Discuss Trade Margin Rationalisation as a tool for affordable medicines. Should it be extended to all essential and non-scheduled drugs?

Trade Margin Rationalisation (TMR) does not fix a drug's final price. It caps the trade margin, which is the gap between the distributor-level price and the MRP. NPPA used it under Para 19 of DPCO, 2013 because ceiling prices cover only scheduled (NLEM) drugs [1][6]. TMR's record supports extending it, but in a calibrated way.

TMR as a tool for affordability

• Proven savings: a 30% margin cap on 42 non-scheduled anti-cancer drugs cut the MRPs of 526 brands by up to 90%, about 50% on average. Patients save about ₹984 crore a year [1].
• Flexible reach: during COVID-19, TMR was applied to pulse oximeters, BP monitors, nebulisers, digital thermometers and glucometers. 91% of brands lowered their MRPs [2].
• Innovation-neutral: it cuts the distribution mark-up, not the manufacturer's price, so R&D incentives are largely untouched [1].
• Prevents overcharging before the sale: recovery after the sale is weak. Of ₹2,328.53 crore of overcharging flagged by NPPA, most remains stuck in litigation [4].

Limitations

• Selective, reactive use: it is applied product by product. Non-scheduled brands such as the statin Rosuvas remain outside any cap [3].
• Administrative load: NPPA would have to monitor thousands of brands and combinations.
• Risk of a flat cap: cold-chain and low-volume rural chemists may stop stocking some drugs if their margin becomes too thin.

Should it be extended? Yes, with calibration

• Need: in September 2026 the Supreme Court (Justices Vikram Nath and Sandeep Mehta) noted that a cancer drug bought by retailers at about ₹3,000 carried an MRP of about ₹27,000. The Bench asked why DPCO's 16% retailer margin should not apply to all medicines, and said that "the loser is the taxpayer" [3].
• Design: margins should be set by product category, with higher margins for cold-chain or remote supply if the Centre justifies them. All other drugs should default to 16%.
• Complement: the PM Bhartiya Janaushadhi Pariyojana runs 18,000+ Kendras selling generics 50–80% cheaper, with about ₹38,000 crore saved by June 2025 [5].

TMR shows that medicines can be made affordable by trimming distribution mark-ups rather than squeezing manufacturers. Extending it to all essential and non-scheduled drugs through category-wise margins, alongside a wider Jan Aushadhi network, would shift drug pricing from recovering overcharges later to preventing them. This would advance the right to health under Article 21 and SDG 3.8 (universal health coverage).