4 private Delhi hospitals sold medicines at profit margins as high as 1,192 per cent, says pricing authority

Non-scheduled drugs and diagnostic services constituted major components of charges billed to patients in four private hospitals with margins as high as 1,192 per cent, drug pricing regulator NPPA said on Tuesday.

For consumables such as three way stop cock, BI valve, GS-3040, the margins were even higher. The purchase price of the device for the hospital was Rs 5.77 and a 1,737 per cent margin on procurement price was charged, it added.

This has emerged from an analysis done by the National Pharmaceutical Pricing Authority (NPPA) after "some unfortunate deaths because of dengue and other ailments in four reputed private hospitals" in Delhi and NCR , the regulator said in a memorandum.

"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 NPPA said.

Elaborating on how patients were billed with high margins on medicines, the regulator said in case of Adrenor 2 ml injection with an MRP of Rs 189.95, the purchase price to the hospital was Rs 14.70 but was charged at Rs 5,318.60, inclusive of taxes,  to patients.

The margin on procurement price of the drug used in emergency cases for treatment of potentially life-threatening low blood pressure was 1,192 per cent.

Likewise, the NPPA said Todaycef 1 gm injection was billed to patients at Rs 860, whereas, the purchase price of the hospital was Rs 40.32 although the MRP was Rs 430. The margin on procurement price was 966 per cent.

The drug price regulator did not disclose the names of the four private hospitals.

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The NPPA said the pharmaceuticals industry in order to get bulk supply orders in a way is 'forced' to print higher MRPs as per the 'market requirements'.

It is amply clear that for claiming higher margins, doctors, hospitals preferred prescribing and dispensing non-scheduled branded medicines instead of scheduled medicines, it said.

This also indicates that the drug variants of scheduled medicines in the name of 'new drugs' and 'fixed dose combinations' have become the preferred choice avoid price control by manufacturing and medical fraternity, the regulator said.

"This trend of migration from scheduled to non-scheduled category is reflected in the growth rate of 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," NPPA said.