Dhurjati Mukherjee

The cost of private healthcare has risen sharply in the country’s metropolitan centres and major cities, making it increasingly unaffordable even for a substantial section of the middle class. The enormous profits generated by establishing hospitals in the private sector have attracted several business groups to the healthcare industry. It is increasingly being viewed as a safe investment avenue. This is evident from the Adani Group’s decision to opt for setting up a large hospital in New Town, Kolkata, rather than investing in manufacturing or infrastructure.

Meanwhile, in a significant development, the prices of 137 medicines are expected to come down by as much as 70 per cent from November 9. The government has decided to cap their trade margins at 30 per cent. The National Pharmaceutical Pricing Authority (NPPA), the country’s drug price regulator, has recently notified certain cancer medicines that are not included in the list of scheduled drugs. To address the problem of excessive trade margins on these medicines, the government has invoked Paragraph 19 of the Drug Price Control Order, 2013. The move follows observations by the Supreme Court expressing concern over the huge disparity between the prices charged to patients and the prices at which medicines are supplied to retailers.

Recently, the government admitted before the Supreme Court that hospitals indulge in irregularities, including charging patients exorbitant maximum retail prices (MRPs) for medicines and medical consumables. Although the government did not offer any concrete assurance, it stated that measures for appropriate intervention would be developed. In an affidavit concerning the proposal to cap the prices of all medicines and medical consumables, the government acknowledged that patients are in an extremely weak bargaining position vis-à-vis hospitals, creating scope for various forms of exploitation.

However, the government’s affidavit also stated that medicine prices in India are among the lowest globally. Despite this, it is surprising that the government has argued that there is “no need for price regulation because of adequate competition”.

The question is: how can the government advance such an argument before the Supreme Court? How can it justify this position even after media reports have repeatedly highlighted arbitrary pricing of medicines? The government’s stance indirectly suggests that there is no effective mechanism to monitor private hospitals. Consequently, hospitals continue to charge patients arbitrary amounts, with the poor bearing the greatest burden.

Earlier, two organisations working for patients’ rights had urged the Central Government to regulate the charges levied by private hospitals. They claim that large corporate hospital groups earn between Rs 22 lakh and Rs 55 lakh per bed annually, even after accounting for expenses and tax payments. The Jan Swasthya Abhiyan (JSA) and the Working Group on Access to Medicines and Treatment (WGA) have called for immediate government intervention, alleging that private nursing homes charge patients excessive and arbitrary amounts for treatment, medicines and medical consumables.

This demand has come at a time when the charges imposed by private hospitals for medicines, medical equipment and other services are once again under scrutiny. Since April this year, a state regulatory body, an industry association and the Supreme Court have all expressed concern over the excessive charges.

The JSA and WGA have pointed out to the government that India lacks an effective nationwide mechanism to determine how much private hospitals can charge patients for various medical procedures, services, medicines and consumables. This observation is largely correct. However, instead of blaming the absence of an appropriate regulatory framework alone, it must also be acknowledged that the Central and state governments have failed to demonstrate the necessary commitment to monitoring private healthcare institutions.

There is also no effective regulation to ensure that private hospitals that acquire land at concessional rates reserve a portion of their beds for economically weaker sections. This reflects the reality of the existing system.

The statement by the JSA and WGA has come at a crucial juncture when the cost of treatment in nursing homes is increasingly moving beyond the reach of even sections of the middle class. The organisations have rightly urged governments to take immediate action. They have demanded that maximum trade margins be fixed for medicines, medical devices and consumables, while ceilings should also be imposed on the charges levied by private hospitals for medical procedures, services and different forms of treatment.

While hearing two petitions seeking price caps on medicines, the Supreme Court cited the example of an essential anti-cancer drug. Its maximum retail price was Rs 27,000, whereas the price at which it was supplied to retailers was merely Rs 2,700. This example illustrates that not only private healthcare institutions but also pharmaceutical companies are making enormous profits, while the government remains a silent spectator.

Recently, the Supreme Court directed the Central Government to constitute a high-level committee within two weeks to examine unethical practices adopted by pharmaceutical companies. These include influencing doctors through free gifts to prescribe expensive medicines of particular brands and encouraging irrational prescribing practices. A Bench comprising Justices Vikram Nath and Sandeep Mehta issued these directions while hearing a public interest litigation filed by the Federation of Medical and Sales Representatives Associations of India and two other parties.

The most important question is whether this situation will be allowed to continue indefinitely. Private hospitals must be brought within the ambit of existing regulations. Upper limits should be prescribed for charges relating to private wards, general beds, surgeries, medicines and other medical consumables. Unless an effective regulatory framework is established, certain business groups will continue to set up hospitals and reap enormous profits. The silver lining is that some states have established regulatory bodies where patients can lodge complaints against hospitals for overcharging.

Under the prevailing system, healthcare has been reduced to a commodity that can be bought and sold for profit. This should be a matter of concern for the medical community as well. Government apathy has allowed private hospital owners to charge patients according to their own discretion. They are well aware that there will be no effective obstacle to their unchecked pursuit of profits.

At a time when disease prevention and control have become critically important, the burden of expensive treatment for heart attacks, strokes, kidney failure and cancer is growing much faster than the capacity of the healthcare system to cope with it. Primary prevention, timely diagnosis and effective treatment at an early stage are the most important ways to address this challenge. Unfortunately, a lack of awareness, inadequate treatment facilities and the high cost of healthcare prevent these measures from being implemented effectively.

According to a study, every cancer patient spends an average of Rs 3.3 lakh annually on treatment out of their own pocket, an amount higher than the country’s per capita income. Even relatively less expensive chronic metabolic diseases gradually weaken the financial position of households. The study also found that one in every five diabetes patients has to spend such a disproportionately large share of their financial resources on regular medicines and diagnostic tests that the expenditure becomes financially catastrophic.

In contrast, China has succeeded in controlling non-communicable diseases, even though both China and India face a substantial burden of risk factors such as tobacco consumption, hypertension and other metabolic conditions. Comparable international estimates indicate that out-of-pocket expenditure on healthcare accounts for approximately 32 per cent in China, 10 per cent in Thailand, 37 per cent in Malaysia and 43 per cent in India.

Under the Drug Price Control Order, 2013, price ceilings were prescribed for 3,482 medicines. Of these, 1,924 are used in the treatment of diabetes, cancer and cardiovascular diseases. However, these medicines, classified as essential drugs, account for only around 18 per cent of India’s domestic pharmaceutical retail market, which is valued at approximately Rs 3 lakh crore. Most medicines remain outside the ambit of price controls.

It is essential to bring a larger number of medicines under the category of essential drugs. The scope of this category should be expanded to cover around 30 per cent or more of medicines so that ordinary citizens can access them at affordable prices. Only healthy citizens can contribute to building a healthier and more productive nation.

Numerous discussions and plans are being presented to transform India into a developed nation by 2047. However, adequate attention is not being paid to making medicines affordable and ensuring proper healthcare facilities for economically weaker sections across the country. In view of the continuously rising cost of private healthcare, the time has come for the government to formulate a concrete action plan so that the poor, particularly those living in backward and remote regions, are not deprived of their right to healthcare.

Furthermore, India needs stricter monitoring of pharmaceutical manufacturing processes, testing of medicines in independent laboratories, and swift and effective enforcement of regulatory directives. Healthcare cannot be allowed to become merely an avenue for profit-making. The government must ensure that every citizen has access to affordable, accessible and quality healthcare, irrespective of their economic circumstances.