Private hospitals suck money out of patients, make 100% to 1700 % profit: Govt body report

The Hush Post: Private hospitals in Delhi and across NCR have been prescribing non-scheduled branded medicines to patients instead of scheduled medicines in order to expand their profit margins, resulting in profit margins varying from 100 per cent to over 1700 per cent. Drugs, consumables and diagnostics account for 46% of a patient’s inflated bill.
In a first-ever study done by the National Pharmaceutical and Pricing Authority (NPPA) it has come to light that hospitals, and not drug makers, are the major beneficiaries of profits from drugs and consumables. Scheduled drugs are much cheaper since these are part of price control under the National List of Essential Medicines. “The total cost on scheduled medicines is only 4.10 per cent compared to 25.67 per cent on non-scheduled formulations,” the apex drug pricing authority said. The study also revealed that profit margins in non-scheduled devices used in syringes, cannula and catheters were very high. The NPPA said that most drugs, devices and disposables were sold by hospitals from in-house pharmacies, making huge profits.

The profit margins for the hospitals were highest on consumables, ranging from almost 350% to over 1,700%. Drugs that are not under price control get them profit margins ranging from 160% to 1200% whereas sale of drugs under price control fetch them profits between 115% and 360%.

According to the NPPA findings, hospitals push the industry to print higher MRPs to get bulk supply orders from them. “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’. Patients have to incur huge out-of-pocket expenditure in hospitalisation cases,” stated the NPPA.

The NPPA has its hands tied and cannot do much about the market distortions. “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 lamented. Diagnostics services do not come under the NPPA and can only be regulated by states through the Clinical Establishments Regulation Act, the NPPA said. Diagnostics constitute more than 15% of the total bill.

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