India requires a smarter policy for healthcare margins and pricing

A recent hospital bill showing a product purchased for 11 rupees and sold for 325 rupees has triggered a debate over maximum retail price in healthcare. Hospitals state that this gap covers storage, keeping supplies sterile and ensuring availability, but families often face the maximum price as the default charge during emergencies when they cannot shop around. Price controls have worked before. In 2019, the National Pharmaceutical Pricing Authority applied trade-margin rationalisation to 42 non-scheduled cancer medicines, saving patients an estimated 200 crore rupees annually. However, India needs a system where different products have different profit margins based on what the price pays for. Routine items like standard syringes do not need the same high return as a treatment developed for a rare disease after years of research. Companies investing in original research or products that improve outcomes should earn higher profits, but the premium should go to the creator of clinical value rather than intermediaries. The government should set up an independent Healthcare Pricing and Value Panel with clinicians, scientists, health economists, patient representatives and pricing regulators to assess products and separate manufacturer profits from hospital and trade margins.

Context

Healthcare pricing involves balancing fair returns for innovation with affordable access for patients who have limited choices during medical emergencies. Independent oversight bodies often help evaluate whether higher prices genuinely reflect scientific breakthroughs rather than inflated supply chain costs.