‘Hidden tax on the sick’: Panel flags 1,100% profit margins on non-scheduled drugs

New Delhi/Hyderabad: Revealing the way in which some medicines are being sold at a margin of 1,100 per cent, the Standing Committee on Chemicals and Fertilisers discussed a critical gap in the regulation of prices of medicines.

This gap was especially true for medicines not on the list of ‘Essential Medicines’.

This was in the 14th report of the committee released in 2025, highlighting how ‘non-scheduled drugs’ complex formulations are sold at a higher price, impacting public health.

What are non-scheduled medicines?

Non-scheduled medicines are those which are not in the essential price list of the government. In these medicines, the manufacturers are free to fix the price of the medicine.

What has the committee found?

The committee found that there is a ‘loophole’ in the Drug Price Control Order of 2013, which allows the pharmaceutical companies to launch medicines and fix arbitrary initial prices.

This has caused these changes:

- Trade Margin Exploitation: The committee flagged ‘whopping differences’ between the Price to Stockist (PTS) and the Maximum Retail Price (MRP). For example, common antibiotics supplied to stockists at Rs 450 are being sold to patients for Rs 3,500.

- The FDC Shift: Companies are increasingly using Fixed-Dose Combinations (FDCs)—mixing two or more drugs—to move products into the ‘non-scheduled’ category, effectively bypassing direct price caps.

- Lack of Transparency: While apps like Pharma Sahi Daam show MRPs, the PTS remains hidden from the public, making it impossible for consumers to know the extent of profiteering.

- Call for TMR: The panel urged the government to make Trade Margin Rationalisation (TMR) a permanent legal tool rather than a temporary measure used only during emergencies (like the Covid-19 pandemic).

A hidden tax on the sick, says IMA

Dr Kiran Madhala, a member of the IMA Action Committee, said, “The current system effectively allows a ‘hidden tax’ on the sick.”

“By shifting drugs to the non-scheduled category through irrational combinations, companies exploit a legal vacuum where the base price is never checked. Without monitoring the Price to Stockist (PTS), the government is only regulating the tip of the iceberg while the foundation of drug pricing remains unchecked,” he said.

What is the earning gap?

The report data says, “An anti-inflammatory drug with a stockist price of Rs 831 is reaching patients at an MRP of Rs 4,560. Similarly, cough syrups with a PTS of Rs 316 are being sold for Rs 2,850.”

The standing committee noted: “The Department of Pharmaceuticals’ explanation that these gaps are due to distribution costs is unconvincing.”

Strategic bypassing

The panel also highlighted a growing trend where manufacturers create Fixed-Dose Combinations (FDCs) specifically to exit the ‘Scheduled’ category (which has strict price caps) and enter the ‘Non-Scheduled’ category, where they enjoy much higher profit margins.

The road ahead

To protect ordinary citizens, the committee has recommended:

1. Legalising TMR: Making Trade Margin Rationalisation (TMR) a permanent part of drug law.

2. Price to Stockist (PTS) Disclosure: Making the price charged to wholesalers public to ensure transparency.

3. Cost Audits: Implementing a legal provision to audit the actual manufacturing costs of high-value drugs, including anti-cancer medications.

Medical experts, including those from the Indian Medical Association (IMA) noted that these reforms are important to achieve the goal of ‘affordable healthcare for all.’