Last Updated on July 27, 2026 5:15 pm by BIZNAMA NEWS
R. Suryamurthy
For millions of Indian households, the cost of illness increasingly extends beyond disease itself as Parliament has questioned a drug pricing regime that leaves nearly 82% of the pharmaceutical market outside direct price regulation, enabling wide disparities between factory prices and retail prices, sustaining high industry profits while exposing patients—particularly those dependent on chronic and life-saving medicines—to opaque pricing mechanisms, excessive trade margins and regulatory blind spots that lawmakers warn now demand urgent structural reform.
India’s pharmaceutical industry has earned global recognition as the “pharmacy of the world,” supplying affordable generic medicines to more than 200 countries and ranking as the world’s third-largest producer by volume. Yet, a report tabled in Parliament on Monday presents a striking paradox: while India exports some of the world’s cheapest medicines, millions of domestic consumers continue to face high retail prices driven by a pricing architecture that lawmakers say disproportionately benefits manufacturers and intermediaries rather than patients.
The Twenty-Seventh Report of the Standing Committee on Chemicals and Fertilizers, reviewing the government’s response to its earlier recommendations on rising medicine prices, concludes that the Department of Pharmaceuticals has failed to adequately address seven of its 11 recommendations, including several relating to price regulation, transparency and trade margins.
At the heart of the committee’s criticism lies India’s two-tier drug pricing framework.
Only medicines listed under the National List of Essential Medicines (NLEM) are subject to direct price regulation by the National Pharmaceutical Pricing Authority (NPPA). According to government data cited in the report, these scheduled medicines account for only about 18% of the pharmaceutical market by value, while the remaining 82%—around 70,000 formulations—fall into the non-scheduled category, where manufacturers face little more than a restriction on increasing the Maximum Retail Price (MRP) by over 10% annually after the launch price has already been fixed.
The committee argues that this regulatory gap has effectively created a market where launch prices remain largely unrestricted, allowing significant price differentiation between production costs, distributor prices and retail prices.
Government data presented to the committee showed that while nearly 87% of the non-scheduled market carries weighted average distributor-retailer markups of up to 45%, around 4% of medicines record markups exceeding 100% over distributor prices. The committee, however, said the Department’s explanation failed to address the broader concern that the absence of effective controls over non-scheduled medicines leaves patients vulnerable to excessive pricing.
The lawmakers also recalled evidence presented in their earlier report showing trade margins ranging between 600% and 1,100% on commonly prescribed medicines, saying the Department had not convincingly explained why such disparities persist. Instead, they reiterated their demand for a comprehensive overhaul of the existing pricing framework.
The report paints a picture of an increasingly sophisticated pharmaceutical marketplace where data asymmetry—not merely manufacturing costs—appears to shape medicine prices.
The committee noted that consumers have no access to Price to Stockist (PTS) information, while public platforms display only MRPs, limiting transparency over the actual pricing chain. It also questioned why the National Pharmaceutical Pricing Authority lacks powers to regulate excessive margins on widely prescribed non-essential medicines despite evidence of arbitrary pricing.
Lawmakers also expressed concern over what they termed “regulatory blind spots” surrounding fixed-dose combination medicines, non-scheduled formulations and publicly available pricing information, saying the Department’s replies were silent on several issues raised in the committee’s original recommendations.
One of the committee’s strongest criticisms concerns the prolonged delay in institutionalizing Trade Margin Rationalisation (TMR), a mechanism intended to cap excessive trade margins.
Although the government successfully used the framework to reduce prices of anti-cancer medicines and certain medical devices during the COVID-19 period, proposals to permanently incorporate TMR into the Drugs (Prices Control) Order, 2013 have remained under consultation for several years.
The committee said such delays have unnecessarily prolonged a regulatory vacuum while medicine prices continue to rise, adding that protecting affordable access for patients must take precedence over prolonged industry consultations.
The report is equally critical of pricing practices involving so-called “trade generics,” medicines largely distributed through rural and remote markets.
The Department attributed higher retail prices to logistics, inventory and financing costs borne by distributors. The committee rejected that reasoning, describing it as ironic that medicines sold in areas with lower purchasing power should attract higher effective costs and urging immediate regulation of prices for trade generics to protect vulnerable consumers.
The panel also turned its attention to life-saving medicines, particularly anti-cancer drugs, warning that reliance on temporary emergency powers under the Drugs (Prices Control) Order is no substitute for a permanent legal mechanism to regulate trade margins.
It recommended that the government accord the highest priority to creating a statutory Trade Margin Rationalisation framework capable of ensuring continuous monitoring of prices and preventing unjustified markups on critical medicines.
Beyond the immediate debate over medicine prices, the report signals a broader shift in India’s pharmaceutical policy discourse—from regulating annual price increases to questioning the architecture of price discovery itself.