On 17 October 2026 the National Pharmaceutical Pricing Authority (NPPA) capped the trade margin on 137 cancer medicines at 30%, from 9 November. Prices are expected to fall by up to 70%, and the government puts the saving at about Rs 2,500 crore a year. The list grew from the 110 drugs first proposed. Two months earlier, the Lok Sabha’s Standing Committee on Chemicals and Fertilizers reported that hospitals and pharmacies routinely sell medicines at 20–60% below their printed maximum retail price (MRP), which it read as evidence of large margins built into the price, and asked for a permanent trade-margin framework.

This piece explains how India controls medicine prices, why most medicines fall outside those controls, what earlier margin caps did, and why the regulator recovers so little of what it says companies overcharged.

Two kinds of medicine, two kinds of control

Most of the market is untouched by price control. India’s medicine sales were about Rs 2.41 lakh crore in 2025, and the committee puts the non-scheduled share at 82%, about Rs 1.97 lakh crore. For these, the only rule is that the MRP cannot rise by more than 10% a year. The launch price, and the margin in it, are left to the company. A 2023 Delhi High Court ruling (Bharat Serums) narrowed even that rule: the regulator can monitor non-scheduled prices and recover overcharges, but a breach does not take away a company’s right to raise prices later.

The committee’s December 2025 report showed what this allows. It cited a cetirizine pack with an MRP of Rs 21.06 against a stockist price of Rs 2, a markup of 953%, and pantoprazole at Rs 102 against Rs 10, a markup of 920%. Other common medicines were marked up by 600% to 1,800%. The public cannot see stockist prices, so it cannot see these margins.

How big a margin is normal

In a usual branded-medicine chain, a wholesaler takes about 10% and a pharmacy about 20%, so the MRP ends up about 1.32 times the price to stockist. The order’s own formula (Table A of S.O. 5690(E)) sets the MRP at the price to stockist × {1 + 30/(100 − 30)}, plus GST: the 30% is a share of the MRP, so the MRP before GST can be at most about 1.43 times the March 2026 price to stockist. The order’s worked example takes a stockist price of Rs 70 to a maximum MRP of Rs 100 plus GST. That is close to, and slightly above, what an ordinary branded chain already earns. It bites only where margins are far above normal: on “trade generics”, sold to pharmacies with very high margins so that they push them, and on expensive specialty drugs like cancer medicines. The Competition Commission’s 2021 market study found that companies compete for pharmacy shelf space mainly by offering higher margins, especially on trade generics.

An illustration of what the order’s formula would mean if it applied to these two packs; it does not. GST is assumed at 5%, the rate on most medicines after September 2025. The committee did not name the brands.

What earlier caps did

Every margin cap so far has cut prices sharply because the margins it removed were large. In 2019, 526 cancer-drug brands lowered their MRPs, by up to 90%. In 2021, 91% of reported brands of five home medical devices cut prices after the regulator found margins of up to 709%. But each cap was issued under the order’s emergency powers for a named list. The committee noted that there is still no timeline for turning trade-margin rationalisation into a standing part of the price-control order, and the 2026 list covers only cancer drugs.

Why overcharging is rarely repaid

When a company charges more than a ceiling price or raises a non-scheduled price by more than 10%, the regulator demands the excess back with interest. The demands have grown and the recoveries have not kept up. By March 2026 the regulator had demanded about Rs 10,030 crore and recovered about Rs 1,582 crore, 16%. The committee put the unrecovered sum at Rs 8,526 crore, and found 70% of it, about Rs 5,968 crore, tied up in court, some cases for more than 20 years. It recommended a fast-track mechanism for cases not in court and a legal cell inside the regulator for the rest.

The cheaper alternative already on sale

Jan Aushadhi Kendras, the government’s generic-medicine pharmacies, price each medicine at no more than half the average of the top three brands, and often much less. One study found telmisartan 40 mg at a median Rs 7.19 a tablet in private pharmacies against Rs 1.1 at Jan Aushadhi, 85% less. That gap is roughly the size of the margins the committee found, which suggests the margin, more than the cost of making the medicine, is what separates the two prices. This blog’s piece on Jan Aushadhi’s 2,439 products looks at where their ingredients come from.

What would fix this

• The Department of Pharmaceuticals should add a standing trade-margin rule to the Drugs (Prices Control) Order, as the committee asked: a cap on the markup from stockist price to MRP for all non-scheduled formulations above a set level, starting with trade generics, rather than lists notified one at a time.
• The price to stockist should be published alongside the MRP for every pack, from the data companies already file on the regulator’s IPDMS system, so that buyers and hospitals can see the margin.
• The regulator should publish its overcharging cases with the company, the amount demanded, the amount recovered and the age of each case, every quarter.
• Pharmacies should be required to show the Jan Aushadhi price of the same molecule where one exists.

These are proposals from this blog, not recommendations any agency has adopted.

What this piece could not establish

The October 2026 order (S.O. 5690(E), CG-DL-E-17102026-277271) was read in the Gazette of India’s own text through the SansadSaar index of the archive.org Gazette of India collection; the list of 137 drugs, the formula, the March 2026 base price and the 9 November start date above match it. The committee’s report could not be opened directly; its contents come from news reports and PRS Legislative Research’s summary. The March 2026 recovery figures come from an explainer of official data and differ slightly from the committee’s (Rs 8,447 crore unrecovered against Rs 8,526 crore). The savings estimates (Rs 984 crore for 2019, Rs 2,500 crore for 2026) are official claims, not measured outcomes. No systematic data on margins across molecules was found; the cetirizine and pantoprazole figures are the committee’s examples, and the branded-chain margins are an industry illustration. The Jan Aushadhi telmisartan comparison uses 2019–21 prices. Nothing here is medical advice; patients should not change medicines without a doctor.

Sources and caveats

About this article: Researched, written and edited by Umashankar Triplicane Dwarakanathan, with AI research assistance; every figure is meant to trace to the primary source cited. See the Editorial Policy for how sourcing, AI use and corrections work.