Trade margin rationalisation

In one line: Trade margin rationalisation caps the mark-up added between the trade's purchase price and the MRP, without fixing the maker's own price.

How it works

A medicine passes from maker to stockist to retailer to patient. Each adds a margin. For scheduled drugs, a 16% retailer margin over the price to retailer is built into ceiling prices. For non-scheduled drugs there is no such limit, so an MRP can be many times the trade price. A margin cap limits that gap. The Centre capped margins of 42 non-scheduled cancer drugs in 2019 and, recently, of selected cancer drugs at 30% of MRP.

The debate

The petitioner says a 30%-of-MRP cap still allows a mark-up of about 42.86% on the purchase price. The bench asked why a uniform 16% cap could not apply across medicines and devices. Hospitals warn that tighter margins may push up other charges.

Where to go next

• Drugs (Prices Control) Order, 2013
• National Pharmaceutical Pricing Authority