Private hospitals are making a killing by buying medicines and devices in bulk at huge discounts and selling them to patients at the marked maximum retail price — accounting for 15-35% of their profits. Patients, as a captive market, have little choice but to bear the inflated costs.
the example of Shalini Pahwa, diagnosed with multiple myeloma, a kind
of cancer. She was given an injection, Novartis's Zometa, that costs Rs
15,200 per shot, every three to four weeks for over two years in a top
private hospital in Gurgaon. On a work trip to Bangalore, she got the
injection at a hospital there for just Rs 4,000. When she confronted the
Gurgaon hospital about this huge cost difference, it readily offered
her a cheaper option — Cipla's Zoldria for Rs 2,800.
they tell me earlier of the cheaper option? Why do I have to bargain
like in a mandi? Now I go to a different hospital and get the same
injection, Zoldonat, manufactured by Natco, for just Rs 800 and I feel
just fine," says Pahwa.
A haematologist, who didn't wish to be
named, explains the more expensive choices thus: "Some doctors feel
safer giving the medicine of the originator company as they feel there
will be better quality control. And some people feel if it's cheap it
can't be good enough. But generics, especially by good companies, are as
good as originator drugs. It's better to give patients a choice."
quality issues may not be the only reason why a hospital chooses to
push the more expensive option. Zometa is sold to stockists for just Rs
13,000, according to an industry insider. At that rate, the hospital
would make a profit of Rs 2,200. Clearly, the Rs 2,800 injection could
not yield that huge a margin.
Take the case of a broad-spectrum
antibiotic, meropenem, used particularly in ICUs for patients with
serious infections. Cipla's brand Merocrit is sold for Rs 2,965 per gram
by a top hospital. The adult dose is about 1-2g every eight hours for
about 10 days. That's about Rs 90,000 to Rs 1.8 lakh on just one
antibiotic. Merocrit is sold to hospitals for anything between Rs
700-900 per gram. So the hospital makes anything between Rs 70,000 and
Rs 1.4 lakh on just one patient by pocketing the discount.
other brands of meropenem are much cheaper in many not-so-high-end
hospitals. "The MRP per gram of meropenem manufactured by Zuventus is Rs
698 and by Lupin, Rs 988. The hospital buying price for the Lupin brand
Merotrol is Rs 600. When the patient is charged the MRP, the hospital
makes Rs 400 per gram or Rs 12,000 to Rs 24,000 per patient over 10 days
on one antibiotic even in a not-so-expensive hospital," explains a
veteran doctor who wishes to remain anonymous.
It's not just
medicines, hospitals charge MRP on every consumable — from syringes and
catheters to bandages and diapers — though they buy them at huge
discounts. To protect this revenue stream, patients are not allowed to
buy anything from outside the hospital, ostensibly to ensure quality.
give hugely discounted rates. It is not our fault that hospitals choose
not to pass on the discount to patients," argues a company's sales
official who didn't wish to be named.
However, that leaves one
question unanswered — why hospital MRPs are so much higher than actual
selling prices? Doctors point out that the huge MRP enables companies to
attract hospitals with the prospect of high margins. "Pharmaceuticals
or devices and diagnostics are two major revenue earners for any private
hospital. Besides, as a private venture, we also have to ensure healthy
profits for the investors or owners," points out a hospital
Public hospitals, in contrast, can not only get
drugs and devices at even steeper discounts — the government buys in
bulk — they have no compulsion either to earn ever higher profit
margins. Yet, the failure of governments to boost public health
infrastructure in keeping with rising demand has pushed patients to the
private sector. And for many, this means impoverishment.