Published Sep 28, 2026 | 11:35 AM ⚊ Updated Sep 28, 2026 | 12:02 PM
Across the 256 entries, the arithmetic average of the reported MRP-to-acquisition-cost multiple is 9.23 times, while the median is 7.58 times.
Synopsis: Karnataka’s drug regulator has asked the National Pharmaceutical Pricing Authority to review how hospitals bill patients for medicines and consumables bought at discounted institutional prices. The proposal, based on price checks of 256 products, would cap the patient price at the lowest of the statutory price, printed MRP, or the hospital’s acquisition cost plus a permitted margin and taxes.
Karnataka’s drug regulator has asked the National Pharmaceutical Pricing Authority (NPPA) to examine whether private hospitals should be allowed to bill admitted patients at printed maximum retail prices (MRPs) when medicines and consumables are procured at deeply discounted institutional rates.
In a six-page representation, Food Safety and Drug Administration (FSDA) Commissioner K Srinivas, IAS, has proposed a mechanism under the Drugs (Prices Control) Order, 2013, under which the amount charged to an in-patient would be calculated from the hospital’s actual net acquisition cost, with a prescribed service margin and applicable taxes.
The proposal follows a price verification covering 256 medicines and hospital consumables. It records a hospital acquisition cost of ₹86 for Gufipol against an MRP of ₹4,528, ₹160 for Guficycline 50 injection against an MRP of ₹7,110, and ₹8.35 for a vented infusion set against an MRP of ₹248.
“The issue is not merely a commercial discount. It is an information-asymmetry and captive-patient problem,” the letter reads.
“The patient, who is generally unable to obtain an immediate substitute during admission, bears the entire benefit of the manufacturer-hospital discount being retained within the supply chain. The patient neither knows the institutional acquisition cost nor possesses an effective choice at the point of use.”
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In its representation, the FSDA notes that a 200-cm pressure monitoring line has a reported acquisition cost of ₹18 and an MRP of ₹478.
The pattern continues among higher-value medicines. GUFICANDIN 50 injection is listed at ₹850 against ₹21,230, or 24.98 times the acquisition cost. Taxocare 120 mg is listed at ₹1,000 against an MRP of ₹21,617.58, a 21.62-fold difference. Micafungin PLSU 100 is listed at ₹1,350 against ₹22,900, or 16.96 times.
Among expensive oncology products, Hertumab 420 mg/14 ml has a reported acquisition cost of ₹16,200 and an MRP of ₹94,951, a difference of ₹78,751 per vial. Its MRP is 5.86 times the reported acquisition cost.
BIOMAB is listed at ₹4,200 against ₹61,541. BEVATAS 400 mg is listed at ₹5,850 against ₹62,690.10. CANMAB 440 mg has a reported acquisition cost of ₹6,600 and an MRP of ₹57,457.50.
The disparity is not present across every entry. REMICADE is listed at ₹15,389 against ₹19,236, a 1.25-fold difference. One entry for Bevatas 300 mg shows ₹9,000 against ₹9,900, or 1.10 times the acquisition cost.
Across the 256 entries, the arithmetic average of the reported MRP-to-acquisition-cost multiple is 9.23 times, while the median is 7.58 times. Seventy-three entries are at least 10 times the reported acquisition cost, 15 are at least 20 times, and 210 are at least five times.
Some of the largest multiples involve basic hospital supplies. An adult nebuliser mask is listed at ₹44.50 against ₹950, an IV set at ₹14.75 against ₹295, a Polysafety PRO IV cannula at ₹33.21 against ₹548, and an RMS infusion set at ₹12.25 against ₹201.
A urine collection bag listed at ₹25.15 has an MRP of ₹362. A blood set has a reported acquisition cost of ₹17.90 against ₹226, while an adult oxygen mask is listed at ₹34.56 against ₹368.
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The FSDA notes that MRP is a ceiling, but does not necessarily represent a fair price for an admitted patient.
“MRP operates as a ceiling on retail sale to a consumer, but it does not by itself ensure that the MRP is a fair patient-facing price in an institutional setting,” the letter states.
“Where manufacturers offer very large institutional discounts while retaining a very high MRP, the MRP may become a mechanism for transferring excessive margins from a captive patient to intermediaries.”
The letter includes a draft framework for incorporation into the Drugs (Prices Control) Order, 2013. Under it, the patient-facing price of a medicine, medical device or consumable supplied through a hospital would be capped at the lowest of:
The FSDA suggests 20 per cent, 25 per cent and 30 per cent as possible service-margin rates, but says these are drafting placeholders. The rate would be decided after consultation and a cost study.
The proposal would also require hospitals to disclose on bills the product description, brand or generic name, batch number, MRP, applicable NPPA price, net institutional acquisition cost, permitted service margin, tax component and final patient-facing price.
The proposed framework would calculate the hospital’s net institutional acquisition cost after all discounts and benefits, rather than relying only on the basic invoice price.
The definition includes discounts, rebates, credit notes, free quantities, incentives, reimbursements, retrospective adjustments, related-party benefits and other monetary or non-monetary consideration connected with the product.
The draft also contains anti-avoidance provisions covering manufacturers, importers, marketers, distributors, wholesalers and medical establishments.
The framework would initially cover oncology and critical-care medicines, high-cost injectables and biologics, cardiac, orthopaedic, neurological and ophthalmic implants and devices, surgical and ICU consumables, and dialysis and infusion consumables. The regulator proposes expanding it after reviewing implementation.
It also proposes a scrutiny trigger when an MRP materially exceeds the median or weighted-average institutional transaction price. Manufacturers or importers could then be required to provide cost and pricing justification, with MRP revision or other action where legally warranted.
The FSDA asks the NPPA to collect transaction-level or periodic data from manufacturers, importers and hospitals, including institutional purchase prices, discounts and rebates, effective acquisition costs, amounts billed to patients and whether patients had an option to procure an equivalent product externally.
The FSDA has asked the NPPA and Department of Pharmaceuticals to constitute an expert working group involving the pricing authority, central and State health officials, consumer representatives, hospitals, insurers and clinical experts.
It also seeks an anonymised market study comparing MRP, institutional transaction price and patient-billed price; an immediate advisory requiring hospitals to retain procurement records; a disclosure framework for institutional supplies; amendments to DPCO 2013 where necessary; and a coordinated inspection and audit mechanism with State regulators.
Karnataka has proposed a transitional pilot in willing States, including Karnataka, with compliance data published every quarter.
Karnataka Health Minister UT Khader has backed allowing hospitals a legitimate margin while arguing that healthcare requires a different approach from ordinary commercial goods.
“We are not against a reasonable margin for business, but healthcare is not like any other commodity. It must remain patient-centric,” Khader said.
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(Edited by Dese Gowda)
