‘Exorbitant’ 2,000% margins drive India to mull further device price caps

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A small group of manufacturers has asked India's cost watchdog to intervene. (Yann Forget/CC-BY-SA-3.0)

India’s cost watchdog is considering bringing the prices of more medical equipment under its remit after learning how much hospitals bill for certain items. A deep dive into the fees of four hospitals revealed that patients are paying as much as 2,100% more than distributors for some medical products.

Officials at the National Pharmaceutical Pricing Authority (NPPA) got access to the pricing data after receiving complaints against four “reputed private hospitals.” The NPPA released data from one hospital late last year but held off on sharing information from the three facilities that requested their details remain confidential. Now, the NPPA has published the data (PDF) in the public interest.

The numbers paint a similar picture to other NPPA releases. Hospitals bought pieces of equipment for slightly more than the distributor paid, then added a zero to the end of the figure when it came time to charge the patient. The margins discovered by the NPPA topped out at the 2,112% a hospital added to the cost of an infusion set. Multiple examples of 1,000%-plus margins on syringes and other pieces of medical equipment were discovered.

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Those numbers have caught the attention of the NPPA. 

“The profit margins ... are exorbitant and clearly a case of unethical profiteering in a failed market system,” the NPPA wrote. “Some manufacturers are said to have brought down prices on their own while a small group of manufacturers are said to be resisting the self-regulation and have requested NPPA for its intervention in rationalizing the trade margins so that it is compulsorily compiled by all.”

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Officials at the NPPA said they are “closely monitoring the developments.” History suggests the NPPA sees enforced price caps as the solution for overly aggressive trade margins. This is how it decided to tackle the prices of cardiac stents and knee implants, and it looks set to be the approach it takes with cardiac guidewire, catheters and balloons.

If the NPPA extends price caps to cover syringes and other pieces of day-to-day medical equipment, it is unlikely to be manufacturers that are hit hardest. In this case, the NPPA has few qualms with the prices manufacturers including B. Braun Medical and Becton Dickinson charged to hospitals. The issue is with the markups that the hospitals then applied.