Bengaluru: Karnataka Food Safety and Drug Administration commissioner K Srinivas has sought urgent regulatory intervention over the pricing of medicines, medical devices and consumables supplied to hospitals at discounted institutional prices but billed to in-patients at the printed maximum retail price (MRP) or close to it.In some cases, the difference between the landing cost and MRP is as high as 52 times. In a letter to National Pharmaceutical Pricing Authority (NPPA) and Department of Pharmaceuticals, Srinivas has flagged critical-care medicines, oncology medicine, high-value injectables, implants and surgical supplies, besides diagnostic-linked consumables and disposable devices. The letter says the practice “may be especially harmful” in these categories.Tens of examples have been enclosed with the letter, showing substantial differences between the reported landing cost and MRP of several products.Some with massive margins are: Gufipol, manufactured by Criticare, has a landing cost of Rs 86 and an MRP of Rs 4,528, a difference of 5,165.1%, or 52.6 times the landing cost. Guficycline-50 injection, manufactured by GUFI, has a landing cost of Rs 160 and an MRP of Rs 7,110, a 4,343.7% difference or 44.4 times the landing cost. Terlitis has a landing cost of Rs 118 against an MRP of Rs 4,416, a 3,642.4% difference or 37.4 times.Among the cancer drugs listed, Taxocare 120 mg from Intas has a landing cost of Rs 1,000 and an MRP of Rs 21,617.6, a 2,061.8% difference or 21.6 times. Romy 250 mcg injection, also from Intas, has a landing cost of Rs 1,650 and an MRP of Rs 4,109, a 149% difference or 2.5 times.The commissioner said a recurring pattern had been reported in hospital procurement and billing: a manufacturer or importer supplies an item to a hospital at a very low institutional price, while the pack carries a substantially higher retail MRP. The hospital then supplies it to an in-patient and charges the MRP or a nominal discount on it despite the lower acquisition price.“The patient, who is generally unable to obtain an immediate substitute during admission, bears the entire benefit of the manufacturer-hospital discount being retained within the supply chain,” the letter says.Srinivas described the issue as an “information-asymmetry and captive-patient problem”, saying patients generally do not know the institutional acquisition cost and do not have an effective choice at the point of use.The letter argues that MRP-only regulation is insufficient. “MRP operates as a ceiling on retail sale to a consumer, but it does not by itself ensure that the MRP is a fair patient-facing price in an institutional setting,” it says.It proposes mandatory disclosure of institutional transaction prices, a patient-facing price ceiling linked to acquisition cost, anti-evasion provisions, MRP rationalisation and an enforceable reporting and penalty framework.Under the proposed system, the patient-facing price would be the lowest of the applicable statutory ceiling or notified retail price, the printed MRP, and the net institutional acquisition cost plus a prescribed maximum service margin and applicable taxes.The letter also proposes disclosure on hospital bills of the product details, MRP, net institutional acquisition cost, permitted service margin, taxes and final amount charged. It seeks quarterly electronic reporting, risk-based audits, a grievance channel and refunds with interest where overcharging is established.Srinivas has sought an expert working group and amendments to the Drugs (Prices Control) Order, 2013, and asked that the matter be treated as “urgent” with a reasoned action taken report communicated.
