Rising healthcare inflation bites

The alphabet ‘O’ in the word ‘COVID’ seems to have been decoded by the pharma & health sector as ‘opportunity’ to grab the market as the pharmaceutical players have not been showing any mercy to let the prices of the drugs remain under control, if not reduced. In other words, the sector is driving healthcare inflation upwards to the discomfort of consumers and that too in a situation when millions of people have either lost jobs or have witnessed drastic cut in their salaries/incomes. Since life on medicines is as good as life on a ventilator, the consumers have no option but to fall in line with the arbitrary price regime of the pharma and healthcare players to survive.

Irony is that there is no such regulator on the lines of other sectors to keep streamline the pricing of products and services in the sector within permissible limits. For example, the banking sector has Reserve Bank of India (RBI), insurance industry has the Insurance Regulatory and Development Authority (IRDA) and the telecom sector has Telecom Regulatory Authority of India (TRAI). The health services sector does not have a this kind of regulator.

This lack of regulation has paved way to unchecked increase in prices of medicines and health services. The rate of retail inflation related with hospital and nursing charges was, some time back, reported in double digits. With each passing day, it’s mounting without any plausible reason. In fact, the healthcare industry, especially in private sector, has developed a habit to drive the prices upwards at regular intervals, which is hardly questioned by the authorities and not even resisted by the consumers (patients). Ask any healthcare institutions about the reason of mounting charges; they would brush it aside by saying ‘what is the problem if patients are ready to pay?’

This high healthcare inflation gaining traction in a consistent manner, is a huge concern. In fact health inflation was the highest by any commodity group in the CPI basket during December 2018 to April 2019, reveals a data collected by India Ratings & Research. “The retail inflation of health component of CPI has been in excess of 8 per cent since December 2018. It has been reported in the media that this is mainly due to change in data collection agency.”

It’s worth mentioning that rate of retail inflation is indicated by the Consumer Price Index (CPI). This index is prepared on the basis of data collected from 1,114 markets in 310 selected towns by the Field Operations Division of NSSO and the specified State/UT Directorates of Economics and Statistics and from 1181 selected villages by the Department of Posts. The base year is 2012 and health has a weight of 5.89 (7.94 in rural area and 5.58 in urban areas) in overall CPI.

Precisely, the uncontrolled cost of healthcare, be it cost of medicines or allied services, is a huge cause of concern and the arbitrary pricing in vogue in pharma and allied industry is as good as robbing the people of their hard earned money. Even as the sector has advanced in recent years and one can get the best medical care for several chronic ailments, most of the times it’s the increasing healthcare inflation not the disease which forces patients resign to destiny.

Everyone understands that a serious and life-threatening illness turns the situation traumatic. Everything else one is worrying about in life suddenly becomes unimportant. The only thing that could make it worst is managing the expenses of treatment of the illness. Fear looms large that the expenses will leave the patient personally responsible for huge bills that could wipe out all the life time savings.

Of course, tremendous advances in medical technology and war on deadly diseases through new medicines have been a boon. The world of medical science celebrates when they invade a deadly human consuming disease by inventing dependable treatment protocol. But the benefits of the inventions in medical sciences hardly percolate to the grass root level where populations are at higher risk to contract any disease. Today, it’s a common sight to see most people unable to afford even conventional treatments in government hospitals where treatment doses are available at subsidised prices.

Some time back Harvard Business Review in one of its issues quoted a study which gave private hospitals in India a thumbs-up for “delivering world-class health care, affordably”. But the fact as per the World Bank data is that 99% of India’s population cannot afford these services. The data reveals that each year, over 39 million people are pushed financially pushed to the wall and driven into poverty by shelling out-of-pocket expenses for treatment of their diseases.

Let’s pick a very common scenario from our region (J&K). There are instances in abundance when even a financially sound family had to sell-off their assets to meet treatment expenses. Any savings become first casualty when it comes to availing of healthcare facilities – be it diagnostic tests or purchase of medicines. Not only savings go, money is borrowed to foot the medical bills. We have innumerable cases across the region where a family with a meager of monthly income of Rs10,000 is forced to shell out over Rs50,000 for medicines and for each round of chemotherapy and radiation of an ailing family member suffering from cancer! In this huge financial imbalance, majority of the ailing population are forced to go for a fatalistic surrender to destiny.

Precisely, the cost of healthcare services, including cost of medicines is uncontrolled and drug dealers/retailers most of the time resort to profiteering. Current medicine pricing is only condemning patients to death. Even as you see cost of the medicine plainly displayed on the cover of the medicine, the actual cost price of the drug remains invisible. It’s wrapped in so many layers like maximum retail price (MRP) that almost no one understands what’s really happening. The maximum retail price (MRP) printed on most of the drugs or a healthcare article is already loaded with unbelievable margins ranging from 100 to 1000 percent!

Over the last few years, I’ve come across dozens of cancer patients struggling for want of finances and succumbing to the disease midway of the treatment protocol. There are innumerable instances when the high cost of anti-cancer drugs consumed the life of a cancer patient more than the disease itself. Every unit responsible for the pricing and distribution of anti-cancer drugs like stockists, retailers, carrying and forwarding agencies and other liaison agents are involved in the loot.

The daredevilry of the traders can be gauged from the fact that even those drugs, whose prices are ceiled as per the Drug Pricing Control Order (DPCO) decided by the National Pricing Pharmaceutical Authority, are being sold at two to ten times of the original cost whereas DPCO rules state that they cannot be sold at a profit margin of more than 16%.

Why the anti-cancer medicines are so expensive at our place? In our region contraceptives are tax free, while as life-saving drugs are sleeved with multiple taxes. Thus, making the drugs costly. Notably, many states in India have exempted anti-cancer drugs from tax net.

So what’s needed is that these skewed medicine price bites, which are more dangerous than coronavirus bites, need special focus of the government to bring parity in costing of medicines and healthcare services. Otherwise, current pricing is only condemning patients to death. Meanwhile, let’s hope the government comes out with strategies that would ensure affordable healthcare costs and well guarded health portfolio across populations in the J&K region.

Last but not the least. The reformation should begin with a regulator for healthcare sector. It’s shocking, but not surprising. In Covid crisis, the pharmaceutical manufacturers and those in their supply chain have continued to raise the prices of drugs.  This is hurting patients who are struggling to afford medications.

(The views are of the author & not the institution he works for)

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