"Price regulation of medicines in India addresses ceiling prices but not the trade margins that distort hospital procurement." Critically examine this statement in the context of DPCO 2013.

Under the Drugs (Prices Control) Order (DPCO), 2013, the National Pharmaceutical Pricing Authority (NPPA) fixes ceiling prices for drugs listed in Schedule-I [1]. A ceiling limits the MRP. It does not limit the gap between the price paid to the supplier and the MRP. The statement is therefore largely valid, but it overlooks tools DPCO already has.

Why the statement holds

• Most drugs have no ceiling: for non-scheduled drugs, the launch price is not regulated and only yearly increases are capped at 10% [3]. An inflated launch MRP therefore stays in place.
• Margin caps are only temporary: DPCO allows trade margin capping only for a limited period [3].
• The price chain is hidden: the Price to Stockist (PTS) is not made public [3], so regulators cannot see how large the margin is.
• Captive hospital procurement: the hospital chooses the brand and sells it through its own pharmacy. Companies then compete on the hospital's margin, not the patient's price, and cheaper equivalent drugs lose out. This is a principal–agent failure.
• Weak enforcement: between 1997 and January 2011, overcharging worth ₹2,328.53 crore was found, but only ₹207.86 crore was recovered [5].
• A ceiling does not bring prices down: stent prices rose 44% (bare-metal) and 29% (drug-eluting) between 2017 and 2024, even under price control [3].

Where the statement overstates

• DPCO can reach margins: in 2019, Para 19 (extraordinary powers "in public interest") was used to cap the trade margin at 30% on 42 anti-cancer drugs. Prices of 526 brands fell by about 50%, saving patients about ₹984 crore a year [4].
• Ceilings do work: fixing prices under NLEM 2022 saved patients about ₹3,788 crore a year [2].
• Parliament has recognised the gap: its Standing Committee called trade margin rationalisation (TMR) viable and asked for it to be made permanent [3].
• Industry concern: trade margins pay for distribution and cold chains, so a single flat cap could reduce the availability of some drugs.

Way forward

• Amend DPCO to make TMR permanent and tiered, with different caps for different types of drugs [3].
• Publish PTS-versus-MRP studies, and regulate launch prices of non-scheduled drugs and fixed-dose combinations (FDCs) [3].
• Give patients a right to buy outside the hospital pharmacy, and add more cancer and chronic-disease drugs to the NLEM.

DPCO 2013 is strong on ceilings but weak on margins. It has shown, through Para 19, that it can fix this. Giving TMR a permanent legal basis, combined with open price data and patient choice, would advance the right to health under Article 21 and SDG 3.8 (universal health coverage).