full price at a chemist, and much less where a hospital already bought at a deep discount. And since anti-cancer drugs, due to their specialized nature, high-cost, or temperature-sensitive therapies, are typically stocked only in specialty oncology pharmacies, hospital-attached pharmacies, the benefits of this flow directly to a patient seems difficult. Note (r) of the order itself acknowledges that a substantial supply of anti-cancer drugs goes directly to hospitals and medical institutions. While hospitals may pass on their discounts to patients, maynothing in the order says the hospital must pass it on. The hospital can still bill the patient the full MRP and keep the difference. The order does ask hospitals to monitor their own prices but it is not clear what this means, and ultimately self-regulation simply means that the people who gain from the gap are asked to police it. A lower MRP helps patients only if hospital bills actually follow it.

Finally, there is the problem of traded generics. Take two tablets with the same molecule. Before the Order, Brand A was sold to stockists at rupees 70 with an MRP of rupees 100, so the chemist’s cut is about rupees 30. Traded generic B was sold at rupees 20 but printed at rupees 100, so the chemist’s cut is rupees 80, and chemists pushed B. After the order, B’s MRP must fall to rupees 28.6 (20 x1.43), leaving the chemist about rupees 8. Brand A stays at ₹100 because it was already within the cap, and retailer’s 30 rupees cut is untouched. The incentive to prescribe brand A now increases, and a patient steered to buy A pays 100 rupees instead of 28.6 rupees. Obviously, this is a hypothetical, and in oncology its possibility is less, because doctors and hospitals decide what the patient gets, not chemists. But the risk would grow if the government copies this template for everyday medicines like diabetes tablets or cardiovascular tablets, taking inspiration from the “great success” of this model.

The result of this is that the claimed benefit to the patients is never brought to fruition, effectively. By only capping the margin, a lot of medicines are allowed to slip through from the scope of revision, which makes TMR as a policy doesn’t ameliorate patients actual problems due to exorbitant pricing, while leaving a lot many weaknesses unaddressed. The mechanism of self-filing opted by the order further aggravates it, and is dealt with in the next section.

A Cap on Margin, Not on Price

The 17 October order puts the cap on the margin, and the margin is computed on PTS, a number the manufacturer provides. Even new launches after 31 March 2026 are to be priced on their current PTS, which is again to be provided by the manufacturer. So the PTS provided by the manufacturers is to be believed by the NPPA because the manufacturer “said so”? What is starkly striking here is that in August 2026, a Standing Committee in its report noted the necessity of broadening the data coverage on sales, and strengthening the government monitoring databases to reduce dependency on third party sales data providers. (See Part II of report here) Going in the opposite spirit of the Committee’s report, the NPPA relies on the manufacturers’ provided data believing that they would provide true data because the form to submit revised price requires manufacturers to undertake that “the information furnished above is correct and true to the best of my knowledge and belief.”

Incidentally, the revised MRP list, filled with repetitions and errors, itself becomes an example of how hard verification is. For example, Xtandi appears with two different revised prices (1,04,886 and 1,17,416 at serial numbers 404 and 416 respectively); Sun Pharma’s Degapride 80 mg also with two revised prices 9,030 and 13,363 at serial numbers 348 and 359, and several entries carry impossible strengths such as “100 GM” at serial numbers 140, 209 and 324.

Even compliance of the order is based on self-reporting. The order mandates that all manufacturers must submit revised prices within seven days, and non-submission would be treated as non-reduction. Hospitals must monitor compliance (Note r), State Drug Controllers must verify it (Note s), and violators must deposit the overcharged amount with interest (Note u). But the Standing Committee had already found that, as of 2025, 8,526 crore rupees i.e., 85% of the amount demanded for overcharging remained unrecovered, with 70% of it under litigation and some cases pending for over 20 years. The order therefore adds fresh recovery liabilities but provides no mechanism to recover them any faster than before.

The Standing Committee, in paragraph 64 of the report, cites Pharmarack’s database noting that non-scheduled formulations make up 82% of the market and are restricted only in how much their price may rise annually i.e., 10%, not in the price they start at. A TMR policy does not change that, and Note (t) of the order still lets manufacturers avail the annual increase from the date of the order.

The Standing Committee had actually drawn a comprehensive map of these problems, and the order follows only one of its recommendations, the use of TMR itself, and ignores the rest even though it follows the report submitted in August 2026. It observed that relying only on market data may miss price distortions caused by monopolies in multi-layered supply chains, and recommended examining cost-based pricing through statutory amendments where markups are abnormally high. It noted that NPPA relies on private data covering about 70% of the market, which leaves out hospital sales, Jan Aushadhi stores, trade generics and direct e-commerce supplies, and it recommended widening that coverage. It also noted that of 1,426 draft price worksheets uploaded between 2022 and 2025, only 30 drew public representations, all from industry, thus, recommended increased public participation. The current order was passed with no general public consultation, and its timing, with the Supreme Court case pending, raises the question of whether it was meant to let the government point to an existing policy on the issue.

Tape, Again

Nothing in the order says how long it will run. Note t of the order says that the revised prices will stay “until further orders”, and the list will be “updated periodically” (paragraph 8) with no period/interval defined. This is not new. The 2019 exercise was described as a pilot to prove the concept, and seven years later the Standing Committee noted that there is still no timeframe for building a permanent framework into the DPCO. It recommended finalising one within a defined timeline, after review and stakeholder consultation. Instead, the government has simply extended the same temporary tool from 42 drugs to 137. “Policy” on affordable medicines has often followed this pattern. A measure is announced as a solution, its headline numbers are presented as proof, and the underlying problem is never solved. Part of the reason for this is the diagnosis of the problem. A sound policy starts with sound data, yet this order rests on prices that manufacturers report about themselves, and, as the Committee found, NPPA’s wider price monitoring depends on private data that misses hospital sales, Jan Aushadhi stores and direct supplies. If the data is incomplete, the diagnosis will be too.

Despite the order introducing price cuts for drugs where there is competition, the order seems of limited use in the larger picture. A trade margin cap that applies only to listed drugs, rests on self-reported figures, and has no end date or review is a stopgap. A lasting fix would do four things. It would write trade margin rationalisation into the DPCO with a timeline. It would allow cost-based pricing where markups are abnormal. It would widen the data NPPA depends on, so that hospital and direct sales are visible. And it would set up a dedicated cell to recover overcharged amounts, which have gone largely uncollected so far. Until then, the tape holds only until the next leak.