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Drug Price Caps Could Slash Hospital Profits by 4%, Threatening Essential Medicine Access
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CNBC TV18•30-09-2026, 15:55
Drug Price Caps Could Slash Hospital Profits by 4%, Threatening Essential Medicine Access
- •Proposed drug price caps could reduce hospital EBITDA by 1.5% to 4%, as medicines constitute 10% of hospital revenue with 30% blended margins, according to Kewal Handa, President of Samarth Life Sciences.
- •Healthcare executives like BS Ajaikumar of HCG warn that price caps could lead to shortages of essential medicines, particularly oncology drugs, which are already difficult to source profitably.
- •Ankit Thakker, CEO of Jupiter Life Line Hospitals, emphasizes that hospital profitability should be viewed at the overall business level, as medicines are just one component of comprehensive healthcare services.
- •Concerns were raised about patients buying medicines outside hospitals, leading to risks of spurious drugs and potential hospital liability.
- •A more targeted approach, such as government subsidies for expensive patented medicines under schemes like Ayushman Bharat, is suggested by Kewal Handa to address affordability without disrupting hospital and drugmaker economics.
Key Questions Answered
Proposed drug price caps could reduce hospital EBITDA by an estimated 1.5% to 3-4%, depending on the proportion of a hospital's medicine portfolio subjected to price controls.
BS Ajaikumar warned that lower prices could worsen the availability of essential medicines like oncology drugs, noting that some cancer medications are already difficult to source because current prices make them unprofitable to produce.
Hospital executives argue that comparing individual drug prices inside and outside hospitals ignores the broader economics of delivering comprehensive medical services, where medicines and consumables represent only part of the overall business.
