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The Karnataka government has urged the Union government to regulate the prices of high-cost cancer medicines, saying the gap between what hospitals pay for medicines and what patients are billed can be 30 times to more than 70 times in some cases. In a letter to Union Health Minister JP Nadda, accessed by TNM, Karnataka Health and Family Welfare Minister UT Khader sought a comprehensive cap on trade margins for high-value life-saving and cancer medicines and called for advanced chemotherapy and targeted therapy drugs to be brought under direct price control.
The government has also urged the Union government to regulate the prices of medical devices and consumables, citing large gaps between institutional procurement prices and the amounts billed to patients, and a national framework to address what the state described as excessive margins on medicines used for cancer, kidney and AIDS treatment.
The letter said hospitals can procure medicines at deeply discounted institutional rates but bill in-patients at the printed maximum retail price (MRP) or close to it. It said the gap between institutional landing prices and MRPs can be as high as 30 to more than 70 times in some cases.
The state said the problem is particularly significant for patients in emergency and intensive care, oncology and other settings where medicines, implants and consumables have to be purchased immediately. Patients may not be able to compare prices or source the products elsewhere, the letter said.
It also pointed to commercial arrangements such as rebates, credit notes, free quantities and retrospective discounts, which may not be visible to patients but can reduce a hospital’s actual acquisition cost.
The Karnataka government has proposed that the Union government constitute an inter-ministerial expert group involving the Union Health Ministry, Department of Pharmaceuticals, National Pharmaceutical Pricing Authority (NPPA), state governments, drug regulators, hospitals, insurers, consumer representatives and clinical experts.
It has also sought a national study comparing the MRP of selected high-value medicines, devices and consumables with the manufacturer or importer price, the hospital’s net acquisition cost and the amount ultimately charged to patients.
Among its other proposals, Karnataka has suggested amending or supplementing the Drugs (Prices Control) Order, 2013, to regulate patient-facing prices for products supplied through hospitals. The state proposed that such prices could be capped at the lower of the applicable statutory price, MRP, or the hospital’s net acquisition cost plus a notified service margin and applicable taxes.
The letter also called for a comprehensive cap on trade margins for high-value life-saving and cancer medicines and for more advanced chemotherapy and targeted therapy drugs to be brought under direct price control.
Karnataka has proposed mandatory itemised bills for specified high-value products, including details such as the product’s MRP, applicable statutory price, hospital acquisition cost, permissible service margin, taxes and final amount charged to the patient.
The state has further proposed that rebates, credit notes, free quantities, marketing support, retrospective discounts and related-party benefits be treated as part of a hospital’s acquisition cost while determining permissible patient charges.
It has sought an audit and enforcement mechanism involving the NPPA and state drug authorities, including inspections, preservation of procurement and billing records, refunds with interest for excess collections and action against repeated violations. The initial focus, it said, should be on oncology and critical-care medicines, expensive injectables, implants, surgical and ICU consumables and dialysis supplies.
The letter comes amid an investigation in Karnataka into an alleged counterfeit medicine racket. The Food Safety and Drugs Administration (FSDA) recently cancelled 16 drug licences and suspended eight others, including the wholesale licence of a Pfizer depot, after a raid at an alleged unlicensed repacking and relabelling facility near Bidadi.
The August 18 raid resulted in the seizure of suspected spurious medicines, machinery, packaging material and forged labels worth about Rs 5.05 crore, according to the FSDA. Investigators alleged that low-cost medicines sourced from neighbouring states were being repacked and relabelled as expensive life-saving drugs.
The department said samples of the seized medicines have been sent for laboratory testing to establish their chemical composition, sterility and potency. A Special Investigation Team is also probing the wider supply chain.
Karnataka has said it is willing to participate in a pilot or national framework and can strengthen transparency and itemised billing requirements for private medical establishments. It has, however, argued that a central intervention is needed to address drug pricing and the disconnect between institutional supply prices and patient-facing charges.
