UPSC Prelims Practice Questions — Government Expands Cancer Medicine Price Controls; Cancer Patients Expected to Save ₹2,500 Crore Annually

Q1. With reference to price regulation of medicines under the Drugs (Prices Control) Order, 2013, consider the following statements: Which of the statements given above is/are correct?

  1. A manufacturer launching a new non-scheduled formulation is free to fix its initial maximum retail price.
  2. The ceiling price fixed for a scheduled formulation binds branded and generic versions of that formulation alike.
  3. The ceiling price of a scheduled formulation is worked out from the cost-of-production data that its manufacturers submit.
  • A. 1 and 3 only
  • B. 2 and 3 only
  • C. 1 and 2 only
  • D. 1, 2 and 3

Q2. Suppose the trade margin on a non-scheduled anti-cancer drug, meaning the difference between the price at which the manufacturer sells it to the distributor and its MRP, is capped at 30% of the MRP. If the manufacturer sells the drug to the distributor at ₹1,400, what is the highest MRP that can lawfully be printed on it?

  • A. ₹1,820
  • B. ₹2,100
  • C. ₹1,700
  • D. ₹2,000

Q3. With reference to the institutional arrangement for controlling prices of essential medicines in India, consider the following statements: Which of the statements given above is/are correct?

  1. When a medicine is included in the list of essential medicines notified by the health ministry, it comes under ceiling-price control, because that list is incorporated as Schedule-I of the DPCO.
  2. The pricing regulator may, on its own, add a medicine to Schedule-I of the DPCO in order to fix a ceiling price for it.
  3. The body that decides which medicines are essential is also the body that enforces ceiling prices against manufacturers who overcharge.
  • A. 1 only
  • B. 1 and 2 only
  • C. 2 and 3 only
  • D. 1, 2 and 3

Q4. Consider the following statements: Which of the following is correct in respect of the above statements?

  1. In 2019, the pricing regulator capped trade margins on 42 anti-cancer medicines even though they were not scheduled formulations under DPCO 2013.
  2. DPCO 2013 contains a residual power that lets the price of any drug, including one outside Schedule-I, be regulated in extraordinary circumstances in the public interest.
  • 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

Q5. Consider the following statements: Which of the following is correct in respect of the above statements?

  1. Before the 2026 margin cap, a non-scheduled anti-cancer drug outside the 2019 pilot could carry a trade mark-up of several hundred per cent without violating DPCO 2013.
  2. Under DPCO 2013, the MRP of a non-scheduled formulation may not be raised by more than 10% in any 12-month period.
  • 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

Q6. With reference to the use of indirect tax policy to make cancer medicines more affordable, consider the following statements: Which of the statements given above is/are correct?

  1. A cut in the GST rate on a medicine is notified by the Union government after the GST Council recommends it.
  2. Because the MRP includes taxes, the pricing regulator directed manufacturers to lower the MRP of certain anti-cancer drugs after their duty and GST were cut in 2024.
  3. Unlike a cap on trade margins, exemptions from customs duty on life-saving drugs involve revenue forgone by the exchequer.
  • A. 2 and 3 only
  • B. 1, 2 and 3
  • C. 1 and 2 only
  • D. 1 and 3 only

Q7. Suppose a medicine that was earlier non-scheduled is added to the National List of Essential Medicines and so to Schedule-I of DPCO 2013. Which of the following consequences is/are correct?

  1. Manufacturers may keep selling their existing brands above the new ceiling price until the next annual revision.
  2. Its ceiling price will thereafter be revised every year in line with the Wholesale Price Index.
  3. Its price is no longer governed mainly by the rule limiting annual MRP increases to 10%, which applies to non-scheduled formulations.
  • A. 1 and 2 only
  • B. 2 and 3 only
  • C. 1, 2 and 3
  • D. 1 and 3 only