Will Union Budget 2026’s cancer drug duty cuts actually lower treatment costs?

While the Union Budget 2026-27 removed import duties on 17 imported cancer drugs, experience with earlier healthcare tax relief suggests that duty cuts alone do not guarantee cheaper treatment.

A commentary published in Frontiers in Public Health on Wednesday by Dr Vaibhav Sahni and Dr Abhishek Shankar of the Department of Radiation Oncology at the All India Institute of Medical Sciences (AIIMS), New Delhi, examined how reductions in indirect taxes on cancer medicines have translated at the patient level. While the analysis focuses on GST rationalisation introduced earlier, the authors said it offers lessons relevant to the Budget’s customs duty exemption.

The study noted that lowering taxes on finished cancer drug formulations does not automatically lead to price reductions for patients. As the authors wrote, “zero GST on finished formulations does not automatically guarantee lower prices at the patient level,” pointing to structural and supply-chain constraints that influence final pricing.

The commentary said that active pharmaceutical ingredients and key starting materials continue to attract taxes, which can create cost pressures elsewhere in the supply chain. It also noted that delays in tax refund mechanisms may affect manufacturers’ working capital, limiting the scope for immediate price cuts even after fiscal relief.

Customs duty applies at the point of import and affects the landed cost of medicines, while GST is levied across domestic sale and distribution and is reflected more directly in the final bill paid by patients. The study said that even when taxes or duties are reduced, patient-level price relief depends on whether savings are passed on through manufacturers, distributors and hospitals.

Using price data, the authors noted that if tax benefits are fully passed through, the cost of certain high-value cancer medicines could fall by more than ₹40,000 per vial. However, the study cautioned that this assumes complete pass-through, which is not always observed, particularly for patented oncology drugs with limited or no substitutes.

Drawing on GST experience, the authors said that the impact of tax rationalisation is typically gradual. “The full benefit of tax relief is therefore likely to unfold over time,” the study noted, adding that near-term price changes depend on how quickly manufacturers and healthcare providers adjust pricing and procurement practices.

India’s cancer burden continues to rise, with the National Cancer Registry Programme estimating over 15 lakh new cancer cases annually, making affordability a critical issue. Against this backdrop, the Union Budget also added seven more diseases to the list eligible for customs duty exemption, reinforcing the government’s intent to expand access to critical medicines, particularly imported drugs used in advanced and complex cancer treatment.

The authors cautioned that with India’s cancer care system still heavily dependent on out-of-pocket spending, price pass-through remains central to whether patients ultimately see meaningful relief. Fiscal measures can lower costs at the input level, the authors said, but patient-level affordability depends on execution and pricing behaviour across the healthcare supply chain.