Drugs, diagnostics, consumables form bulk of private hospital bills, says NPPA

In private hospitals, medicines, diagnostics and consumables constitute more than 50% of the billed amount, whereas room rent and procedural costs are just 11% each, reveals an analysis by a government agency.

After analysing the bills of four big private hospitals in Delhi, the National Pharmaceutical Pricing Authority said nearly 55% of the billed amount are the charges that patients paid for medicines, consumables and diagnostics.

Among the medicines, there is a huge gap between "scheduled formulations" (4.1% of bill) that are under price control and "non-scheduled formulation" (25.67%), whose MRPs are decided by the pharmaceutical companies.

"It is amply clear that for claiming higher margins, doctors and hospitals prefer prescribing and dispensing non-scheduled branded medicines instead of scheduled ones. The scheduled medicines under National List of Essential Medicines are supposed to cover all essential medicines," says the NPPA report.

In the 20-page document, the drug price regulatory body demonstrated how private hospitals hugely over charge patients by selling drugs, devices and consumables at MRP while procuring them at a much lower price.

Private hospitals are poorly regulated at the moment, leaving the patients virtually at the mercy of these healthcare outlets.

India has one of the world's highest out of pocket expenditure, of which nearly 60% are spent on drugs and diagnostics. According to the Economic Survey released last month, out of pocket expenditure on health continues to impact the finances of 62% Indians adversely.

"The profit margins in the non-scheduled devices used in syringes, cannula and catheters are exorbitant and clearly a case of unethical profiteering in a failed market system," it says.

Similarly, the hospital purchase price of scheduled and non-scheduled drugs are invariably lower than the prices for the stockists.

While diagnostic services constitute more than 15% of the total cost, hospital charges for the tests were higher than diagnostic facilities provided by other independent private centres.

Inflated MRPs

The NPPA report comes almost seven months after a group of doctors wrote to Prime Minister Narendra Modi seeking his intervention to curb the malpractice of creating inflated MRPs though the companies sell the same product at a much lower price to the hospitals.

"Private hospitals are operating with impunity in the regulatory vacuum and capitalising on the vulnerability of patients," commented Malini Aisola from the All India Drug Action Network “ a non-governmental organisation.