Hospitals selling high-cost drugs at up to 52-fold hike, Karnataka govt finds

The Karnataka government has flagged large disparities between the institutional purchase cost and printed MRP of high-cost medicines, cancer drugs and hospital consumables.

In a press note issued on October 1, the Food Safety and Drug Administration (FDA) said its recent inspections had found markups ranging from 10 times to more than 52 times the actual procurement cost of some products.

The department said pharmaceutical companies were supplying medicines to hospitals at heavily discounted institutional or landing prices, while patients were being billed at or near the printed MRP.

The state government said 253 drugs with “extreme pricing anomalies” were identified during its inspections. Some of the largest differences were found in medicines used for cancer treatment.

For instance, the landing cost of Gufipol manufactured by Criticare was listed as Rs 86, against an MRP of Rs 4,528, a markup of 52.6 times. Guficycline-50 injection had a landing cost of Rs 160 and an MRP of Rs 7,110, a 44.4-fold difference.

The landing cost of Terlitis was listed as Rs 118 against an MRP of Rs 4,416, while Taxocare 120 mg had a landing cost of Rs 1,000 against an MRP of Rs 21,617.

The list also included Canmab 440 mg, with a landing cost of Rs 6,600 and an MRP of Rs 57,457, and Bevatas 400 mg injection, with a landing cost of Rs 5,850 and an MRP of Rs 62,690.

The department also found substantial differences in the prices of hospital consumables. An adult nebuliser mask listed a landing cost of Rs 44.50 and an MRP of Rs 950, while an IV set had a landing cost of Rs 14.75 and an MRP of Rs 295.

The Health and Family Welfare Minister had written to Union Health Minister JP Nadda on September 23 seeking national action on what Karnataka described as exorbitant patient billing for medicines, medical devices and consumables purchased by hospitals at institutional prices.

The state has sought mandatory transparency in institutional pricing, including requiring hospitals to display both the landing cost and MRP on patient bills.

It has also called for expanding the list of drugs under price control, regulating trade margins on essential high-value medicines and consumables, and constituting an inter-ministerial expert group to examine the issue.

Among other proposals, Karnataka has sought amendments or additions to the Drugs (Prices Control) Order, 2013, mandatory cost-to-MRP transparency and an expansion of the National List of Essential Medicines.

The state has also sought a system to treat back-end benefits and other considerations received by hospitals as part of the actual acquisition cost of medicines. It has proposed an audit and enforcement mechanism to monitor pricing practices.

According to the FDA, scheduled drugs currently come under price controls where the National Pharmaceutical Pricing Authority fixes a ceiling price with a 16 per cent retailer margin. Non-scheduled drugs, however, do not have a cap on retailer margins, with the manufacturer's printed MRP serving as the main limit.

The department also said medical devices and consumables have limited price controls, with most not covered under the DPCO. It said hospital pharmacies were not specifically required to pass on institutional discounts to patients.

Following directions from the Health Minister, the FDA and Drugs Enforcement Officers conducted another verification drive on September 25 and 26 at wholesale premises, hospitals and other establishments in Bengaluru and districts across Karnataka.

The preliminary findings showed substantial differences between landing costs, MRPs and actual sale prices at different stages of the supply chain, the department said. The inspections covered more than 768 consumable items and 189 high-cost drugs.

The FDA said the verification exercise would continue in phases. The next phase will cover categories including antiretroviral drugs, newer-generation and critical antibiotics, medical devices and hospital consumables with significant financial implications for patients.

The department also said hospitals and pharmaceutical establishments were expected to maintain transparency in billing and provide patients and their families with appropriate information about the medicines, devices and consumables being charged to them.