Hospitals overcharge patients upto 700% on medicines while India makes some of the world’s lowest priced drugs: Centre admits to SC

Govt has told Supreme Court that hospitals charging patients high MRPs for medicines and consumables is a “malpractice”. It said it knows about the problem and is working on fixes with all stakeholders.

The statement came in an affidavit filed by the chemicals and fertilisers ministry, according to a TOI report. SC is hearing a plea on capping the prices of all medicines and medical consumables. The affidavit also pointed to an irony. India has companies that make cheap drugs, yet patients here pay far above the manufacturing price.

Why patients are at a disadvantage

The ministry said the Indian drug market is fairly competitive. Many companies sell in every drug segment, which keeps prices among the lowest in the world. Normally, such competition removes the need to regulate prices.

Health care is different, it said. Patients, on one side, and pharmacies, hospitals and doctors, on the other, do not have equal information or bargaining power.

A patient has a “very low bargaining position” before a hospital, the affidavit said. The patient also knows very little about drugs, their substitutes and their prices. This gap leads to malpractices even when manufacturers compete strongly, and that is why regulation is needed, the ministry said.

Margins of up to 700% on cancer drugs

According to the affidavit, hospitals buy medicines from makers who offer the highest trade margin. They then sell those medicines to patients at MRP. Margins range from 170% to 700% or more in the case of anti-cancer drugs.

Consumables are another worry. The affidavit said margins of 100% to 1000% or more are common. Hospitals also tend to buy consumables that have a high MRP and a large margin, but a low price for the distributor or hospital.

Insured patients and direct payers are treated differently

The ministry explained how billing differs. Hospital supplies are usually included in the package cost for major diseases and procedures under govt schemes or insurance. Govt and insurance agencies negotiate and fix the lowest rate for such packages.

Patients who pay the hospital directly do not get this benefit. Their hospital supplies are billed separately at MRP, the ministry said.

The plea before SC

The affidavit was filed in response to a plea by Dr Sanjay Kulshrestha. He referred to a Niti Aayog report and a 2020 statement by then health minister Harsh Vardhan. That statement said spending on health pushes an estimated six crore families below the poverty line each year. The affidavit listed steps taken so far to control drug prices. Ceiling prices have been fixed for 935 scheduled formulations. Retail prices have also been fixed for 3,881 new drugs.

The ministry has not said what steps it will take or when. It said only that it is examining the issue and devising suitable interventions in consultation with all stakeholders.

Inputs from TOI