Karnataka’s Food and Drug Administration has asked the Centre to intervene against 254 pharmaceutical companies over what it says are extreme gaps between the prices at which medicines are supplied to hospitals and the amounts patients are charged, with some products carrying MRPs more than 70 times their reported landing costs.
Karnataka FDA Commissioner K Srinivas has sent the pricing details to the National Pharmaceutical Pricing Authority (NPPA) and the Central Drugs Control Agency, seeking regulation under the Drugs (Prices Control) Order, 2013. The state has also sought limits on trade margins for medicines, medical devices and hospital consumables.
Among the cases cited by the department, a medicine procured for ₹86 was listed with an MRP of ₹4,528. Another product bought for ₹160 carried an MRP of ₹7,110.
The FDA also identified large gaps in the prices of several injectable medicines. Cancer drug Cytax 100mg had a reported landing cost of ₹342 against an MRP of ₹3,836. Nucain 300mcg was listed at ₹112 at landing cost and ₹1,239 as MRP, while Bivatas 400mg injection had a reported landing cost of ₹5,850 and an MRP of ₹62,690. Cosate 3 MIU injection was cited at ₹340 and ₹3,699 respectively.
“The state has argued that the disparity can be particularly burdensome for patients requiring emergency, intensive care, oncology, kidney and AIDS treatment, where medicines, implants and consumables may have to be obtained immediately and patients may have little scope to compare prices or buy elsewhere,” said a senior health department official in the know of the development.
{{/usCountry}}“The state has argued that the disparity can be particularly burdensome for patients requiring emergency, intensive care, oncology, kidney and AIDS treatment, where medicines, implants and consumables may have to be obtained immediately and patients may have little scope to compare prices or buy elsewhere,” said a senior health department official in the know of the development.
{{/usCountry}}“The letter to the Centre said hospitals can receive medicines at substantially reduced institutional rates but subsequently bill in-patients at the printed MRP or at prices close to it. It said the difference between institutional landing costs and MRPs can range from 30 times to more than 70 times for some products,” the officer added.
Karnataka has also pointed to commercial arrangements between hospitals and suppliers, including rebates, credit notes, free quantities and retrospective discounts. Such benefits, it said, can lower the hospital’s actual acquisition cost without being apparent to patients.
The state has proposed a national framework to determine how much hospitals can charge patients for high value medicines, devices and consumables. It has suggested that an inter-ministerial expert group comprising the Union health ministry, Department of Pharmaceuticals, NPPA, state drug regulators, hospitals, insurers, consumer representatives and clinical experts examine the issue.
Karnataka has proposed a national study comparing four figures for selected high value products: the MRP, manufacturer or importer price, hospital’s net acquisition cost and the amount ultimately billed to the patient, according to the officer.
It has also proposed changes or additions to the Drugs (Prices Control) Order, 2013, under which patient facing prices for products supplied through hospitals could be capped at the lower of the applicable statutory price, MRP, or the hospital’s net acquisition cost plus a notified service margin and applicable taxes.
For expensive cancer and life saving medicines, the state has sought comprehensive limits on trade margins and direct price regulation for a wider range of chemotherapy and targeted therapy drugs.
Karnataka has proposed mandatory itemised bills for specified high value medicines, devices and consumables. Such bills would disclose the MRP, applicable statutory price, hospital acquisition cost, permitted service margin, taxes and the final amount paid by the patient.
The state has also proposed that rebates, credit notes, free supplies, marketing support, retrospective discounts and related party benefits be included when calculating a hospital’s actual acquisition cost.
Under the proposed enforcement mechanism, the NPPA and state drug authorities would inspect procurement and billing records, conduct audits, order refunds with interest where excess amounts had been collected and act against repeat violations. Karnataka has suggested that the first phase focus on oncology and critical care medicines, expensive injectables, implants, surgical and intensive care consumables and dialysis supplies.
The pricing investigation comes as Karnataka authorities separately examine an alleged counterfeit drug operation. The department recently cancelled 16 drug licences and suspended eight others, including the wholesale licence of a Pfizer depot, following an August 18 raid at an alleged unauthorised repacking and relabelling facility near Bidadi.