Hospitals ‘overcharging’ is a malpractice: Govt to Supreme Court

Hosps charge up to 700% premium on cancer drugs (Generative image)

NEW DELHI: Govt has admitted before Supreme Court the “malpractice” of hospitals charging patients high MRPs for medicines and consumables, and said it was conscious of the problem, examining it and devising appropriate interventions in consultation with all stakeholders.In an affidavit filed in SC on the issue of capping prices of all medicines and medical consumables, chemicals and fertilisers ministry said that patients have a very low bargaining position with respect to hospitals, resulting in various malpractices. The affidavit noted the irony of India being home to companies making cheap drugs but patients here having to pay way above the manufacturing price, as well as patients being subjected to overcharging by hospitals.“The Indian drug market is fairly competitive, with a large number of pharmaceutical companies in every drug segment, resulting in one of the lowest prices in the world. Ordinarily, where there is substantial competition, there is no need to regulate prices. However, by their very nature, health treatment and pharmaceutical products involve information and bargaining asymmetries between patients on the one hand, and retail pharmacies, hospital pharmacies, hospitals providing treatment and doctors on the other,” the affidavit said.

Hospitals charge up to 700% premium on cancer drugs

The govt affidavit said a patient has a “very low bargaining position vis-a-vis the hospital, and the patient’s knowledge of drugs, their substitutes and their prices is also very limited”. These bargaining and information asymmetries result in various malpractices in the system despite strong competition among manufacturers, leading to the need for regulation, it said.Enumerating the steps taken by it to control the pricing of drugs, govt said ceiling prices for 935 scheduled formulations and retail prices of 3,881 new drugs have been fixed. Govt filed the affidavit on a plea filed by Dr Sanjay Kulshrestha, who referred to a Niti Aayog report and a 2020 statement of the then health minister Harsh Vardhan that expenditure on health pushed an estimated six crore families below the poverty line each year.

The affidavit said hospitals buy medicines from manufacturers who provide highest trade margin and then sell those medicines to patients at MRP, with margins ranging from 170% to 700% or more in the case of anti-cancer drugs.“That another area of concern in the sector is the supply of consumables in hospitals, where margins of 100% to 1000% or more are prevalent, along with a tendency of hospitals to purchase consumables that have a high MRP and margin, with a low price to the distributor/hospital. Ordinarily, hospital supplies are included in the package cost for treatment of major diseases/procedures under govt schemes/insurance, and govt/insurance agencies negotiate and fix the lowest rate for such packages. However, for patients making direct payment to the hospital, hospital supplies are billed separately at MRP,” it said.