Price gap for medical items needs proper context: AHPI to reports

AHPI has responded to reports on medical product price gaps, stating hospitals don't set MRPs. They stress that manufacturers determine prices under NPPA regulation and that selective examples shouldn't be used to suggest systemic collusion.

The Association of Healthcare Providers of India (AHPI) on Thursday said it has taken note of recent reports highlighting differences between the procurement cost and prices charged to patients for certain medical consumables and products in hospitals. While affordability and transparency in healthcare are important objectives shared by all stakeholders, the issue needs to be examined in its proper regulatory and administrative context, they said.

Selective examples of price differentials between procurement prices and patient billing prices should not be used to suggest systemic collusion between hospitals and manufacturers or to attribute the setting of Maximum Retail Prices (MRPs) to hospitals, they added.

Understanding the Pricing Chain

“It is important to distinguish between the procurement price of a medical product and its Maximum Retail Price (MRP). Hospitals do not determine the MRP printed on medicines and medical products. MRP is determined by the manufacturer, and is subject to regulation by NPPA; price of any non-scheduled medical device is regulated by the Central Government and price increase of only upto 10% in a year is permitted,” said Dr. Girdhar Gyani, Director General, Association of Healthcare Providers (India).

The Government has also retained powers to regulate prices of medical devices in extraordinary circumstances and in public interest; the price ceiling for knee implants, which are non-scheduled devices, was fixed by the Central Government in 2017 under para 19 of the Drug Price Control Order, 2013.

AHPI therefore believes that attributing the difference between procurement prices and MRP to hospitals, or suggesting that such pricing reflects an understanding or collusion between hospitals and manufacturers, would be an inaccurate representation of how the pricing chain operates. Any such suggestion would imply coordinated pricing decisions involving thousands of hospitals and manufacturers across the country, without evidence of such coordination, it said.

AHPI further noted that the issue of pricing of medicines and medical products is not new. The Competition Commission of India (CCI), in its orders dated May 21, 2026, relating to 12 Delhi hospitals, examined allegations concerning pricing of medicines, medical devices and consumables. In these proceedings, the CCI noted that hospitals are legally permitted to sell medical products up to the manufacturer-notified MRP and that there was no finding that the hospitals had charged above the applicable MRP, they added.

Procurement, Margins, and Profitability

AHPI also points out that procurement discounts and trade margins are characteristics of the broader medical products supply chain and cannot automatically be equated with hospital profits. Depending upon if hospital is 1000 bedded or 50 bedded or if procurement is directly from manufacturer or from whole sale dealer or from retailer, the purchase price will change. It is important to point out that the most private hospitals in the country report profit in the range of 8-12%, which is hardly enough to meet sustenance of high-tech quality hospitals.

The Broader Context of Healthcare Costs

AHPI also cautions against selective extrapolation from a limited number of products or instances to the hospital sector as a whole. A meaningful assessment should consider a representative sample across products, manufacturers, hospitals and geographies, and distinguish between medicines, medical devices and consumables, each of which may operate under different regulatory and commercial frameworks.

Price of device or medicine is very small part of overall cost of administering healthcare, which include manpower (doctors, nurses, paramedical, administration etc.) maintaining infection free environment, infrastructure etc. In majority of cases, the hospital billing is based on packages like in insurance and package rates notified under Ayushman Bharat scheme of the Government. Accordingly, the price of the device becomes irrelevant.

Healthcare cost is increasing more so due to high-cost diagnostic technology but that is reaping big benefits in terms of clinical outcomes. Average life expectancy during 1947 was less than 37 years, and today it is more than 73 years. So let us not undermine the contribution of high-tech healthcare delivery by picking up selective pricing issues of small items, they said.

A Call for Evidence-Based Policy

The Association of Healthcare Providers of India (AHPI) remains committed to transparency, responsible pricing and patient-centric healthcare. "It believes that the objective of making healthcare more affordable is best served through evidence-based policy, appropriate price regulation, greater transparency across the entire supply chain and delivery of medical procedures."

There exists constructive engagement among hospitals, manufacturers, distributors, insurers and regulators, as the nation is fast progressing towards realising universal health coverage. (ANI)

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