Centre to cap trade margins on 110 non-scheduled cancer drugs at 30%
Trade mark-ups on some cancer drugs reach 700%. Can a 30% margin cap close that gap?
Published 9 October 2026. Written by Pratidin from the reports linked at the end; every fact checked by a separate review before publishing. How we work
The Centre has decided to cap trade margins on about 110 non-scheduled anti-cancer drugs at 30%, according to officials quoted in reports on 8 and 9 October 2026. The cap will cover branded and generic, domestic and imported, and patented and non-patented medicines; 35 of the drugs are patented. Officials expect maximum retail prices (MRPs) to fall by up to 70%, saving patients about ₹2,500 crore a year, and said manufacturers will be required to maintain current production levels. Implementation is expected later in October 2026. The cap limits only the trade margin, the mark-up added by distributors and retailers between the manufacturer and the patient, and not the manufacturer's own selling price.
Non-scheduled drugs are those outside the price ceilings of the Drugs (Prices Control) Order (DPCO), 2013, which mainly cover medicines in the National List of Essential Medicines. For them, a manufacturer may raise the MRP by up to 10% in a year, but there is no cap on the price at launch. An official analysis cited in reports found trade mark-ups of about 170% on average on such cancer drugs, with some as high as 700%. The step repeats a 2019 pilot: in February 2019, the National Pharmaceutical Pricing Authority (NPPA) used its extraordinary powers under Paragraph 19 of DPCO 2013 to cap trade margins on 42 non-scheduled anti-cancer drugs at 30%, which reports say cut prices of 526 brands and saved patients about ₹984 crore a year.
The move comes while a Supreme Court Bench of Justices Vikram Nath and Sandeep Mehta is hearing petitions on high drug mark-ups and has questioned the scheduled and non-scheduled distinction under the DPCO; the matter is listed on 12 October 2026. In August 2026, the Department of Pharmaceuticals told a parliamentary committee it was examining whether to build trade margin rationalisation into the DPCO, and officials describe the cancer cap as a first step. Industry and consumer groups broadly support rationalisation but want changes in how margins are calculated and a phased rollout, while associations of small firms warn that extending it widely could hurt smaller companies and supply in remote areas.
Prelims facts
- The Centre plans to cap trade margins on about 110 non-scheduled anti-cancer drugs at 30%, expecting MRPs to fall by up to 70% and patients to save about ₹2,500 crore a year.
- Non-scheduled drugs fall outside DPCO 2013 price ceilings; their makers may raise MRPs by up to 10% a year.
- In February 2019, the NPPA used Paragraph 19 of DPCO 2013 to cap trade margins on 42 non-scheduled cancer drugs at 30%.
- Trade margin is the mark-up added by distributors and retailers between the manufacturer's selling price and the MRP.
- A Supreme Court Bench of Justices Vikram Nath and Sandeep Mehta has questioned the scheduled and non-scheduled distinction; the matter is listed on 12 October 2026.
Quick recall
- Proposed trade margin cap on non-scheduled cancer drugs?
- 30%.
- How many non-scheduled cancer drugs will the 2026 cap cover?
- About 110, including 35 patented drugs.
- Expected annual savings to patients from the 2026 cap?
- About ₹2,500 crore.
- How many cancer drugs did the 2019 pilot cover?
- 42 non-scheduled anti-cancer drugs.
- Which DPCO provision allows price action in extraordinary circumstances?
- Paragraph 19 of DPCO 2013.
- Maximum annual MRP rise for a non-scheduled drug?
- 10% over the preceding 12 months.
- Under which Act is the DPCO issued?
- The Essential Commodities Act, 1955.
- Retailer margin built into ceiling prices of scheduled drugs?
- 16%.
Prelims practice question
With reference to drug price regulation in India, consider the following statements:
1. The Drugs (Prices Control) Order, 2013 fixes ceiling prices for scheduled formulations.
2. Manufacturers of non-scheduled formulations may raise their MRP by any amount every year.
3. The trade margin cap on anti-cancer drugs in 2019 was imposed under Paragraph 19 of the DPCO, 2013.
Which of the statements given above are correct?
- 1 and 2 only
- 2 and 3 only
- 1 and 3 only
- 1, 2 and 3
Show answer
Answer: (c) 1 and 3 only. Statement 1 is correct: ceiling prices apply to scheduled formulations. Statement 2 is wrong: the MRP of a non-scheduled formulation may be raised by no more than 10% over the preceding 12 months. Statement 3 is correct: the NPPA used its extraordinary powers under Paragraph 19 in February 2019.
Use this in UPSC Mains: previous-year questions
Recurring theme: Affordability of medicines, drug price regulation and out-of-pocket health spending
- How to use this
Use the cap to show the State containing marketisation through price regulation of medicines, a large part of out-of-pocket health spending.
