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CCI orders investigation into pricing practices of super-specialty hospitals in and around Delhi

Joe C Mathew     September 6, 2018

Anti-competition watch dog Competition Commission of India (CCI) has asked its Director General (DG) to conduct an investigation into the pricing pattern of super-specialty hospitals in and around Delhi. The directive is the fallout of an ongoing case, where a complaint was registered against medical device maker Becton Dickinson India (P) Ltd and Max Super Speciality Hospital, Patparganj, against alleged contravention of Section 3 and 4 of the Competition Act that deals with anti-competitive agreements and abuse of dominant position.

While CCI sought more information on the investigation report submitted by the DG on the particular case, it also widened the scope of investigation to include more products and services offered to in-patients by all other hospitals in the region. This was done as DG's report on the specific case flagged the existence of huge profit margins that are being earned by sale of products to the locked-in in-patients, in private super specialty hospitals in the National Capital Region of Delhi.

"Investigation will focus on the products sold by the super specialty hospitals to their in-patients, which are not required on an urgent basis for any medical procedure/intervention or which do not involve any high degree of quality issue from the medical procedure point of view; and for the purchase of which the patients have the time and scope to exercise their rational choice to purchase such products from open market, where such products may be available at lower rates," the commission stated. It also added that the commission aims to prevent practices having adverse effect on competition in the tertiary healthcare sector.

Incidentally, the DG investigation on the Max-Bector Dickinson case did not find any evidence of anti-competitive agreements with the two entities. The commission, in its August 31 order, notes that the allegation of the informant that Max in collusion with the medical device maker had printed a higher MRP on the disposable syringes, to be sold in the in-house pharmacy of the hospital in order to cheat the patients, has not been substantiated in DG's investigation report.

"It has been reported by the DG that both the parties have not entered into any exclusive agreement with respect to supply of disposable syringes and, according to the DG,  have not contravened any of the provisions of Section 3(3) of the Act," the CCI Order said.

"It is common knowledge that this practice of exploitative pricing from the locked-in patients is followed with impunity by most of the hospitals. Though the information in the present matter was received with respect to the alleged abusive conduct of Max Super Speciality Hospital only in the sale of syringes, the scope of investigation may be broadened by the DG by including other super speciality hospitals who are indulging in the aforesaid practices not only with respect to syringes but also with respect to other products such as medicines, surgical tools etc," the order says.

The investigation report has to be submitted within 45 days.

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