NPPA analysis: Three private hospitals earn huge margins on drugshttps://indianexpress.com/article/business/business-others/nppa-analysis-three-private-hospitals-earn-huge-margins-on-drugs-5071929/

NPPA analysis: Three private hospitals earn huge margins on drugs

The memorandum observed that drugs off price control comprise as much as a quarter of bills which it inferred is a clear indication that doctors and hospitals prefer these drugs to claim higher margins.

NPPA analysis: 3 pvt hospitals earn huge margins on drugs
It is a followup exercise to the price analysis at Fortis Hospital Gurugram where the family of a dengue Patient who died was billed Rs 15 lakh. That analysis too showed similar results.

National Pharmaceutical Pricing Authority (NPPA) on Tuesday came out with a price analysis of three unnamed private hospitals in the city that showed huge margins on MRPs kept by these hospitals on drugs and consumables, ranging from 2112 per cent to 116 per cent.

The authority though merely made observations about the trade practices in the pharmaceutical industry of inflated MRPs and bulk procurement price advantage not being passed to consumers, instead of coming out with a concrete order. It is a followup exercise to the price analysis at Fortis Hospital Gurugram where the family of a dengue Patient who died was billed Rs 15 lakh. That analysis too showed similar results.

“Institutional bulk purchases by private hospitals, which in most cases keep a pharmacy of its own, makes it easier for them to get very high profit margins and indulge into profiteering on drugs and devices even without need to violate the MRPs which is already enough inflated. Industry, in order to get bulk supply orders is in a way ‘forced’ to print higher MRPs as per the ‘market requirements’. This is a clear case of market distortion where manufacturers after accounting for their profits print inflated MRPs to meet out 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 hospitalisation cases and also otherwise where they are not allowed to buy drugs from outside or go by the physician’s branded prescription,” the authority noted in an office memorandum.

The memorandum observed that drugs off price control comprise as much as a quarter of the bills which it inferred is a clear indication that doctors and hospitals prefer these drugs to claim higher margins. The analysis threw up some startling figures even though the authority said it has decided not to make the names of the hospitals public.

For An IV infusion set that has a printed MRP of Rs 115, the margin on procurement price was 1271 per cent and on price to the distributor was 2112 per cent. For a suction catheter with an MRP of Rs 58, there was a 713 per cent margin on procurement price. For a three way stop cock priced at Rs 106 there was a 1737 per cent margin on procurement.