- The Centre plans a 30% trade margin cap on about 110 non-scheduled cancer drugs, expecting MRPs to fall up to 70%.
- An official analysis cited in reports found average trade mark-ups of about 170% on such drugs, some up to 700%.
- A 2019 pilot on 42 cancer drugs under Paragraph 19 of DPCO 2013 reportedly saved patients about ₹984 crore a year.
Drug pricing is one alternative to relying on the private sector for affordable care; the story offers one data point.
Mains practice question
High trade margins on medicines push up out-of-pocket spending in India. Discuss the merits and limits of trade margin rationalisation as a tool to make essential medicines affordable, with reference to the recent decision on anti-cancer drugs. (250 words)
Model answer
The Centre has decided to cap trade margins on about 110 non-scheduled anti-cancer drugs at 30%, expecting MRPs to fall by up to 70% and patients to save about ₹2,500 crore a year.
Why trade margins matter
- Non-scheduled drugs escape DPCO 2013 ceiling prices; only annual increases are limited to 10%.
- An official analysis cited in reports found average trade mark-ups of about 170% on such cancer drugs, some up to 700%.
- Cancer treatment is long and costly, so mark-ups fall directly on households.
Merits of rationalisation
- Targets the gap, not innovation: the manufacturer's selling price is untouched, so patented and imported drugs stay on the market.
- Proven model: the 2019 pilot on 42 cancer drugs under Paragraph 19 reportedly cut prices of 526 brands and saved about ₹984 crore a year.
- Wide coverage: branded, generic, patented and imported drugs alike.
- Supply safeguard: manufacturers must maintain current production.
Limits
- Margin caps do not touch the base price set by the manufacturer.
- Small firms warn that broad extension could hurt them and supply in remote areas.
- Industry wants changes in how margins are calculated and a phased rollout.
- Enforcement across hospital, retail and online pharmacies needs monitoring.
Way forward
- Build trade margin rationalisation into the DPCO, as the Department of Pharmaceuticals is examining.
- Expand Jan Aushadhi outlets and public procurement for cancer drugs.
- Publish post-cap price audits.
Margin caps are a quick, targeted fix, but lasting affordability needs wider pricing reform and public provisioning.
The basics
Why this matters
Most Indians pay for medicines from their own pockets. For cancer, where treatment runs for months, the price on the strip decides whether a family can finish the course. The Centre's plan to cap trade margins on about 110 cancer drugs targets one specific part of that price: the mark-up added after the drug leaves the factory.
From factory to patient
A medicine passes through stockists, distributors and retailers. Each adds a margin. The total gap between the price at which the manufacturer first sells to the trade and the MRP printed on the pack is the Trade margin.
- 1ManufacturerSets its selling price to the trade (price to stockist)
- 2Stockist and distributorAdd their margins while moving stock
- 3Retailer or hospital pharmacyAdds its margin and sells at or below the MRP
- 4PatientPays the MRP; the planned cap limits the total trade margin to 30%
Two kinds of drugs under the DPCO
The Drugs (Prices Control) Order, 2013 is the main price law for medicines. It splits drugs into two groups, with very different rules.
- Listed in Schedule I, drawn from the National List of Essential Medicines
- NPPA fixes a ceiling price
- Ceiling built on the average price of brands with at least 1% market share, plus a 16% retailer margin
- Everything else, including many newer cancer drugs
- No ceiling on the launch price
- MRP may rise by up to 10% over 12 months
The regulator and its special power
The National Pharmaceutical Pricing Authority (NPPA) fixes and enforces prices. For drugs outside Schedule I, it can still act in the public interest under Paragraph 19 of DPCO 2013, which it used in 2019 to cap trade margins on 42 cancer drugs.
The debate
Supporters say margin caps hit profiteering in the supply chain without touching the manufacturer's price, so supply and innovation are protected. Critics point out that the base price remains free, and small firms fear wider caps could squeeze them. The Supreme Court, hearing petitions on mark-ups, has questioned whether the scheduled and non-scheduled split still makes sense.
Go deeper
In one line: The Centre will cap the mark-up that distributors and retailers can add to about 110 non-scheduled cancer drugs at 30%, expecting prices to fall by up to 70%.
Why it matters for UPSC
Drug pricing joins GS2 health policy (affordability, out-of-pocket spending) with regulatory design (statutory orders and regulators). The scheduled versus non-scheduled distinction is a classic Prelims trap.
The core idea
The Drugs (Prices Control) Order, 2013 caps prices only for scheduled drugs. Many cancer drugs are non-scheduled, so the gap between the factory price and the MRP, the Trade margin, can be very large. The National Pharmaceutical Pricing Authority can step in for such drugs using Paragraph 19 of DPCO 2013, as it did for 42 cancer drugs in 2019.
