"Trade margin rationalisation is a market-friendly alternative to full price control of medicines." Critically examine this statement in light of the 2019 cancer drug experience and the Supreme Court's 2026 observations.

Under the Drugs (Prices Control) Order (DPCO), 2013, NPPA fixes ceiling prices only for Schedule-I drugs [4]. Trade Margin Rationalisation (TMR) works differently. It caps the gap between the Price to Retailer (PTR) and the MRP, and leaves the manufacturer's price alone. It is lighter-touch than full control, but it is not enough on its own.

Why TMR is market-friendly: the 2019 experience

• Producers keep their price: In February 2019, NPPA used Para 19 (its extraordinary powers in public interest) to cap trade margins at 30% on 42 non-scheduled anti-cancer drugs [2]. Ex-factory prices stayed free.
• Results were large: MRPs of 526 brands fell by up to 90%. Patients saved about ₹984 crore a year [3].
• Diagnosis: The cuts showed that much of the retail price came from mark-ups in the supply chain, not from the cost of making the drug.
• Reaffirmed in 2026: The Centre told the Supreme Court it will extend the 30% cap to both patented and non-patented cancer drugs [1].

Limitations: the Supreme Court's 2026 observations

• Narrow coverage: The Bench of Justices Vikram Nath and Sandeep Mehta called the step "just the tip of the iceberg". It asked why other drugs and medical devices could not be brought under DPCO's 16% retailer margin [1].
• Abuse continues: Mark-ups of up to 1,000% led the court to call them "broad daylight dacoity" [1].
• Weak legal base: TMR still rests on Para 19 emergency powers, not a standing DPCO provision [2].
• Flat-rate design: The WHO pricing guideline recommends regressive mark-ups (lower margins on costlier drugs) and pairing them with other pricing policies [5]. A flat 30% still allows the highest rupee profit on the costliest drugs.
• Blind spots: TMR cannot touch the high launch prices of imported or patented drugs. Off-invoice discounts can also hide the real margin.

Verdict TMR is a market-friendly complement to price control, not a substitute for it.

The 2019 pilot showed that capping margins can lower prices sharply without controlling production. The 2026 observations show where it falls short. The way forward is to write TMR into DPCO, set price-slab margins in line with WHO advice, require disclosure of discounts, and use price negotiation for patented drugs. Done this way, TMR can serve the Right to Health under Article 21 and SDG 3.8 (universal health coverage) while keeping pharmaceutical innovation viable.