New Delhi: Weeks after the Union government capped trade margins on 137 anti-cancer drugs to make them more affordable, it is examining high markups on medical devices and hospital consumables. However, regulating their prices could be more complicated.
Margins can be added at several stages of the supply chain, while hospitals often include consumables in treatment packages. This makes it difficult to track their procurement costs and what patients are ultimately charged, experts say.
A senior government official, who did not want to be named, told ThePrint that markups were excessive but cautioned that capping them would not necessarily bring down hospital bills. “The hospital will simply adjust that amount elsewhere in the bill. It could say that it used 10 syringes instead of five. Who is going to count?” the official said.
The issue came into focus after a Maharashtra Food and Drug Administration (FDA) survey, flagged by Commissioner Tukaram Mundhe in September 2026, found markups of up to 2,841 percent on hospital consumables.
In an affidavit filed on 12 October in the Supreme Court’s Kishan Chand Jain case, the Department of Pharmaceuticals (DoP) said it had so far capped trade margins only on anti-cancer drugs, at 30 percent. Finding appropriate margins for hospital consumables, it said, “is more difficult and requires extensive consultation”.
During the hearing, the Supreme Court asked the Centre why such caps could not be extended to all essential medicines and medical products, and directed it to work out how margins could be regulated.
According to the official, the bigger challenge is ensuring that hospitals comply with any price restrictions. “How will you improve something if you cannot measure it? The issue is very relevant, but how will you bring about a change? Compliance happens where there is certainty that you will be caught if you do not comply,” the official said.
Around 50-60 percent private hospital billing is through package rates, the official said. Under this system, patients pay a consolidated amount for a procedure rather than separately for every injection, cannula or catheter. “For instance, you do not know how a hospital arrives at a Rs 1.5 lakh bill,” the official said.
The official pointed out that the Drugs (Prices Control) Order (DPCO) is “manufacturer-centric”. It regulates prices at the manufacturing level, not the final amount a hospital charges patients.
Even if margins on separately billed consumables are capped, hospitals could recover the difference through nursing charges, surgeon’s fees or consultation visits. “A patient lying in the ICU cannot figure all this out,” the official said.
Tracking procurement costs poses another challenge. The official questioned how regulators could establish what hospitals actually pay for medical devices and consumables.
“There is no way to establish what a hospital actually paid to purchase a particular item. GST data is not shared. Even if you look at the bill, it will show the MRP. But you will not know how much the hospital itself paid to procure that item,” the official said.
Discounts and free supplies could further complicate calculations. “The distributor can simply give away four boxes for free, and the effective margin can go up,” the official said.
The official also warned that excessive scrutiny could have unintended consequences for private hospitals. “We do not know what goes on inside a private hospital. If you start investigating every little detail, you will essentially end up killing the private hospital sector,” the official added.
Hospitals do not defend the extreme markups found in the Maharashtra audit. But they argue that regulation must account for the costs of maintaining supplies, including storage, inventory management, expiry write-offs and biomedical waste disposal. Delayed payments from insurers and government schemes also strain working capital, hospitals say.
Dr Chandrasekar Chikkamuniyappa, chairman and managing director of Bengaluru-based DHEE Hospitals—a 207-bed multi-super speciality tertiary care hospital—said the scale of some markups was indefensible, but that regulation should begin earlier in the supply chain.
“Where an IV set bought for Rs 11 is billed at Rs 325, there is nothing to defend. Margins of that order should be regulated, and the industry side—manufacturers, importers, distributors—must be regulated first, because that is where the price is born. A cap applied only at the last point of sale asks the hospital to absorb a distortion created upstream,” he said.
Delayed reimbursements, he added, are particularly hard for smaller hospitals to manage. He said hospitals with fewer than 200 beds deliver roughly 60 percent of India’s healthcare and hold over 90 percent of its beds.
“Cap the margin and cut the cost in the same breath, or the arithmetic simply does not close,” he said. He added that margin ceilings should be tiered by product category and procurement scale, rather than applied uniformly across hospitals.
ThePrint also reached out to major hospital chains, including Max, Apollo, Hinduja and Medanta, among others, with detailed questions on how they view regulating margins on devices and consumables, package-rate transparency, and the costs they bear. However, they did not respond.
The Association of Indian Medical Device Industry (AiMeD), which represents domestic device manufacturers, said it wants “fair trade margins for medical devices”. It argued that any price cap must cover every step in the supply chain, including importers.
Under earlier price caps on medical devices, importers could add their own profit margin before selling a device to a distributor, who could then add another margin.
Forum coordinator Rajiv Nath said importers should be treated like distributors. He explained that if a device costs Rs 100, including GST, a domestic manufacturer adding a 30 percent margin would take its MRP to about Rs 143. But for an imported device, the importer and distributor could each add 30 percent, pushing the final price to about Rs 204. This would make the imported device Rs 61 more expensive.
The industry body has sought the same rules for domestic and imported products. It has proposed a phased pilot covering syringes, catheters, cannulas, intraocular lenses, heart valves and pacemakers, followed by an assessment of its impact on patient costs, availability and hospitals.
“Our proposal focuses on the portion of the healthcare bill that is currently most opaque, namely device pricing. It is true that no single intervention can regulate every component of hospital billing,” he said in a written response to ThePrint.
“However, the inability to monitor every element of a healthcare bill should not become a reason to avoid addressing excessive mark-ups where they exist,” he added.
Why the cap stops at anti-cancer drugs
The government has intervened in device pricing before, through two mechanisms. In 2017, it fixed ceiling prices for coronary stents in February and knee implants in August. A ceiling price directly limits the maximum price at which a product can be sold.
Trade margin rationalisation, on the other hand, limits the margin added as a product moves through the supply chain. The National Pharmaceutical Pricing Authority (NPPA) used this approach for 42 anti-cancer drugs in February 2019, and then on 137 anti-cancer drugs in October 2026.
During the Covid pandemic, it capped trade margins at 70 percent on the price to distributor for six critical devices including oxygen concentrators, pulse oximeters, blood pressure monitors, nebulisers, digital thermometers and glucometers. Introduced in June-July 2021, the cap was extended until 30 June 2023.
The NPPA’s powers, however, are limited. Under the DPCO 2013, it can directly fix prices only for scheduled drugs and devices. For non-scheduled products, including the IV sets and catheters flagged by Maharashtra FDA, manufacturers set the initial price and the NPPA can only restrict annual increases to 10 percent.
The authority therefore cannot impose a uniform price ceiling on all hospital consumables under the existing framework.
The Parliamentary Standing Committee has sought a 20 percent cap on the gap between a medical device’s landing cost (what an importer pays to bring it into India, including the foreign price, insurance, customs duty and clearing charges) and its MRP. This would need either an amendment to the DPCO 2013, or the inclusion of specific products under trade margin rationalisation (TMR), the route the government used for 42 anti-cancer drugs in 2019 and six COVID-era devices in 2021.
(Edited by Viny Mishra)