Four Delhi pvt hospitals sold drugs at profits margins as high as 1,192%: Pricing regulator

The NPPA said the pharmaceuticals industry in order to get bulk supply orders is “forced” to print higher maximum retail price (MRP) in accordance with “market requirements”.

Allegations of overpricing and inflated bills against private hospitals with markups of sometimes 1,192% on medicines were confirmed during an analysis of bills from four hospitals in New Delhi and the national capital region (NCR) by the National Pharmaceutical Pricing Authority (NPPA).

Hospitals make substantially high profits on drugs and devices and diagnostics.. (Sneha Srivastava/HT File Photo)

The analysis by the country’s drug pricing regulator was made public on Tuesday.

It found that “the major beneficiaries of profits in all these cases because of inflated MRPs have been hospitals rather than drugs and devices manufacturers”.

Hospitals make substantially high profits on drugs and devices and diagnostics (46%). And does not make part of the publicised estimate or package — in case of implants — by the hospitals in comparison to procedures (11.42%), room rent (11.61%), etc., which are more visible components, the analysis says.

“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 report reads.

“In all these cases, the patients have complained that the initial estimate of expenditure got inflated by three to four times,” the report says.

The NPPA said the pharmaceuticals industry in order to get bulk supply orders is “forced” to print higher maximum retail price (MRP) in accordance with “market requirements”, and it was amply clear that for claiming higher margins, doctors in hospitals preferred prescribing and dispensing non-scheduled branded medicines instead of scheduled ones.

“This trend of migration from scheduled to non-scheduled category is reflected in the growth rate of National List of Essential Medicines (NLEM) and non-NLEM drugs in the year 2017 where the rate of growth of non-NLEM drugs is almost double the rate of NLEM drugs.”

Reacting to the NPPA analysis, the All India Drug Action Network (AIDAN) commented: “We ask for … 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.”

The NPPA withheld the names of establishments whose bills were analysed to “honour confidentiality requested by the hospitals”.