A social media post last month by Maharashtra’s drug regulator chief, Tukaram Mundhe, has drawn fresh attention to a long-standing problem in Indian healthcare: steep markups on medicines, consumables and even hospital services.

Mundhe’s post added momentum to a debate already under the Supreme Court’s scrutiny, after it emerged that cancer drugs were being sold at prices several times their procurement cost. The Centre has since decided to cap trade margins at 30 percent on select life-saving but expensive medication. But drug pricing is only one part of a larger argument about how healthcare costs are determined, and who ultimately bears them.

The layers of the markup

Patients pay more not only for medicines and consumables carrying inflated maximum retail prices, but also for hospital stays and services whose charges are often opaque. Activists point to several forces driving the rise: the influx of foreign and private capital into healthcare, and vertical consolidation, where the same company owns hospitals, pharmacies, diagnostic centres or insurance businesses.

They also flag a conflict of interest in hospitals using their dominant position to steer patients towards their own pharmacies and diagnostic services. The Supreme Court’s scrutiny of cancer drugs sold at multiples of their procurement cost has sharpened the focus on how maximum retail prices are set, and who pockets the gap between a medicine’s cost and the price a patient pays. These activists have urged the government to investigate and intervene in the sector’s profit structures.

Why regulation matters

The push to regulate healthcare profits could have significant implications. The private sector accounts for nearly 60 percent of in-patient care and 70 percent of outpatient care in India, meaning most patients experience these costs directly.

The challenge for policymakers is to curb excessive charges without compromising the availability of medicines and services. Striking that balance will decide whether getting well in India becomes more affordable, or whether the price of care keeps rising faster than patients can pay.