Inadequacy of regulatory mechanism and loopholes in the Drug Price Control Order (DPCO) are helping many private healthcare establishments in the country manipulate rules and fleece patients and the latest billing analysis by the National Pharmaceutical Pricing Authority (NPPA) has only underscored the problem, say industry observers.

A report published by the drug price regulator on February 20 stated that private hospitals in Delhi were inflating medical bills by prescribing drugs which did not fall under price control and were overcharging patients for diagnostics and consumables such as gloves and syringes.

“The total cost of scheduled medicines used in the treatment is only 4.10 per cent compared to 25.67 per cent on non-scheduled formulations. It is amply clear that for claiming higher margins, doctors and hospitals preferred prescribing and dispensing non-scheduled branded medicines instead of scheduled medicines while scheduled medicines under National List of Essential Medicines (NLEM) are supposed to cover all essential medicines,” the report said.

“We have repeatedly pointed out that the current system of price control is wholly inadequate in its scope of control covering just 10 per cent of the market by value. The NPPA’s own statements acknowledge this deficiency in the DPCO that provides perverse incentives for prescription of non-scheduled medicines,” a spokesperson for All India Drug Action Network (Aidan), an independent network of NGOs in the healthcare sector, said.

Under NLEM 2015, the regulator has capped the prices of 871 essential drugs along with approval of retail prices of 642 drugs as ‘new drugs’ because of statutory provisions. However, the trend of migration from scheduled to non-scheduled category is obvious from the growth rate of NLEM and non-NLEM drugs in 2017 where the rate of growth of the latter is almost double the rate of the former. “This issue needs to be addressed through policy intervention,” the regulator has observed in its analysis.

The report also highlights the helplessness of the price regulator in the case of consumables. “The charges on consumables are one-tenth of the total bills and more than two times the expenditure on scheduled drugs. These consumables are not under any kind of price control or monitoring of MRPs since they are not even listed as ‘drugs’ under Drugs and Cosmetics Act. NPPA can neither monitor the MRPs nor bring these disposables under price control even in public interest under extraordinary conditions,” the report says.   

“This is an anomaly in the policy that needs to be rectified. The solution is immediate price regulation of devices coming under the definition of drug and commonly used consumables like surgical masks and gloves,” a healthcare professional opined. As per the report, these commonly used consumables make up a whopping 10 per cent of the medical bill.

In fact, the NPPA, in its recent order on coronary stent price revision, has directed hospitals to mention the cost of main consumables during angioplasty procedure to increase transparency in billing process. The directive was issued amid allegations that the cost of main consumables used in angioplasty -- cardiac catheters, balloon catheter and guide wire-- had skyrocketed after the capping of stent prices as many healthcare institutions tried to make up for the huge margins they lost on stents.

The report also sheds light on overcharging by hospitals in diagnostic services. These services constitute more than 15 per cent of the total medial expenditure and the charges are invariably higher than the rates offered by independently run private centres. But the regulator itself admits that the issue is beyond its or the Central government’s purview and state-specific laws are imperative to deal with the problem.