Why it's time to question hidden cost of medicines in hospitals
When Sangeeta Mehra (name changed), a 62-year-old retired bank manager from Mumbai, began treatment for HER2-positive breast cancer, the family was told about trastuzumab deruxtecan (ENHERTU), a targeted cancer medicine whose MRP (maximum retail price) in India was about Rs 1.67 lakh for a 100 mg vial.
The cost immediately became part of the treatment decision. “At that point, you are not asking what margin the hospital is making,” says Mehra. “You are asking how many cycles will be needed and whether you can afford them.”
For patients like Mehra, however, the price on the drug pack often reveals little about how that figure was arrived at or how much of it reflects manufacturing cost, distribution and retail margins. That lack of transparency came under scrutiny in the Supreme Court recently.
A bench of Justices Vikram Nath and Sandeep Mehta questioned 10-fold markups on cancer drugs by hospitals, terming it “carnage”. As an example, a cancer medicine supplied to retailers for around Rs 2,700 being issued by hospitals to patients for Rs 27,000.
The court also questioned the practice of hospitals requiring admitted patients to buy medicines from its own pharmacies and asked the Centre to examine whether a uniform 16 per cent price margin could be applied more widely.The court cited Rosuvas, a rosuvastatin brand used to lower cholesterol, to illustrate how pricing could change depending on whether a formulation fell under price controls. One formulation was cited at around Rs 214-240 a strip while a combination containing aspirin cost roughly Rs 70. The matter is still being heard, with no final ruling as of now.
These differences are rooted partly in how India regulates drug prices. The country’s drug-pricing system divides medicines into scheduled and non-scheduled categories. The National Pharmaceutical Pricing Authority (NPPA) fixes ceiling prices for medicines on the National List of Essential Medicines. For many non-scheduled drugs, however, companies have considerably greater freedom in setting the initial MRP, although subsequent annual increases are restricted.
For patients in hospitals, these regulatory distinctions have often meant little. Farida Khan, a 43-year-old school teacher from New Delhi, spent several days in intensive care after complications following surgery. Her family bought antibiotics, injections, saline, infusion equipment and other consumables directly from the hospital pharmacy.
“There was never really a question of going outside and checking prices,” says Khan. “You were told what was needed and you bought it. It was only when we saw the total bill that we realised how much the smaller items had added up to.”
This captive nature of hospital purchasing has been central to the debate. A patient in an ICU or receiving chemotherapy can rarely compare several pharmacies or delay treatment while looking for a cheaper brand.
The All India Drug Action Network (AIDAN), which calls itself an independent network of NGOs working to improve access and rational use of essential medicines, had raised similar concerns earlier. In a public statement on cancer-drug pricing last month, AIDAN argued that capping trade margins alone would still leave many anti-cancer medicines unaffordable and pointed to large commissions on medicines, consumables and devices within private hospitals. It said meaningful price regulation needed to address the underlying prices of essential and life-saving medicines, not merely the margins added later.
Hospitals, however, maintain that the difference between procurement price and MRP cannot automatically be treated as profit. Pharmacy staffing, storage, distribution, cold-chain requirements and wastage also carry costs.
The Supreme Court hearing has, therefore, raised a larger question: how should medicines be priced when the consumer is seriously ill, cannot realistically shop around and may have little choice but to pay whatever appears on the hospital bill?
