Injurious to health: Capping hospital profit margins is counter-productive

Will the retail price be the benchmark when it involves a margin that the manufacturer is unlikely to divulge?

On the face of it, the Delhi government’s proposal to limit hospitals’ profits margins on drugs, consumables and devices appears to be a sensible way to protect consumers from the venality of the medical industry. The policy, recommended by a nine-member panel set up by Chief Minister Arvind Kejriwal in December last year, proposes to cap prices at 50 per cent of the procurement price or manufacturing cost, whichever is lower, and covers a range of “package” prices for various procedures. These recommendations can be seen as a reaction to the public outrage following the death of a child last