Chemicals and fertilizers minister J.P. Nadda has directed the Department of Pharmaceuticals (DoP) to explore measures to curb excessive markups on hospital consumables, following a Maharashtra survey that found markups of up to 2,841% on some medical devices. According to Mint, Nadda issued the directive during a high-level review meeting on Friday attended by senior officials from the DoP and the National Pharmaceutical Pricing Authority (NPPA), with the meeting focusing on evaluating trade margin rationalisation (TMR) for medical devices and inpatient consumables. The DoP has been asked to review previous trade margin rationalisation exercises and submit a comprehensive assessment of possible regulatory and policy measures, as reported by Mint. Nadda sought an overview of previous trade margin exercises undertaken in different years, including 2004, 2008 and the 2019 intervention on cancer drugs initiated by the NPPA, to assess their impact and determine viable future steps.
The healthcare industry has emerged with differing views on recommendations by the Maharashtra Food and Drug Administration (FDA) regarding medical device pricing, with industry bodies calling for greater transparency and scrutiny while differing on how gaps between hospital procurement costs and prices charged to patients should be assessed. According to Business Standard, the debate follows Maharashtra FDA Commissioner Tukaram Mundhe's call for a review of medical device pricing after a state survey found mark-ups running into several times the procurement price in some cases. The survey covered various products including syringes, nebulisers and oxygen masks, with nebulisers and oxygen masks purchased for around ₹40-45 being sold at MRPs ranging from ₹650-715, translating to differences of approximately 1,300% to 1,600%. However, Mundhe's intervention followed a Maharashtra government survey that found some surgical consumables and medical devices being sold at markups as high as 2,841% over their trade procurement price in certain cases, according to Mint.
Hospital representatives at the consultation argued that printed MRPs do not directly translate into hospital profits, as reported by Mint. "The hospital stakeholders emphasised that the MRP may not, by itself, reflect the hospital's actual procurement economics or the complete cost of delivering treatment," said one person familiar with the matter. Dr. Girdhar Gyani, director general, Association of Healthcare Providers (India), whose representatives attended the Thursday meeting, said "We submitted our representation to the Department of Pharmaceuticals clarifying that hospitals do not charge beyond the MRP, which we are legally entitled to. The regulator, NPPA, fixes MRPs and not hospitals. Additional hospital costs cover critical administration, infection control, nursing care, and storage." The association represents around 30,000 private hospitals in the country.
Nathealth has called for a differentiated framework that distinguishes between routine consumables and complex medical technologies, acknowledging that hospitals incur costs related to clinical evaluation, emergency inventory, sterile-chain integrity, trained personnel, specialised infrastructure, traceability and safety compliance. According to Business Standard, Siddhartha Bhattacharya, secretary general, Nathealth, said a hospital's procurement price cannot automatically be equated with the cost of delivering a medical technology to a patient. However, Nathealth emphasised that unusually high margins on routine, commoditised consumables should be scrutinised and cannot be justified on the basis of costs associated with sophisticated technologies. The association noted that patients cannot bargain over hospital consumables, leaving them vulnerable to inflated MRPs while ethical manufacturers face distorted market conditions.
The Association of Healthcare Providers of India (AHPI) has urged a fact-based assessment, emphasising that the regulatory framework governing medical products needs to be considered before drawing conclusions from differences between procurement prices and prices charged to patients. As reported by Business Standard, Girdhar Gyani, director general, AHPI, said hospitals do not determine the MRP printed on medicines and medical products. According to AHPI, MRPs are determined by manufacturers and medicines are subject to applicable regulation by the National Pharmaceutical Pricing Authority (NPPA). The association pointed out that prices of non-scheduled medical devices are regulated by the central government, with annual price increases capped at 10 per cent under the applicable framework. Maharashtra may not be alone in raising pricing concerns, as the NPPA has received similar representations from drug-control authorities in Punjab, Rajasthan and Tamil Nadu, according to Mint. The NPPA is now examining whether manufacturers and intermediaries are adding substantial margins before products reach patients, comparing company filings and internal price lists with the Maharashtra survey.
Mundhe said the Centre's consultation was a positive step but that it needed to produce concrete outcomes, as reported by Mint. "It is a good thing to move forward—that is the starting point. It is positive that they are consulting all stakeholders. I believe there will be a policy intervention that is fair to all, including consumers, the pharmaceutical industry, hospitals, citizens, and regulators. We need to come out with concrete outcomes, not just processes. This is a big issue, and doing something on consumables will provide significant relief to everyone," Mundhe told Mint on Thursday. Dr. Shuchin Bajaj, founder director of New Delhi-based Ujala Cygnus hospital, welcomed an evidence-based NPPA framework that "rationalizes margins across manufacturers, distributors and hospitals while ensuring patient affordability and operational sustainability." He noted that reports of extreme gaps between procurement prices and MRPs are concerning and demand scrutiny, as patients deserve full transparency, but equating this gap with hospital profit margins is inaccurate.
