Plea in Karnataka HC against direction to hospitals to disclose procurement price of medicines on bills

The Karnataka High Court on Thursday issued notice to the Central and State governments on a plea challenging a Karnataka government circular requiring hospitals and healthcare institutions to disclose the base procurement prices of medicines alongside the final price charged on patient bills from November 1.

The petition has been filed by the Private Hospitals and Nursing Homes Association, Pristine Hospitals and Research Centre Private Limited, and a doctor, Dr Halagere Mallikarjuna Prasanna.

Justice CM Poonacha has sought a response from the Union Ministry of Health and Family Welfare, the Karnataka Department of Health and Family Welfare, and the Food Safety and Drug Administration in Karnataka.

The petitioners have challenged an October 1 circular issued by the Commissioner of Food Safety and Drug Administration in Karnataka.

The circular directed hospitals and healthcare institutions to disclose the actual procurement or landing price, MRP and the price charged to patients for medicines, medical devices and consumables on itemised bills from November 1.

The circular was issued citing a need for greater price transparency and protection against unfair mark-ups.

It also mandates the display of notices at billing counters and pharmacies, publication of relevant information on websites, and preservation of purchase invoices and billing records for at least three years.

The directive further provides for monitoring and enforcement by district health and drug control authorities.

The petitioners, however, have contended that the circular was issued without statutory authority and imposes a disclosure obligation that is not contemplated under the existing legal framework governing medicines, medical devices and healthcare establishments.

The petitioners argue that while the State's drug licensing authority is empowered to regulate matters under the Drugs and Cosmetics Act, 1940, and the Drugs Rules, 1945, these provisions do not authorise it to mandate disclosure of procurement costs on patient bills.

They further submit that medicine pricing is governed by the Drugs (Prices Control) Order, 2013, administered by the National Pharmaceutical Pricing Authority (NPPA), which regulates specified pricing parameters, including the MRP, but does not require the disclosure of the landing or base price to patients.

The petition also contends that Karnataka has not adopted the Clinical Establishments (Registration and Regulation) Act, 2010, under Article 252 of the Constitution. Healthcare establishments in the State are instead regulated under the Karnataka Private Medical Establishments Act, 2007, which, according to the petitioners, does not prescribe any obligation to disclose the base prices of medicines and equipment on patient bills.

The petitioners have also questioned the circular's reliance on the Legal Metrology Act and hospital-billing standards issued by the Bureau of Indian Standards, arguing that neither provides a statutory basis for compelling hospitals to disclose procurement costs to patients.

According to the petition, procurement prices vary depending on suppliers, purchase quantities, discounts, rebates, credit arrangements and other commercial terms. Compulsory disclosure of such information, the petitioners argue, could expose confidential commercial arrangements and cause confusion among patients when procurement prices differ across establishments.

The petitioners have also raised concerns about the short implementation period, stating that compliance would require changes to billing software, accounting systems, procurement records and administrative workflows across healthcare establishments.

They further allege that the circular was issued without adequate consultation with hospitals, nursing homes, pharmacies or other stakeholders, despite the operational and financial implications of the proposed requirements.

The petition states that the Federation of Healthcare Associations of Karnataka submitted representations to the State government on October 13 and 14, seeking withdrawal of the circular. However, subsequent representations and meetings with government officials did not result in its withdrawal, prompting the petitioners to move the High Court seeking the quashing of the circular.

The petitioners are being represented by advocates Lomesh Kiran N, Twinkle J Chadwa, Prashashti Bhat, Ajay TK and Prajwal V, instructed by a team from Cyril Amarchand Mangaldas.