Capping of costs of health care is not far off


Dr KK Aggarwal    22 July 2018

There has been lot of talk about capping of costs of health care. And, sooner or later, this will become a reality.

There is going to be a capping of medical costs to provide affordable and also accessible health care. The govt. will bring out a policy to cap the treatment costs including hospitalization costs.

The only way the govt. can do this is by bringing the entire health services under the gambit of the Essential Commodities Act as ‘essential medical services’. The prices of any commodity can be controlled only under this Act by making them ‘essential’ so that they are available to the consumers at fair prices.

Declaring health as an ‘essential’ service will ultimately benefit all in the long run. The costs of drug will reduce, there will be no strikes…the net result would be better and more cost-effective care for all.

Currently, only the prices of those drugs or devices are fixed, which are included in the National List of Medicines (NLEM). This has been done under the provisions of the Drug (Price Control) Order 2013 framed under Section 3 of the Essential Commodities Act to fix the ceiling prices for drugs. The drugs and devices in the National List of Medicines (NLEM) are included under Schedule 1 of the DPCO 2013.

DPCO allows the National Pharmaceutical Pricing Authority (NPPA) to revise the list of essential medicines based on need and bring it under govt. price control. But, not all drugs brought under price control are essential medicines. The ceiling prices of even non-scheduled drugs and/or devices can be fixed under certain circumstances as defined in Para 19 of DPCO 2013: “Notwithstanding anything contained in this order, the Government may, in case of extra-ordinary circumstances, if it considers necessary so to do in public interest, fix the ceiling price or retail price of any Drug for such period, as it may deem fit and where the ceiling price or retail price of the drug is already fixed and notified, the Government may allow an increase or decrease in the ceiling price or the retail price, as the case may be, irrespective of annual wholesale price index for that year.” The govt. cited para 19 of DPCO to cap the high costs of knee implants.

If the drug or medical device is not already listed under schedule I, the said drug or device is first included in Schedule 1 as ‘essential’ and then their ceiling price is fixed. This is what happened when the govt. capped the prices of cardiac stents.

Health care in the United States is governed by Medicare and HMOs. Medicare is the national health insurance program run by the govt. Its counterpart in India can be said to be the ‘Ayushman Bharat National Health Protection Scheme’ or ‘Modicare’. But unlike Medicare, Ayushman Bharat does not cover senior citizens. Eventually, it will have to cover senior citizens also. HMOs or Health Maintenance Organizations can be likened to TPAs or Third Party Administrators. HMOs provide or arrange managed care for health insurance, individuals acting as a liaison with health care providers (hospitals, doctors) on a prepaid basis (Wikipedia).

The govt. is now trying to control prices via TPA, CGHS, state government health schemes and the Ayushman Bharat National Health Protection Scheme.

Just as the HMOs have controlled healthcare costs in the US, insurance companies in India too may control pricing in India.

Dr KK Aggarwal

Padma Shri Awardee

Vice President CMAAO

Group Editor-in-Chief IJCP Publications

President Heart Care Foundation of India

Immediate Past National President IMA


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