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Delhi govt likely to put a cap on hospital profits this week -Durgesh Nandan Jha

-The Times of India

NEW DELHI: The Delhi government is likely to come out with a policy to cap profit margins for hospitals this week. A first for any state, the policy will cover sale of medicines, consumables and devices to patients. The state government had appointed a nine-member committee in December last year to suggest the scope and process of capping prices.

The move followed public outrage on the death of a child due to dengue at a private hospital where the family was charged over Rs 15 lakh for treatment. The committee had members from the Delhi Medical Council, Indian Medical Associations and some top bureaucrats with the health department. “We submitted the recommendations to the government about one month ago,” one of the members told TOI.

Government sources said the committee had suggested capping the profit margin for drugs and devices at a maximum of 50% above the manufacturing price or procurement cost, whichever was lower. “Health minister Satyendar Jain will make an announcement on profit capping by next week,” said an official, who did not want to be named. The policy will also cover rates of packages for various procedures.

The panel has suggested the package rates should be transparent and take into account possible complications that may arise during treatment. A member of the committee said: “Hospitals often end up charging more than the package price they share with patients at the time of admission. The possibility of cost escalations should be explained in advance.”

TOI has reported on revelations by the National Pharmaceutical Pricing Authority (NPPA) that hospitals have been found to be charging 1,000-1,700% margin on medicines and consumables. Compared to that, a 50% profit recommendation does seem like a huge reduction. However, it is unclear what the government means by manufacturing cost of a drug, as there is no way to know the ex-factory cost of medicines or consumables.

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