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Soaring Drug Prices, Rising Medical Costs

Soaring Drug Prices, Rising Medical Costs

By Nantoo Banerjee

Blame it to the policy paralysis or policy death in New Delhi’s corridors of power, the drug and healthcare industry is having a field day in India raising prices, costs of hospitalization and clinical tests and doctor’s fees at will. The Insurance Regulatory and Development Authority’s (IRDA) new guidelines for ‘cashless service’ facility under mediclaim policy now provide approved hospitals and pay clinics practically unlimited opportunity to rob ‘in-patients’ to save insurer’s liability. The whole business of healthcare is turning into a nightmare for the ailing, with or without health insurance card. And, nothing is being done to prevent the degeneration of India’s combined drugs, pharmaceuticals and healthcare industry into the biggest exploiter of human misery.

Until recently, Bayer, a multinational German drugs and chemical giant, sold in India its originally-patented cancer drug, Nexavar, at Rs.2,80,000 ($5,500) for a monthly dose. In its generic form, the drug was later sold in the Indian market for Rs. 8,800 ($175) by another firm. The Indian drug company, Cipla, is now selling it for Rs. 6,840 ($132) and still raking in good profit as Nexavar’s India market is rapidly growing. A phial of Reliance Wellness’s Albumin is priced at Rs. 5,000. Albumin, a human serum, is produced in the lever and constitutes about 50 per cent of the blood serum protein. The retail price of Zuventus Healthcare’s Eporise injection could cost upward of Rs. 1,500 to almost anything depending upon the number of units to be administered in a single push. It constitutes recombinant human Erythroprotein and is prescribed for anemia to chronic renal failure. The prices vary widely depending upon formulators and distributors. The sales margin for most of these high-priced drugs varies from 1,000 per cent to 5,000 per cent or even more.

The prices of drugs prescribed for treatment of blood-related diseases, and ailments such as cancer, heart, kidney, lung, lever, hypertension and viral fever have sky-rocketed in recent times, mostly not due to their manufacturing costs but because of their very high post-manufacturing margins. The market size, competition and consumer profile often determine prices. The recent price reduction by Cipla of certain cancer drugs shows, if anything, the holes in the government’s drug policy. The price of ‘Soranib’ used for treating kidney cancer has been cut to Rs 1,710 “for a month’s therapy” from Rs 6,990, earlier. The brain cancer drug ‘Temoside 250mg’ is now available at Rs. 5,000 as against Rs. 20,250, earlier. While lung cancer drug ‘Gefticip 250mg’ in 30-tablet packs is now priced at Rs. 4,250 against Rs. 10,200. The Cipla move came on the back of the government permitting domestic firm Natco Pharma to manufacture and sell Nexavar. The question is: what has the government been doing this long?

A pack of routine anti-ulcer and sickness-relief drug, Rantac-D, which carried a printed MRP of Rs. 10.90 last month, is now priced at Rs. 39 plus. It is manufactured by J B Chemicals. High selling Abbott India’s ‘Vertin* 16,’ an anti-vertigo drug, is available in drug stores at different MRPs, Rs. 77 and Rs. 83 for a pack of 10 tablets, despite the fact that both carry the MFD (manufacturing date) as January, 2012. The US firm Abbott has a history. Its name was hauled in Indian Parliament for overpricing formulations in 1970s. Instances of profiteering are galore in the pharma industry, which has become a law unto itself after deregulation and lack of government and regulatory supervision. It is no wonder that Ranbaxy recorded 310 per cent jump in the first quarter, 2012, profit and Glenmark just declared 200 per cent dividend to its shareholders. India is being used as an easy hunting ground for drug testing by manufacturers in collaboration with dishonest doctors and hospitals.

The drug business has become so lucrative that increasing number of high-profile hospitals are also running retail drug store chains. The Apollo Hospitals group is now operating a retail chain of drug stores across the country called Apollo Pharmacy. Fortis Hospitals have their own retail pharmacy chain. AMRI runs its retail drug chain after it took over India’s premier retail company of pharmaceuticals, baby foods and cosmetics called Frank Ross & Co. Almost every private hospital runs its own pharmacy inside the premises, where medicines are sold at MRP. Medicines and other medical aids are routinely procured for in-patients’ from these stores in quantities in excess of their requirement. Few are aware that that they have been billed for ‘extra’ medicines at the time of the discharge of patients. Those ‘extras’ are returned to its own drug stores and recycled for higher revenue.

The massive expansion of the health insurance market, after the government allowed private and foreign players to enter this business, has thrown new opportunities for the healthcare business, the size of which has grown by over 500 per cent in the last five to six years. The drug industry, which is among the country’s fastest growing sectors, is close to achieving a Rs. 1,00,000 crore annual sales mark, including about Rs. 25,000 crore earned from exports. Until last year, the healthcare industry thrived on mediclaim policies held by subscribers requiring hospitalization, robbing both the insured and the insurers. Things changed after IRDA introduced ‘cashless’ hospitalization facility to the insured in approved hospitals. The so-called ‘cashless’ hospitalization facility has become a big racket source for hospitals. Policyholders are sole victims.

Although the declared intention was to help mediclaim policyholders to use the cashless facility in case of emergency, the real purpose behind the IRDA action appears to be to rescue insurance companies from getting cheated by rogue hospitals and doctors through overbilling and false claims. Initially, the IRDA had listed cashless service network hospitals known as TPA for mediclaim policyholders. Doctors and hospital management soon revolted saying it is financially unviable to treat patients at the rates offered by insurance companies. In July 2010, as many as 18 insurance companies, including four public sector undertakings, removed several hospitals from its list on the charges of overbilling. However, a good number of them grudgingly accepted the IRDA order later only to realize the inflated costs from poor policyholders, this time. Insurance companies hide this information from policyholders while selling cashless mediclaim policy.

Mediclaim policyholders must do their own research to know which authorised hospitals they should visit in case of emergency. Choose the hospital from the preferred network as cashless claims is denied in other hospitals. Check for the daily cap on expenses covered under the cashless facility. Insurance companies do not provide 100 per cent cashless benefits even though the agents claim so while selling the policy. Policyholders must know the maximum amount a policy will pay before buying it to avoid unpleasant surprises in future. Also, check if the policy allows cashless transaction. There were incidents where the insurance companies refused to pay the cashless services as there was no cashless provision in the policy. Read the fine prints in the policy carefully, especially the ‘exclusions and limitations’ section of policy. This section explains what is covered and what is not. All the ‘if/but’ clauses of the policy are captured here.

There is no humanitarian side or even a sense of guilt in the Indian healthcare business. The government, insurance companies, doctors, hospitals, drug companies, clinics and test centres are all there to rob people approaching them while in physical pain and distress. The government’s ‘health-for-all’ programme and health cards for the poor mock at the system, which spare none, not even a doctor in distress. It has become a business of outright cheating in the absence of any effective policing. As if those registered hospitals and doctors are licensed to only kill their clients, either financially or clinically or on both counts. This is the only business where delivery or curative aspect is never guaranteed. Few high-cost medicines are without dangerous side-effects. Although the industry is highly regulated in the western world, where new weapons of regulations and transparency requirements are continuously invented, monitored and imposed, the reverse is the trend in India. (IPA Service)

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