Cancer drug margins to be capped at 30%; government pushes hospital rate transparency

The Union government is moving on two fronts to address concerns over healthcare costs, informing the Supreme Court of its decision to cap trade margins on anti-cancer medicines at 30% while separately asking states and Union Territories to ensure hospitals prominently display their service rates.

The two developments come amid growing scrutiny of steep mark-ups on medicines, medical consumables and healthcare services, which can substantially increase patients' out-of-pocket expenditure.

On Monday, Solicitor General Tushar Mehta told a Supreme Court bench of Justices Vikram Nath and Sandeep Mehta that the government had decided to regulate trade margins on anti-cancer medicines by capping them at 30% of the maximum retail price (MRP). The government will notify a list of medicines covered by the measure, which may be periodically updated to include additional drugs.

Separately, Union Health Secretary Punya Salila Srivastava has written to the chief secretaries of all states and UTs, calling for a review of compliance with existing provisions requiring clinical establishments to prominently display rates for their services and facilities.

The Health Ministry said the move was aimed at helping patients understand treatment costs, plan their medical expenditure and avoid billing-related disputes.

Supreme Court questions steep mark-ups on medicines

The proposed intervention on cancer drugs follows repeated questions from the Supreme Court over the disparity between the prices at which medicines are supplied to retailers and the MRPs printed on them.

During Monday's hearing, the court questioned why the government's proposed intervention was restricted to anti-cancer medicines when patients also face high mark-ups on other medicines and medical devices.

The bench cited the example of an Indian-made cardiac stent supplied to retailers for around ₹5,000 but carrying an MRP of ₹25,000.

Mehta responded that cardiac stents were already subject to price caps. The court, however, pressed the government on the broader question of whether trade margins across the pharmaceutical sector required greater scrutiny.

The Centre has argued that any intervention must balance affordability with the availability of medicines and the commercial requirements of pharmaceutical distribution. It has also raised concerns about extending a uniform margin cap across all medicines, citing differences in distribution costs and the challenges of supplying inexpensive drugs to remote areas.

According to the government's affidavit, the proposed cap on anti-cancer medicines is expected to reduce their MRPs by 20% to 70%, potentially saving patients around ₹2,500 crore annually.

An expert committee under the Director General of Health Services has been constituted to recommend the list of cancer medicines to be covered. The matter is scheduled for further hearing on October 27.

Hospitals told to display treatment rates prominently

In a separate communication, the Health Ministry has asked states and UTs to ensure that hospitals and other clinical establishments comply with existing requirements on displaying healthcare service charges.

The letter refers to the Clinical Establishments (Registration and Regulation) Act, 2010, and the Clinical Establishments (Central Government) Rules, 2012.

Under the central framework, clinical establishments in states and UTs where the Act applies must display the rates charged for each type of service and the facilities available at a conspicuous location. The information must be available in the local language as well as English.

States and UTs where the central law does not apply regulate clinical establishments under their respective frameworks, several of which also contain provisions requiring the display of healthcare rates.

Acknowledging that health is a State subject, the Centre has asked state and UT administrations to ensure effective implementation through the authorities concerned.

The ministry said clearly displayed rates would allow patients and their attendants to understand the likely cost of treatment before making healthcare decisions.

Greater transparency, it added, would help “minimise avoidable confusion and billing-related disputes”, while strengthening trust in the healthcare system.

The Centre has also asked states and UTs to encourage the prominent display, wherever applicable, of package rates offered to foreign patients travelling to India on Medical and Ayush Visas.

Transparency versus price regulation

While both developments concern healthcare affordability, they address different aspects of pricing.

The proposed cancer-drug intervention seeks to regulate trade margins, whereas the Health Ministry's letter focuses on making existing hospital service rates more visible to patients. The letter does not introduce a new nationwide price cap on hospital services or medicines.

The distinction is important because disclosure of charges does not, by itself, prevent steep mark-ups. Patients may be able to see a hospital's stated rates but could still face substantial bills for medicines, consumables, investigations and other services.

The two measures nevertheless place renewed focus on the need for patients to have clearer information about healthcare costs, alongside regulatory scrutiny of medicine pricing.

The Supreme Court is expected to take up the drug-pricing matter again on October 27, while the Health Ministry has sought the attention of state and UT chief secretaries to ensure compliance with applicable rate-display provisions.