India limits drug markups to slash cancer treatment costs by up to 70%

The Indian government has extended price controls to a larger group of cancer medications following a ruling by the country's highest court. Starting next month, 137 additional drugs will fall under a cap that limits trade margins to 30%. This action directly addresses the financial strain on patients who often must sell assets or take on debt to pay for life-saving treatments.

The legal battle began in 2021 when Sarojam Radhakrishnan, a former bank clerk in Kerala, was diagnosed with breast cancer. Her doctors prescribed targeted therapies that cost more than 63,000 rupees per month, a sum her family found unmanageable. In 2022, she filed a petition with the Kerala high court, requesting that the government intervene to lower these costs before the case reached the supreme court.

Justices Vikram Nath and Sandeep Mehta reviewed the pricing structures used by hospitals, distributors, and retailers during a hearing on 29 September. They described the existing markups as instances of carnage and extortion. The judges cited a specific example of a cancer drug supplied to hospitals for 2,700 rupees but sold for 27,000 rupees. Their decision follows analysis by the National Pharmaceutical Pricing Authority, which found average trade markups of 170% for some drugs, with extreme cases exceeding 700%.

The Department of Pharmaceuticals stated that the new cap is expected to reduce medicine prices by up to 70%. The ministry projected that this measure would help cancer patients save 2,500 crore rupees annually, significantly lowering out-of-pocket expenses. Previously, a 30% margin cap applied to only 42 drugs, leaving many others subject to higher costs.

Healthcare costs in India often push families into poverty, a trend documented by the Public Health Foundation of India, which estimates that medical spending pushes about 55 million people below the poverty line each year. Krishan Kalra, a former council member of the Rajiv Gandhi Cancer Institute and Research Centre, noted that many people avoid free diagnosis camps in Gurgaon because they fear the cost of treatment if cancer is detected. He observed that drug prices range from 38,000 to 380,000 rupees, often causing families to leave consultations without starting therapy.

Existing insurance coverage provides limited protection for these high costs. The government's Ayushman Bharat scheme covers certain cancers but offers only 500,000 rupees in annual coverage per family. This amount equals the cost of a single dose of Kadcyla, a breast cancer drug for which patients may require up to 14 doses. Dr. Ravi Kannan, a surgical oncologist in Assam, said that some families start treatment but cannot afford to continue it. He called the new ruling a welcome step that could improve patient access to necessary medicines.

India records approximately 1.56 million new cancer cases annually, a number that has risen from 1.39 million in 2020. Jyotsna Singh, co-convener of the Working Group on Access to Medicines and Treatments, argued that the healthcare system requires a total overhaul, including greater transparency across the supply chain. She warned that hospitals and companies might seek legal loopholes or raise other charges to offset the lower drug prices.

The supreme court has asked government lawyers to explain why the cap applies only to cancer drugs rather than all non-patented medicines. The government has until 27 October to respond to this query. The ruling arrived after Radhakrishnan passed away in September 2022, while her case was still pending in the Kerala courts.