Private hospitals in Delhi NCR making over 1,700% profit on drugs, diagnostics

New Delhi: Private hospitals in Delhi and the national capital region (NCR) are making profits of up to 1,700% on drugs, diagnostics and consumables and forcing consumers to buy from their in-house pharmacies, India’s drug pricing watchdog has found.

According to an analysis by the National Pharmaceuticals Pricing Authority (NPPA) the hospitals are arm twisting both consumers and manufacturers in order to charge exorbitant prices.

The analysis found that non-scheduled drugs and diagnostic services constituted the major components of bills charged to patients in these hospitals.

“It’s amply clear that for claiming higher margins doctors-hospitals preferred prescribing and dispensing non-scheduled branded medicines instead of scheduled medicines,” NPPA said in a statement on Tuesday.

“Institutional bulk purchases by private hospitals, which in most cases keep a pharmacy of their own, makes it easier for them to get very high profit margins and indulge in profiteering on drugs and devices even without need to violate the MRPs, which is already enough inflated,” the NPPA said.

NPPA’s analysis follows complaints of overcharging from families of patients who have died of dengue and other ailments in top private hospitals in recent months. “Patients in all cases had complained that the initial estimate of expenditure got inflated by three to four times,” NPPA said.

All India Drug Action Network (AIDAN), a network pharma NGO, blamed the current system of price control. “AIDAN has repeatedly pointed out that the current system of price control is wholly inadequate in its scope, covering just 10% of the market by value. The NPPA’s statements acknowledge this deficiency in the Drug Pricing Control Order (DPCO) which provides perverse incentives for prescription of non-scheduled medicines,” Malini Aisola co-convenor of Aidan said.

“Companies prefer to market non-schedule drugs to escape the price regulation covering a minuscule percentage of the market. Because non-scheduled drugs make up the highest share (25%) of the bills, as per NPPA analysis, hospitals are maximising their profits through unethical margins,” she said, demanding expansion of the scope of DPCO

“This is a clear case of market distortion where manufacturers after accounting for their profits print inflated MRPs to meet the demands of a distorted trade channel without getting any benefits from this ‘artificial inflation’ and patients have to incur huge out-of-pocket expenditure in hospitalization cases,” the NPPA stated in its analysis.

Profit margins for hospitals were found to be the highest on consumables, ranging from almost 350% to over 1,700%. On drugs that are not under price control, the margins ranged from about 160% to 225%. Those on drugs under price control were between 115% and 200%. The most commonly used consumables make up a whopping 10% of the bill, as per the analysis.

Pointing to the huge margins on non-scheduled devices such as catheters, cannulas and syringes, the NPPA release said these were “clearly a case of unethical profiteering in a failed market system”.

Since most consumables have not even been listed as drugs, “the NPPA can neither monitor the MRPs nor bring the disposables/consumables under price control even in public interest under extraordinary conditions,” the authority said.

“We ask for expansion of the scope of the DPCO to cover all dosages, forms, chemical analogues of all essential and life saving medicines. Shift away from the current market-based pricing mechanism and bring a rational cost-based plus pricing system that has the potential to deliver true affordability for patients and reasonable profits for the industry,” Aisola saidlivemint


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