Opinion: Dr G S Grewal, Dr Arun Mitra
Hospitals have no business making profits on medicines
Friday, July 21, 2017

We at ADEH (Alliance of Doctors for Ethical Healthcare), have been fighting for affordable healthcare. 

We feel that the government of India needs to bring all the medicines under National List of Essential Medicines (NLEM). As of now, only 15 percent of medicines are under it and the rest 85 per cent, which are as essential, are out of the purview of NLEM. It makes them vulnerable to exploitative pricing.

Once these medicines are included in NLEM, they will come under the purview of National Pharmaceutical Pricing Authority (NPPA). The prices of all the essential medicines for the patients admitted in a hospital should be the same as hospital prices—the price at which hospital buys them. As a matter of fact, the MRP mentioned on these medicines is much higher than hospital price. In fact, the difference between the two is huge. 

The hospital price includes the seller’s costs inclusive of import/manufacturing cost, wholesalers’ commission (10%)/and retailers commission (around 20%). 

The implants or drugs have no label of hospital price on them. It has only one label --- MRP. This difference is used either by retailer or by medical professional for making profit. In some cases, a few influential patients may be given discount up to 10%, but still the profit margin is very high. This is, in a way, an excess charge levied on the patient. 

The government cannot be unaware of this enormous difference between the actual price and the MRP of  medicines and implants, and it is the government’s duty to remove this price difference and transfer the benefit to the patient. Hospitals are not supposed to make money on sale of medicines and implants.  

In India, where most patients pay from their pocket for the healthcare, it is important to make healthcare as affordable as possible. Lowering the price of medicine will bring enormous relief to patients. 

While a patient gets the medicines or an implant at MRP, the hospitals’ book of accounts show that they have been  sold at hospital price. This leads to unaccounted monetary benefits to hospitals.

In India, the shocking fact is 6 crore people are pushed below poverty line every year because of out-of-pocket expenses on healthcare.  We propose the following to remedy the situation:

1.      All drugs and implants should come under the purview of NLEM
2.     Healthcare provider should not avail of the margins meant for wholesalers and retailers which come to about 30 per cent of the MRP. 
3.   The difference between the actual price of the drugs and the MRP should not be more than 20%. At present it is up to 700-800% for some drugs. 
4.      Price of a salt by different companies should be the same.
5.      Quality control of all types of medicines should be ensured. 
8.      Public Sector units such as IDPL, HAL should be strengthened and more such units should be opened to produce affordable drugs in bulk. The PSUs should also streamline their price structure.

Like cardiac stents, the prices of medicines, non-coronary stents, implants used in orthopedics, eyes, ears, pacemakers and all consumables such as syringes , and most importantly , all drugs should be capped. 


Excerpted from a letter written to the Prime Minister.  

Dr G S Grewal, former president Punjab Medical Council, is a member Core Committee ADEH. 
Dr Arun Mitra, former chairman ethical committee, Punjab Medical Council, is  a member Core Committee ADEH


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