The maze of trade margins that come between a patient and the final price they pay on a consumable used in hospital has come into sharp focus again, following a survey by the Maharashtra Food and Drug Administration under Commissioner Tukaram Mundhe, who has been cracking down on food and drug companies running foul of the law.
About nine years ago, the National Pharmaceutical Pricing Authority had laid threadbare how a maze of trade margins — between 11 and 1,000 per cent at different levels — resulted in increasing the final cost of a stent for a patient. (A stent is a device often used in heart-related procedures.)
Revealing findings from the latest survey undertaken by the regulatory authority, State FDA Chief Mundhe said, “the most expensive part of a hospital bill may never touch the hospital at all.” He was pointing to the 2,841 per cent markup on an IV infusion set, among other findings.
“A patient admitted for care has no way of knowing whether the price on a medical consumable reflects its actual cost or a markup fixed long before it ever reached the ward. That gap in information is, at its core, a public health issue,” he said, in a post on the survey findings.
“A survey of hospital consumables in Maharashtra found an IV infusion set with a trade price of ₹11.05 carrying a printed MRP of ₹325; a markup of 2,841 per cent. A syringe procured at ₹6.75 carried an MRP of ₹57.20. A catheter procured at ₹29.41 carried an MRP of ₹310,” he said, adding that a patient is not in a position to compare prices, seek alternatives, or question the printed MRP, while seeking care. Besides, the MRP is “often fixed upstream by manufacturers and distributors, disconnected from the trade price by a wide, unexplained margin. The result is a system where the party bearing the cost has the least information to evaluate it.”
Information gap
Mundhe points out that the “regulatory gap is structural: scheduled medicines are capped under the Drugs (Prices Control) Order, 2013. Most medical devices and consumables are not, leaving both the pricing and the information around it almost entirely unmonitored.”
The Commissioner said he has recommended to the Department of Pharmaceuticals and the NPPA a review of their findings and “clear guidelines on the permissible gap between trade procurement price and declared MRP”. This would be a step toward “closing not just a pricing gap, but the information gap patients are left to bear alone,” Mundhe said.
‘Inadequate’ regulatory coverage
Reacting to the Maharashtra FDA’s recommendation, the Association of Indian Medical Device Industry (AiMed) said it had also pointed out that the current regulatory framework under the Drugs (Prices Control) Order, 2013 was “inadequate” for medical devices.
Pointing to the FDA Commissioner’s findings, the industry platform called for “structured price monitoring and margin rationalisation”, starting with pilot studies to generate data.
“Patients, who cannot bargain or choose devices, are left vulnerable to inflated MRPs, while ethical manufacturers and importers are forced to either play within a distorted system or exit the market. This situation penalises both consumers and responsible suppliers, eroding trust and competitiveness,” AiMed said.
The industry platform said it had long advocated for a fair pricing policy that was more in sync with medical devices, “with transparent trade-margin caps based on ex-factory or landed import prices.” A transparent system would ensure affordability for patients and encourage ethical competition, the industry group said, even as it bolsters domestic production.