Regulation Mooted to Stop Hospitals from Forcing Patients to Buy Drugs from In-House Pharmacies

It’s an open secret that super specialty hospitals don’t allow their inpatients to buy products/medicines from outside pharmacies and thereby ensure patronage of only in-house pharmacies. This situation of in-house pharmacies of super specialty hospitals being completely insulated from competition may undergo a change if the Competition Commission of India’s (CCI) latest Policy Note on affordable healthcare is anything to go by. In the Policy Note on Making Markets Work for Affordable Healthcare— brought out by CCI, the competition regulator has called for regulation that mandates hospitals to allow consumers to buy standardized consumables from the open market.

Patient data portability

It also stressed the need for a regulatory framework that ensures and governs portability of patient data, treatment record, diagnostic reports between hospitals. The absence of regulatory framework on portability of patient data acts as a constraint for patients in switching from one hospital to another and creates a lock-in effect. “Portability of patient data can help ensure that a patient is no longer locked into the data silos and do not bear additional cost for switching medical services and that doctors/hospitals can take timely action to patient data,” said the Policy Note.

The Note, which focuses on several competition issues affecting the healthcare and pharmaceutical sector, is being shared with the Corporate Affairs Ministry, NITI Aayog, Health Ministry and Department of Pharmaceuticals. The CCI’s Policy Note is an outcome of the deliberations of a technical workshop on Competition Issues in the Healthcare and Pharmaceutical Sector in India, organized in August. The Policy Note also highlights two major issues that affect the healthcare sector and thus warrant policy response — (i) shortage of healthcare professionals and (ii) inadequacy in health insurance.

High trade margins

One major factor that contributes to high drug prices in the country is the unreasonably high trade margins, says the Note. The high trade margins are a form of incentive and an indirect marketing tool employed by drug companies. Self-regulation by trade associations also contributes to high margins as these associations control the entire drug distribution system in a manner that reduces competition. Electronic trading of drugs, with appropriate regulatory safeguards, could be another potent instrument for bringing in transparency and spurring price competition among platforms and among retailers, as has been witnessed in other product segments, the Policy Note suggested. – The Hindu BusinessLine