Numbers and dates to remember
- About 110 drugs to be covered, 35 of them patented
- Cap: 30% trade margin
- Expected fall in MRP: up to 70%
- Expected savings: about ₹2,500 crore a year
- 2019 pilot: 42 drugs, 526 brands, about ₹984 crore a year
- Non-scheduled drugs: MRP may rise up to 10% in 12 months
Where to go next
- Drugs (Prices Control) Order, 2013: the law that sets drug prices
- Trade margin: what the cap actually limits
- National Pharmaceutical Pricing Authority: the regulator that enforces prices
- Paragraph 19 of DPCO 2013: the special power used for non-scheduled drugs
Go deeper: is capping margins enough?
For the cap. The Trade margin on many non-scheduled cancer drugs is large: an official analysis cited in reports found average mark-ups of about 170%, with some at 700%. Capping it moves money from the supply chain to patients without changing what the manufacturer earns, so the risk of companies withdrawing drugs is lower. The 2019 use of Paragraph 19 of DPCO 2013 is the template.
Against relying on it alone. A margin cap leaves the manufacturer's base price free. The Drugs (Prices Control) Order, 2013 links ceilings to the essential medicines list, so new, costly cancer drugs often sit outside it. The Supreme Court Bench hearing petitions on mark-ups has questioned this scheduled and non-scheduled split. Small firms argue that a wide margin regime could squeeze them and disrupt supply in remote areas.
Institutional angle. The National Pharmaceutical Pricing Authority will have to monitor prices across retail, hospital and online pharmacies. The Department of Pharmaceuticals told a parliamentary committee in August 2026 that it was examining a general trade margin rationalisation framework within the DPCO. The cancer cap may be the test case for it.
Drugs (Prices Control) Order, 2013
The law that sets drug prices and splits scheduled from non-scheduled drugs.
In one line: The Drugs (Prices Control) Order, 2013 (DPCO) is the Centre's order, made under the Essential Commodities Act, 1955, that controls the prices of medicines.
How it works
Drugs listed in Schedule I, drawn from the National List of Essential Medicines, are scheduled. For them, the regulator fixes a ceiling price based on the simple average price of all brands with at least 1% market share, plus a 16% margin for retailers. No one may sell above the ceiling.
Non-scheduled drugs
All other drugs are non-scheduled. Companies set the launch price freely, but may not raise the MRP by more than 10% over the preceding 12 months.
Why it is in the news
Many costly cancer drugs are non-scheduled, which is why the Centre is using a trade margin cap rather than ceiling prices.
Where to go next
Drugs (Prices Control) Order, 2013: every story that connects to it (2)
Trade margin
What the cap actually limits.
In one line: Trade margin is the difference between the price at which a manufacturer first sells a medicine to the trade and the MRP the patient pays.
Where the money goes
After the factory, a medicine passes through stockists, distributors and retailers or hospital pharmacies. Each adds a margin for storage, transport and profit. When the total gap is very large, the patient pays far more than the manufacturer receives.
Why caps are used
A trade margin cap limits this gap without fixing the manufacturer's price. The Department of Pharmaceuticals told a parliamentary committee in August 2026 that for some small (MSME) firms, the trade channel rather than the manufacturer bears the cost of building the market, which helps explain high margins. Capping them is meant to cut prices while keeping drugs available.
Why it is in the news
The Centre plans a 30% trade margin cap on about 110 non-scheduled cancer drugs.
Where to go next
National Pharmaceutical Pricing Authority
The regulator that fixes and enforces drug prices.
In one line: The National Pharmaceutical Pricing Authority (NPPA) is the Centre's drug price regulator, set up in 1997 and attached to the Department of Pharmaceuticals.
What it does
The NPPA fixes ceiling prices for scheduled formulations under the DPCO, monitors prices of non-scheduled drugs, recovers amounts overcharged by companies, and watches for shortages. It also collects market data to judge where intervention is needed.
Why it is in the news
In February 2019, the NPPA capped trade margins on 42 non-scheduled cancer drugs on a pilot basis. The new plan widens this to about 110 drugs, and the NPPA will need to monitor compliance across pharmacies.
Where to go next
Paragraph 19 of DPCO 2013
The special power used for non-scheduled drugs.
In one line: Paragraph 19 of the DPCO, 2013 lets the government fix or revise the price of any drug, scheduled or not, in extraordinary circumstances and in the public interest.
Why it exists
Ceiling prices cover only scheduled drugs. Paragraph 19 is the safety valve for cases where a non-scheduled drug's price causes public harm.
How it has been used
In February 2019, the NPPA invoked these extraordinary powers to cap trade margins on 42 non-scheduled anti-cancer drugs at 30%, with revised prices taking effect from 8 March 2019. Reports say MRPs of 526 brands fell and patients saved about ₹984 crore a year.
Why it matters now
The 2026 plan for about 110 cancer drugs follows the same model.
Where to go next
Take the 9 October 2026 quiz: 30 Prelims-style questions with answers