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The Karnataka Government during the recent inspection on the Hospitals treating cancer where high cost drugs are used brought to the urgent attention of the Union Ministry of Health and Family Welfare and the National Pharmaceutical Pricing Authority (NPPA) the alarming disparity between the institutional landing costs and the Maximum Retail Prices (MRP) of high-value medicines, cancer drugs, antibiotics, and hospital consumables supplied to hospitals across the state.
Recent investigations by the Karnataka Food Safety and Drug Administration (FDA) have revealed that pharmaceutical companies are supplying medicines to hospitals at heavily discounted institutional (landing) prices, while patients are being billed at or near the printed MRP-resulting in markups ranging from 10 times to over 52 times the actual procurement cost.
The Honourable Health and Family Welfare Minister in his letter has written to Union Health Minister, seeking a need for national action against exorbitant patient billing as Maximum Retail Price for medicines used for cancer treatment, medical devices and consumables procured by Hospitals at Institutional discount price. During the inspection 253 drugs where extreme pricing anomalies are identified have been provided.
The Karnataka Government has requested the Central Government for the following:
- Mandate transparency in institutional pricing by requiring hospitals to display both landing cost and MRP on patient bills.
- Expand the list of drugs under price control under the Drug Price Control Order (DPCO)
- Regulate trade margins on essential high-value medicines and consumables
- Constitute an inter-ministerial expert group
- Direct a national data study
- Amend or supplement the Drugs (Prices Control) Order, 2013
- Rationalisation of Trade Margins
- Mandatory Cost-to-MRP Transparency
- Expanded National List of Essential Medicines (NLEM)
- Treat all forms of back-end consideration as part of acquisition cost
- Create an audit and enforcement mechanism
The following in the regulatory at present:
- Scheduled drugs (under DPCO): NPPA fixes ceiling price with 16% retailer margin
- Non-scheduled drugs: No cap on retailer margin; MRP printed by manufacturer is the only limit
- Medical devices & consumables: Limited price control; most devices not under DPCO
- Hospital pharmacies: No specific regulation mandating pass-through of institutional discounts
Based on the direction of the Honourable Minister the Food Safety and Drug Administration, Drugs Enforcement Officers, Karnataka once again conducted a special verification drive on 25 September 2026 and 26 September 2026 at various wholesale premises, hospitals and other establishments in Bengaluru and at district locations across Karnataka.
The preliminary observations indicate that, in respect of certain high cost drugs, medical devices and hospital consumables, there were substantial differences between the landing cost, the MRP and the actual sale price at different stages of the supply chain. The inspections cover more than 768 items in consumables and another 189 high cost drugs. The same will be brought to the notice of the Central Government.
The Food Safety and Drug Administration Department will continue the special verification exercise in a phased manner. In the next phase, enforcement and verification activities will focus, among other categories, on:
- Anti-retroviral drugs
- Higher-generation and critical antibiotics
- Medical devices
- Hospital consumables having substantial financial implications for patients
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