Drug prices are a scandal, and multinational pharma is only part of the problem

For a country celebrated as the pharmacy of the world, India remains shockingly hostile to its own patients. Walk into any chemist shop, pick up a familiar branded pill from a multinational drug maker, and chances are you are looking at a price inflated by 600 per cent to 1,800 per cent over its supply cost. That is not capitalism. That is not competition. It is exploitation, and the government’s refusal to confront it is beginning to look less like oversight and more like complicity.

The latest Parliamentary Standing Committee report presents the numbers plainly. A cetirizine tablet with an MRP of Rs 21 reaches the stockist at Rs 1.85. A calcium supplement sold at Rs 327 is supplied at Rs 16.95. An acidity drug priced at Rs 170 costs the distributor just Rs 13.95. These are margins that would trigger investigations in most developed markets. In India, they trigger shrugs.

The outrage peaks in oncology, where patients have the least bargaining power. One anti-cancer drug carries a printed MRP of Rs 38,215 but is available online for Rs 9,200. Another is listed at Rs 45,000 but sells for Rs 8,800. These are not discounts; they are fire-sale-level reductions that reveal the original MRP was unreasonable to begin with. When lifesaving medicines can be reduced by 70 per cent to 80 per cent without loss, the only conclusion is that the MRP was engineered for profit, not access.

Multinational pharmaceutical companies dominate the therapeutic areas where distortions are worst, including gastro, allergy, cardiac care, paediatrics and cancer. Their branded generics rely on trust, and trust becomes pricing power. Yet it is the government’s permissive regulatory framework that converts pricing power into predation.

Under the Drugs (Prices Control) Order, the state regulates only the rate of annual price increase. It does not regulate the launch price. A multinational company can legally introduce a pill at Rs 3,500 even if its actual supply cost is Rs 450, as the Committee noted, and the law still considers it compliant as long as it does not raise the price by more than 10 per cent in a year. This is not a loophole. It is a structure designed to look away.

The National Pharmaceutical Pricing Authority is widely described as India’s price watchdog. In practice, it is so restricted that it often performs regulatory theatre. It cannot audit production costs, it cannot demand cost sheets, and it cannot cap MRPs of non-scheduled drugs, which account for more than 85 per cent of the market. It is a regulator that reassures the public while protecting industry discretion.

Multinational firms deserve criticism, but they do not operate alone. They are enabled by a government that has repeatedly promised structural reform but never delivered it.

Take Trade Margin Rationalisation. When the government briefly capped margins on 42 cancer drugs, MRPs fell by 50 per cent, saving patients nearly Rs 984 crore in one year. When applied to medical devices during COVID, it saved another Rs 1,000 crore. These were real interventions that sharply reduced predatory margins. Yet five years later, the reform remains stuck in consultations influenced by the very companies whose profits depend on inflated MRPs.

Consider the government’s Jan Aushadhi programme, which exposes the real cost of medicines. A drug sold by a multinational at Rs 170 is available for Rs 12 to Rs 22 through Jan Aushadhi stores. A vitamin supplement priced at Rs 327 in the branded market sells for Rs 40 to Rs 60 in government outlets. If Jan Aushadhi offers fair pricing, then the branded market has become a system of legalised markup laundering.

Even rare instances of firm intervention have eroded over time. Coronary stents, heavily reduced in price in 2017, have climbed again. Drug-eluting stents now cost 29 per cent more than the regulated Rs 29,600 ceiling. Bare metal stents are up 44 per cent. Hospitals add procedural charges and GST, quietly undoing affordability gains.

The online pharmaceutical market, often seen as a leveller, instead reflects the regulatory vacuum. Extreme cancer drug discounts raise questions. Where is the stock sourced from, why are reductions so large, and why do manufacturers not need to disclose supply chains or pricing? The Committee warns that such opacity invites inflated MRPs and safety risks alike.

Defenders of high MRPs say Indian drugs remain among the cheapest in the world. This is true only statistically, since it includes thousands of low-cost generics that are not driving the crisis. The real distortion is in branded generics, especially those dominated by multinationals and large domestic players. Here margins soar, MRPs turn fictional and families crumble under medical expenses.

India does not lack data or tools to fix this. It lacks political will. It has a regulator, it has evidence and it has proven policy instruments. What it does not have is a government prepared to place patients above profit.

India cannot be the world’s low-cost pharmacy while remaining an unaffordable market for its own citizens. If it wants global credibility, it must begin at home, because the drug pricing crisis is not an economic inevitability. It is a political choice, and until it changes, the healthcare system will continue to punish the sick for the misfortune of falling ill.