What percentage of profiteering is ethical in healthcare?
Tough times bring best of human race. Pandemic exposes every deed of humans. I am referring to a small dispute between 2 or 3 parties which led to opening a Pandora's box of issues, facts, ethical angles, inevitable comparisons and business models without value addition.Primarily dispute is between a drug (COVID-19 test kit) importer who has exclusivity to import from China and two drug distributors in India. Drug in discussion is the one used in the detection of the virus which is threatening (COVID-19) entire human race. Before the story ,let me introduce the characters.
ICMR: Indian Council of Medical Research, leading Indian Govt agency battling COVID-19.
Drug: WONDFOSARS CoV-2 Antibody test kit
Drug Imported From: People’s Republic of China
Drug Importer: Matrix Labs=Respondent
Drug Distributor (for entire India) 1: Rare Metabolics Life Sciences Pvt Limited=Petitioner No 1
Drug Distributor 2: ANR= Petitioner No 2
Govt of Tamilnadu: Battling against COVID-19 in Indian state of Tamilnadu.
Intermediary dealer M/s Shan Biotech and Diagnostics : Drug distributors for Tamilnadu.
ICMR approached Chinese drug manufacturer to buy the corona diagnostic kit directly from them. However, they refused the same as Matrix Labs, based in Delhi, has the license as exclusive importer for India. ICMR then ordered initial 5 million units through a Delhi based drug distributor Rare Metabolics, being exclusive distributors for Matrix Labs. Problem started when Matrix labs insisted for 100% upfront payment from the distributors for the delivery of remaining kits of the order. Irked by this Rare Metabolites apparently being exclusive distributors moved Delhi high court.
Honorable court noticed interesting numbers. Importer acquired the drug at a price of 225INR per unit and additional 20 INR per unit as freight charges. From this cost of 245INR per unit, it reached the hands of drug distributor at the price of 400 INR/unit. Drug distributor sold them to ICMR at a price of 600 INR /unit. Needless to say, ICMR was to bear GST on this price. Honorable court observed these transactions account for huge markupwithout any value addition. Court capped the price at 400 INR (GST included) and opined larger public good prevails over unacceptably large private gains. Without court’s intervention 5 lakh unit order by ICMR would have costed INR 12.25 crores to importer and INR 30 crores (plus GST) to govt of India. Now it would cost INR 20 crore (including GST).
Two things were at stake: INR 10 crore gain at the time of pandemic and 130 crore Indian lives!
The issues are manifold. A general public perception we hear is that expenses in private healthcare segment is forbidding. It is evident that import of medical goods and their deployment without value addition in the country is one of the major causes of spiraling cost of healthcare. Private hospitals and private practitioners face the blame for this situation. It is necessary that whole healthcare ecosystem needs to be responsible and responsive for the prevailing scenario. Many pharmaceutical molecules, diagnostic kits, equipment like endoscopes, MRI, CT scanners, gamma cameras are imported.
Commercial healthcare enterprises have considerably contributed for efficient, affordable mechanisms in healthcare delivery. Private -public partnership model has been particularly successful in Indian scenario. Do we need to mark an ethical or a legal upper limit percentage for profiteering in health care value chain? In this ever-evolving dynamic situation clause of mandatory value addition may be introduced in entire range of goods and equipment in medical system.
Did the public notice the fact that these private firms ignored the lives of countrymen while focusing on their gains in crores of rupees? On the contrary doctors and hospitals have not increased their charges and on occasions have helped the government fight COVID-19 without private gains.
Public will take these facts into cognizance when they come across allegations of ‘exuberant’ rates charged by private doctors and hospitals. It is important to put reports in sections of media and statements of political leaders in ‘correct‘ perspective following the often-heard violent incidents against healthcare personnel and private establishments.
Now, deeper to the skin there could many possible reasons behind exorbitant pricing to a govt agency. Do logistics of kit distribution cost in crores? Is it simply the human greed? Any suspicion of kickbacks?
There are two additional interesting facts to observe at this stage. At the time of court hearing ICMR had not made any payment to the distributor. The second is that, quality and performance of the imported kits are altogether different issue. ICMR had to recall a few of the kits distributed to the states.
Learnings during the pandemic will surely be the guiding forces for better post COVID-19 healthcare ecosystem.
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