UPSC Prelims Practice Questions — Are lower MRPs on cancer drugs translating into affordable care?
Q1. When the price regulator caps the trade margin on a group of non-scheduled medicines at 30% of the retail price, which of the following brands are likely to see the steepest reduction in what patients pay?
- A. Brands whose ex-factory price includes heavy recovery of research and development costs
- B. Brands sold at many times the price the manufacturer charged its first distributor
- C. Brands of formulations already sold within a ceiling price fixed under Schedule-I
- D. Brands whose manufacturer charges distributors a high price owing to patent protection
Q2. Consider the following facts about a recent drug-pricing measure: I. The trade margin on certain non-scheduled anti-cancer drugs was capped at 30% of the Maximum Retail Price. II. Before the cap, these drugs carried an average mark-up of about 170%, and over 700% in some cases. III. Prices of the affected brands fell by up to 70–93%. Which of the following inferences can be drawn from the above facts?
- Before the cap, for some brands the distribution chain received more of the retail price paid by the patient than the manufacturer did.
- The cap works by lowering the price at which manufacturers sell these drugs to the first point of distribution.
- After the cap, every patient buying the affected brands pays at least 70% less than before.
- A. 1 and 2 only
- B. 2 and 3 only
- C. 1 and 3 only
- D. 1 only
Q3. Consider the following assertion: 'A lower MRP on cancer drugs does not by itself make cancer treatment affordable for patients.' Which of the statements given above support the assertion?
- The trade-margin cap covers about 900 brands of anti-cancer medicines.
- Hospital pharmacies can buy drugs at deep discounts and still sell them to patients at the printed MRP.
- The 2019 pilot of trade-margin capping reduced the MRPs of over 500 cancer-drug brands by up to 90%.
- Diagnostics, hospital stay, surgery and radiotherapy fall outside the scope of drug price control.
- A. 1 and 3 only
- B. 1, 2, 3 and 4
- C. 2 and 4 only
- D. 2, 3 and 4 only
Q4. With reference to the Patents Act, 1970, consider the following statements in the context of access to costly patented medicines: Which of the statements given above is/are correct?
- A compulsory licence transfers ownership of the patent from the patentee to the licensee.
- Non-availability of a patented invention to the public at a reasonably affordable price is a ground for seeking a compulsory licence.
- A mere new form of a known substance that does not enhance its known efficacy is not treated as a patentable invention.
- A. 2 and 3 only
- B. 1 and 2 only
- C. 1, 2 and 3
- D. 3 only
Q5. A patented anti-cancer drug is expensive mainly because its sole manufacturer charges stockists a very high price, while the distribution mark-up on it is already modest. Which one of the following measures would most directly reduce the price patients pay for it?
- A. Granting a compulsory licence that allows a generic firm to make and sell the drug
- B. Capping the trade margin between the stockist price and the retail price at 30%
- C. Requiring hospital pharmacies to display the drug's maximum retail price prominently
- D. Limiting any further increase in the drug's retail price to 10% in a year
Q6. Consider the following statements: Which of the following is correct in respect of the above statements?
- A cut in the GST rate on a scheduled formulation lowers the maximum amount a patient can lawfully be charged for it, even if the price regulator does not revise its ceiling price.
- Manufacturers of scheduled formulations must sell within the ceiling price fixed by the price regulator plus the applicable GST.
- A. Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
- B. Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
- C. Statement-I is correct, but Statement-II is incorrect
- D. Statement-I is incorrect, but Statement-II is correct