Huge gaps in drug prices expose cracks in regulation

Rising concerns over India’s drug pricing regime have resurfaced after a Parliamentary Standing Committee on Chemicals and Fertilisers highlighted an alarming gap between the price to stockist (PTS) and the maximum retail price (MRP) of several widely used medicines. The committee, chaired by MP Kirti Azad, observed that this unchecked difference is undermining the Centre’s commitment to affordable healthcare.

The panel noted that essential drugs, ranging from anti-allergy tablets to cancer medications, continue to remain out of reach for many citizens. What shocked the members was the scale of disparity. In one instance, the PTS of Ciprofloxacin 500 mg paired with Tinidazole 500 mg was pegged at Rs 450, but its MRP escalated to Rs 3,500, an astounding jump of Rs 3,050. Similarly, Ibrufin, priced at Rs 831 at the stockist level, hit shelves at Rs 4,560, widening the gap by Rs 3,729.

While the Drugs (Price Control) Order, 2013, places essential medicines under strict price ceilings fixed by the National Pharmaceutical Pricing Authority (NPPA), non-schedule drugs enjoy significant leeway. Manufacturers are permitted an annual increment of up to 10 per cent, but in practice, the absence of regulation over margins allows retailers and wholesalers to command hefty cuts.

Drugmakers told the committee that manufacturing costs are only one part of the equation. Marketing spend, especially incentives to retailers, often inflates final prices. A manufacturer from Baddi admitted that retailers typically pocket 25-30% margins, while start-ups may offer as much as 40-50% simply to push their brand. Reducing these margins, he said, risks killing a product before it gains visibility.

The panel has now called for expanding price caps to include a wider range of cancer therapies, including vaccines and immunotherapy. But the more urgent task lies in closing the yawning PTS-MRP gap, an essential step if medicines are to remain accessible to the average Indian.