Are Lower MRPs on Cancer Drugs Translating into Affordable Care?

UPSC Syllabus: Gs Paper 2- Issues relating to development and management of Social Sector/Services relating to Health.

Introduction

Cancer care in India remains costly, with high medicine prices and expenses on diagnosis, surgery, hospitalisation and follow-up placing a financial burden on families. Although the National Pharmaceutical Pricing Authority has reduced trade margins on several anti-cancer medicines, lower maximum retail prices do not necessarily make treatment affordable. The key question is whether these price cuts translate into actual patient savings and wider access to quality cancer care.

Current Status of Cancer Care and Affordability in India

1. High Out-of-Pocket Expenditure: The median expenditure on cancer treatment is approximately ₹4.1 lakh, of which patients pay nearly ₹3.3 lakh (80%) from their own pockets.
2. Financial Distress: Nearly 40% of cancer patients borrow money or pledge their assets to finance treatment, increasing the risk of household poverty.
3. Unequal Treatment Outcomes: Approximately 65.5% of women diagnosed with breast cancer in India survive for at least five years, compared with nearly 90% in high-income countries, indicating a significant difference in survival outcomes.
4. Dependence on Private Healthcare: Most advanced cancer treatment facilities are concentrated in the private sector, limiting access to specialised treatment through public healthcare institutions.
5. High Cost Beyond Medicines: Cancer treatment also involves expenses on diagnostics, surgery, hospitalisation, travel and follow-up care, making the total treatment cost much higher than medicine prices alone.

Government Initiatives for Regulating Cancer Drug Prices

1. NPPA’s Trade Margin Rationalisation: The National Pharmaceutical Pricing Authority (NPPA) capped trade margins at 30% for 137 non-scheduled anti-cancer drugs, reducing the prices of nearly 900 medicine brands.
2. Existing Drug Pricing Framework: The Drugs (Prices Control) Order, 2013 regulates prices of essential medicines and limits annual price increases for non-scheduled formulations.
3. Earlier Trade Margin Regulation: In 2019, trade margins were rationalised for 42 non-scheduled anti-cancer medicines, providing an earlier example of direct intervention in medicine pricing.
4. 4. Health Insurance and Financial Assistance: Ayushman Bharat and State government health insurance schemes provide financial support for cancer treatment, while some States also offer assistance through Chief Minister’s relief funds.

Impact of Price Regulation

1. Substantial Percentage Reductions: Of 1,024 brands analysed, 45.4% recorded price reductions above 50%, 19.6% above 70% and 0.8% above 90%.
2. Limited Absolute Savings: Only 16.5% of brands recorded price reductions exceeding ₹10,000, showing that large percentage reductions do not always translate into substantial monetary savings.
3. Palbociclib Price Reduction: The price of one Palbociclib brand fell from approximately ₹40,000 to ₹2,720, although 767 other brands were already available in the market between ₹2,800 and ₹9,000.
4. Enzalutamide Price Reduction: One company’s Enzalutamide price fell from ₹3.14 lakh to ₹1.17 lakh, although several other companies were already supplying the medicine at considerably lower prices.
5. Actual Patient Savings: A reduction in maximum retail prices does not automatically guarantee equivalent savings for patients if hospitals and pharmacies continue to charge substantial margins or other treatment expenses remain high.

Limitations of Trade Margin Rationalisation

1. No Reduction in Several Brands: Nearly 194 out of 1,024 brands recorded no price reduction, with their prices ranging from over ₹1 lakh to ₹10 lakh.
2. High Prices of Newer Medicines: Several patented cancer medicines and immunotherapies remain prohibitively expensive despite trade margin regulation, limiting patients’ access to newer treatment options.
3. Unchanged Prices of Key Medicines: The prices of Ribociclib, a breast cancer medicine, and Pembrolizumab remained unchanged under the latest intervention.
4. Unequal Returns from Uniform Margins: A 30% margin on a medicine priced at ₹8,000 gives hospitals a higher return than the same margin on a ₹2,000 medicine, potentially influencing their stocking decisions.
5. Risk to Generic Competition: Higher returns from expensive brands may discourage hospitals from stocking cheaper generic medicines, weakening competition based on affordability and higher sales volumes.

