A medicine’s price is shaped not by science but by how it travels from manufacturer to patient. That is the logic behind the National Pharmaceutical Pricing Authority’s (NPPA) decision to bring 137 non-scheduled anti-cancer drugs under Trade Margin Rationalisation (TMR), effective November 9. Trade margins are capped at 30 per cent of the maximum retail price (MRP), excluding GST, and MRPs are expected to fall by up to 70 per cent. NPPA found mark-ups of up to 700 per cent in some anti-cancer medicines. The list spans blood, lung, breast, prostate, gastrointestinal and ovarian cancers, besides some palliative agents. The reform should be judged by its consequences for patients, manufacturers, hospitals and innovation.AdvertisementDoes reducing prices adversely affect innovation?New medicines need sustained investment, so the question is fair. But trimming distribution margins does not touch the manufacturer’s realisation. Consider a hypothetical medicine sold to a stockist for Rs 10,000 with an MRP of Rs 50,000: The Rs 40,000 gap covers intermediary margins, distribution costs and taxes. The NPPA’s analysis showed wide gaps, with per-dose prices of pemetrexed ranging from Rs 546 to over Rs 72,000, and bevacizumab from about Rs 6,900 to Rs 1.18 lakh. TMR recalculates the permissible MRP; the manufacturer’s earnings remain unchanged.Immunotherapy has become central to cancer regimens. Pembrolizumab, nivolumab and durvalumab are patented biologics whose prices the Drugs Prices Control Order does not normally regulate, yet the NPPA has included them. Pembrolizumab’s MRP is about Rs 2.06 lakh per dose; durvalumab ranges from Rs 38,849 to Rs 1.63 lakh and nivolumab from Rs 13,286 to Rs 1.04 lakh. Treatment runs over multiple cycles, so even modest mark-ups multiply. Patients often pay full MRP, though some pharmacies and online platforms offer about 15 per cent discount; the gap remains wide. TMR narrows it, but the real test is how much it improves affordability for patients. A post-implementation study should generate that evidence.What do manufacturers, chemists and hospitals say?Manufacturers: The reaction is mixed. Analysts note the cap does not automatically reduce manufacturers’ realisations, and the shares of a few large companies, which dropped earlier, recovered as uncertainty eased. Associations of micro, small and medium manufacturers fear for jobs and availability in remote areas. NPPA’s 2019 TMR pilot on 42 drugs cut MRPs of 526 brands by up to 90 per cent and saved about Rs 984 crore a year, but this does not show the effect on availability or actual patient bills. Supply chains must be monitored for stock-outs, particularly of low-cost older drugs.AdvertisementAlso Read | Cyclone Arnab: The rupee follows the windChemists: The All-India Organisation of Chemists and Druggists, representing more than 12 lakh retailers and distributors, welcomed the move, arguing that MRPs are set upstream by manufacturers. It has urged a similar, evidence-based and uniform approach for other high-cost essential medicines. The key challenge is existing stock carrying older, higher MRPs: price revision, relabelling and inventory reconciliation need clear operational guidelines and a practical transition framework, so compliance does not unduly burden retailers.Hospitals: TMR will squeeze hospital profitability, manageably but noticeably, because hospitals rely on retail mark-ups. Nuvama estimates an impact of around 4 per cent for Max Healthcare and 1-2 per cent for other large chains, while Jefferies expects the pressure to be transitory. Overall, hospital EBITDA could fall by 1-5 per cent, depending on revenue mix and business model. The larger concern is whether hospitals recoup lost revenue through higher charges for consultations, diagnostics, consumables, procedures or bundled packages. This warrants systematic scrutiny so that medicine savings become genuine reductions in patients’ out-of-pocket expenditure.Can share-price moves be pinned on TMR?A fall in hospital stocks after implementation should not automatically be read as proof that the policy has materially weakened hospital profitability. The impact will differ across chains depending on their reliance on pharmaceutical sales, and a market correction is not, by itself, evidence of financial distress. More meaningful indicators are operating margins, earnings, patient volumes and total treatment costs. TMR should be judged not by short-term share-price movements, but by whether it delivers measurable savings to patients without compromising the quality and affordability of cancer care.A lower MRP must mean a lower patient billThe ultimate test of TMR is tangible savings for patients, and that depends on whether hospitals offset lower medicine revenue by raising other charges. Transparent, itemised bills and periodic audits can show whether savings reach patients or are diluted elsewhere. Post-implementation research on out-of-pocket expenditure, billing patterns and access to treatment will be essential to inform future policy refinements.you may likeTMR must move from a pricing intervention to a measurable public health outcome. The NPPA, with healthcare institutions and other stakeholders, should establish a monitoring framework that tracks actual patient bills, medicine availability, hospital billing patterns and treatment access. Manufacturers, distributors, chemists and hospitals need clear implementation guidelines, predictable compliance requirements and mechanisms to flag supply disruptions. Research should also evaluate affordability, market sustainability and innovation, enabling timely, evidence-based course correction.For a family facing a cancer diagnosis, a percentage in a press release means little; the figure that matters is the bill at the end of the month. India need not choose between affordable medicines and scientific progress, but it must demonstrate that it can have both. If savings reach patients, supply holds, and innovation is rewarded, TMR will become a template for fairer pricing.The writer is President, AIIMS Kalyani and former head, Department of Pharmacology, and dean, AIIMS, New Delhi