UP Moves to Curb Hospital Medicine Overpricing, Orders New Price Displays from November 1

Lucknow: Patients buying medicines from hospital pharmacies in Uttar Pradesh could soon get a clearer picture of what their medicines actually cost.

The state government has ordered hospital-based pharmacies to display price information linked to their procurement costs and selling rates from November 1, following inspections that exposed striking differences between purchase prices and the amounts patients may be charged.

In the most extreme cases reported by the Uttar Pradesh Food Safety and Drug Administration (UPFSDA), the maximum retail price printed on a medicine pack was as much as 67 times the price paid to procure it.

The findings have prompted the department to seek a wider review of how medicine prices are fixed and how margins are distributed among manufacturers, suppliers and retailers.

The state has also directed retail chemists to make essential business information accessible online.

Their websites will be required to show drug licence details, the identity of the pharmacist responsible for the premises, the authorised address and information about available stock.

These details must be refreshed weekly, according to the directions reported by officials.

The measures are intended to make medicine sales more transparent, particularly for patients who purchase prescribed drugs from pharmacies located inside hospitals and may have few practical alternatives.

State asks national regulator to examine pricing system

The UPFSDA has taken its concerns to the National Pharmaceutical Pricing Authority (NPPA), asking it to examine whether existing arrangements for fixing maximum retail prices adequately protect consumers when hospitals obtain medicines at heavily discounted rates.

The issue emerged during inspections involving more than 200 pharmacies linked to 22 medical colleges and 30 government and private hospitals across Uttar Pradesh.

The department reported a substantial difference in some cases between the price hospitals paid their suppliers and the amount charged to patients.

Hospitals purchasing medicines in bulk may negotiate favourable rates with pharmaceutical companies and distributors.

However, the printed MRP can remain much higher than the institutional purchase price. When patients are billed at or near that MRP, they may not receive the financial benefit of the discounts secured by the hospital.

In a communication attributed to UPFSDA Commissioner and Secretary Roshan Jacob, the department highlighted the disparity between the price to retailer, or PTR, and the final amount paid by the consumer.

It urged the national regulator to consider how the existing system could be made fairer to patients.

The department also reportedly identified instances in which products from the same manufacturer and brand carried different MRPs for different institutional buyers.

It raised questions about medicines manufactured under contract for particular hospitals, especially where those products are not commonly available through regular chemists.

Cost-based charging offers a possible model

One approach highlighted by the department is the cost-plus system used for certain expensive medicines in some government medical colleges.

Under this arrangement, the amount charged to patients is linked to what the institution paid to obtain the drug, rather than relying exclusively on the MRP printed on the packaging.

The approach has been used for costly treatments, including cancer medicines, specialised antibiotics and expensive injections.

Linking the patient’s bill more closely to the actual purchase cost could make charges easier to understand and help prevent institutional discounts from being lost in the final retail price.

UP proposes tighter controls on margins.

The state has asked the NPPA to review trade margins on medicines and medical devices carrying particularly high MRPs.

It has also called for a more systematic method of determining prices, with manufacturing costs and legitimate expenses incurred after production taken into account.

Another recommendation is to examine whether medicines sold to hospitals with unusually high margins should come under the price-control provisions of the Drugs (Prices Control) Order, 2013.

The department has additionally called for stronger enforcement of existing rules and consideration of further legal measures against violations.

These requests require consideration by the relevant authorities; they do not mean that the proposed restrictions have already been adopted nationally.

At the heart of the issue is a question of who benefits from discounts negotiated during bulk purchases.

The UPFSDA’s position is that patients should not be left paying prices that fail to reflect the savings available to hospitals.

Its proposed measures seek to make the pricing process more transparent and ensure that institutional purchasing power translates into more affordable treatment.