NPPA issues an analysis showing that private hospitals are hugely overcharging patients

NPPA issues an analysis showing that private hospitals are hugely overcharging patients

February 21, 2018 Industry Specific 0

In an Office Memorandum dated February 20, 2018, the National Pharmaceutical Pricing Authority (“NPPA”) has published an analysis, after receiving complaints of overpricing and inflated bills from families of some patients who lost their lives due to dengue and other ailments. The NPPA disclosed the findings of the study with an aim to remove information asymmetry between patients and hospitals and for greater transparency in the healthcare system. The findings of the analysis, stated that the beneficiaries of the profits, because of the “increased MRPs”, have been hospitals and not the drug or device manufacturers. It was noted that the share of the prices of medicines which the government fixed as maximum retail price, was just 4.1 per cent of the overall bill.

The NPPA observed that hospitals have been overcharging patients for drugs, medical tests and consumable items such as gloves and syringes. The Authority has identified the strategy used by hospitals for inflating medical bills, by prescribing non-scheduled branded drugs which do not fall under price control, in spite of the fact that all essential medicines are listed under the National List of Essential Medicines 2015 (“NLEM”). NPPA has also suggested the need of a policy intervention to tackle this situation, thus, leading to the rate of growth of non-NLEM drugs which had reached double the rate of NLEM drugs in the year 2017.

Apart from the use of non-scheduled drugs, one-tenth of the bills is formed by prices of consumables over which the NPPA has no control, since they are not listed as “drugs” under the Drugs and Cosmetics Act, 1940.  Diagnostic services, forming more than 15% of the total cost, were found to be much higher than diagnostic facilities usually available. According to the NPPA, institutional bulk purchase by private hospitals mostly by their own pharmacies makes it easier for them to indulge into profiteering on devices and drugs. This becomes even easier for hospitals since the prices are already inflated without even violating the MRPs.

For further details, please refer to the detailed report in the hyperlink below.

Source: NPPA

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