Key Challenges in Ensuring Affordable Cancer Care

1. Excessive Supply-Chain Margins: The difference between manufacturer, hospital and patient prices may include legitimate storage and distribution costs, but excessive margins captured by intermediaries and some hospitals increase patients’ expenses.
2. Limited Patient Bargaining Power: Cancer patients have limited treatment choices and depend heavily on doctors and healthcare providers, making it difficult to question prescribed medicines or their prices.
3. Information Asymmetry: Patients often lack sufficient information about medicine prices and available alternatives, while healthcare providers have greater knowledge and influence over treatment decisions.
4. Weak Price Transparency: The absence of an independent government pharmaceutical pricing database makes it difficult to verify prices across manufacturers, stockists, retailers, pharmacies and hospitals.
5. Lack of Healthcare Charge Regulation: Hospitals have considerable bargaining power because of bulk purchases, but there is no comparable mechanism to regulate healthcare charges, unlike sectors such as telecommunications and electricity.
6. Fragmented Medicine Procurement: Different government agencies purchase medicines separately, limiting opportunities to negotiate lower prices through combined procurement.

Way Forward

1. Independent Price Monitoring: The NPPA, along with State drug regulators, should compare medicine prices before and after regulation to verify actual patient savings and monitor medicine availability.
2. Independent Pharmaceutical Pricing Database: The government should develop its own pricing database and require manufacturers, stockists, retailers and hospitals to disclose relevant price information.
3. Transparent Hospital Billing: Hospitals should disclose revised medicine prices and provide itemised bills so that patients can clearly understand their medicine and treatment expenses.
4. Stronger Regulatory Enforcement: Regulators should regularly check medicine prices, investigate overcharging and take action against excessive trade margins across the pharmaceutical supply chain.
5. Strategic Pooled Procurement: Government agencies and health insurance programmes should purchase medicines together in larger quantities to negotiate lower prices and reduce procurement costs.
6. Cost-Based Treatment Regulation: The government should introduce cost-based caps on cancer treatment, linked to standard treatment protocols, to control overall treatment expenses.
7. National Cancer Mission: India should establish a dedicated National Cancer Mission to strengthen public healthcare facilities, develop standard treatment protocols, provide systems for second opinions and improve cancer prevention and care.
8. Comprehensive Financial Protection: Ayushman Bharat and State insurance programmes should cover the complete cancer treatment journey, including medicines, diagnostics, surgery and follow-up care.
9. Promoting Affordable Generic Medicines: Doctors should consider effective and quality-assured generic alternatives before prescribing expensive branded medicines, without compromising treatment quality.
10. Balancing Affordability with Research and Development: Price regulation should prevent excessive trade margins while allowing pharmaceutical companies to recover legitimate investments in Research and Development (R&D) for developing new medicines.
11. Encouraging Wider Healthcare Innovation: Better manufacturing processes, affordable diagnostics and improved medicine delivery systems should be encouraged to reduce treatment costs and improve patient outcomes.
12. Outcome-Based Healthcare Financing: Public programmes and insurers should assess treatment value through patient outcomes rather than focusing only on the number of treatments financed or prices negotiated.

Conclusion

Lower medicine prices can ease patients’ financial burden, but they cannot alone make cancer care affordable. India needs transparent pricing, stronger public treatment facilities and comprehensive financial protection. These measures must also protect medicine quality, reliable supply and research investment, so patients can access treatment without facing financial hardship.

Question for practice:

Examine whether the regulation of cancer drug prices has ensured affordable and equitable cancer care in India.

Source: The Hindu; Businessline