On May 21, after a decade-long wait, the Competition Commission of India (CCI) acquitted 12 Delhi-based super-specialty hospitals of charges that they charged excessive health care charges to patients. In what may prove to be a historic missed opportunity, the CCI effectively refused to intervene saying that regulation of health care pricing falls within the domain of the government and the Commission itself is not a price regulator. The decision is not only legally dubious, but also sets a disturbing precedent, where the CCI appears to have ignored its preamble mandate to protect consumers in India’s $372 billion healthcare industry.CCI is India’s only all-sector economic regulator with the authority to correct abusive pricing and business practices of companies with dominant market power under Section 4 of the Competition Act. The regulator can impose financial penalties up to 10% of a company’s global turnover for the last three financial years, besides imposing corrective behavior measures including cease and desist orders.
Price of syringe ranging from hospital billing
The original complaint, filed in 2015, had alleged that Max Super Specialty Hospital had colluded with disposable syringe manufacturers to raise the retail prices of syringes sold through its in-house pharmacy far above the prices of similar products available in the open market. Although the CCI ultimately found no evidence of collusion between Max and syringe manufacturer Becton Dickinson, the investigation conducted by the Commission’s Director General (DG) led to a comprehensive investigation into the pricing practices of major private hospitals in Delhi.
The probe was expanded to examine charges on medicines, consumables and diagnostic services charged from patients admitted in 12 leading private hospitals, including six hospitals of the Max group, two of the Fortis group, one run by Apollo Hospitals, as well as Sir Ganga Ram Hospital, Batra Hospital and St. Stephen’s Hospital. It is noteworthy that Apollo, Fortis and Max are among the largest corporate players in India’s private healthcare sector.
What the pricing data showed
While the CCI was probing the billing practices of major private hospitals in Delhi in 2018, a contemporaneous study by the National Pharmaceutical Pricing Authority (NPPA) revealed the scale of the problem. The study found that four top private hospitals in Delhi were earning margins of up to 1,737% on medicines, consumables and diagnostic services, as admitted patients were required to purchase these products and services exclusively through in-house pharmacies.According to NPPA, such charges constitute approximately 46% of the patient’s final hospital bill. The Association of Indian Medical Devices (AIMED), a premier organization of 300 device manufacturers, has alleged that Indian patients have to pay up to 25 times the factory or import cost when they seek multiple medical devices through private hospitals.Following a three-year investigation between 2018 and 2021, the Director General identified several pricing practices in the hospitals under investigation, except St. Stephen’s Hospital. For example, the DG’s investigation found that for some tests like reticulocyte count and BACT/Alert aerobic culture test, Sir Ganga Ram Hospital charged 243% and 238% more, respectively. Many ultrasound and X-ray procedures were marked up between 50% and 200% above prevailing market rates.
In 2018 the cost of a knee X-ray procedure at a hospital was found to be 206% higher than comparable standalone diagnostic centres, while the price of an upper abdominal ultrasound was 78% higher. The Director General noted similar concerns in other inspected hospitals.
Problem with CCI’s benchmark
Despite these findings, CCI held that such pricing does not constitute excessive or unfair conduct. It was argued that comparisons with standalone pharmacies and laboratories were unfair because hospital-based services operate under a different business model. However, this legal reasoning raises concerns. The central issue is not structural equity across different providers, but rather whether patients are being charged unfair premiums in a captive setting.By limiting comparisons to similarly structured in-house systems, where similar pricing practices may prevail, benchmarks risk becoming circular and self-serving.
captive patient problem
The economics of the region support this concern. Hospitals operate in two interconnected markets: primary health services and a secondary market that includes drugs, equipment, consumables, and diagnostics. In practice, inpatients have limited or no choice but to purchase these items through hospital-controlled channels, creating a structural “lock-in” that weakens price competition in the secondary market.The DG’s findings therefore pointed to potential abuse of market power in this captive ecosystem, amounting to exploitative abuse under Indian competition law.
Can patients really make informed choices?
However, the CCI rejected this approach, arguing that patients are provided pre-admission estimates and can make informed choices. There was also no evidence that patients are unable to estimate overall treatment costs at the time of admission. This assumption becomes uneasy with the available evidence. A 2023 study by the Public Health Foundation of India found that 73% of patients were unable to understand their hospital bills.Common billing terms such as “consumable” and “disposable” often obscure the actual charge, limiting pricing transparency. Recognizing these concerns, Supreme Court Urged state governments to address high prices in private hospitals and curb compulsory domestic procurement of medicines and equipment in 2025.The CCI also said that patients are free to move to another hospital if they find the cost of domestic medicines or medical equipment high. However, this argument appears to ignore the practical realities facing patients and their families. In emergency or specialty care situations, where medical decisions are highly heterogeneous and time-sensitive, the assumption that patients can exercise the same informed economic choice as consumers in normal markets is highly controversial.
Price control is not the same as competition enforcement
Finally, the CCI justified its decision by pointing to existing government regulation of pharmaceutical and medical device pricing and saying that it is not a price regulator. However, it combines price controls with competition enforcement of excessive pricing.First, while private hospitals in India operate under licenses issued by state health departments, are registered with medical councils, and can seek accreditation from national health care quality bodies, none of these frameworks meaningfully regulate hospital billing structures or mark-ups on in-house services.
India’s weak transparency system
Under the Clinical Establishments (Registration and Regulation) Act 2010 (CEA) hospitals are required to display rates for procedures and medicines, maintain standardized records and submit to periodic inspections. This is theoretically comparable to US hospital price transparency rules, under which hospitals are legally required to publish standard charges, negotiated rates, and discounted cash prices for goods and services, making excessive mark-ups more visible to consumers and insurers.However, in India, even after 16 years of the adoption of the CEA, many states have not adopted the Act. The Act also has limited powers of enforcement. Indian hospitals that violate these transparency rules face minimal penalties. Furthermore, the Act does not provide a clear statutory mechanism for patients to seek redressal of medical overbilling through consumer courts.The National Drug Pricing Authority of India controls the prices of essential medicines through the Drug Price Control Order, which is why a strip of paracetamol in India costs Rs 20 instead of Rs 200. However, the NPPA’s mandate does not extend to how hospitals mark their domestic sales of drugs, devices or diagnostic services.
CCI should have asked this question
The CCI was not being asked to prescribe or fix prices for drugs, devices or clinical services. Rather, its mandate was to assess whether major hospitals have abused their market power through unfair pricing practices, an investigation that falls entirely within the ambit of Indian competition law. At its core, this decision is not just about pricing disputes, but about the limits of the regulatory imagination in a market where patients have little real choice. When power meets opaqueness, results matter. If competition law cannot protect captive consumers in health care, its promise of consumer welfare risks ringing hollow.Avirup Bose is Professor of Competition Law and Policy at Jindal Global Law School. He is a former expert advisor to the Competition Commission of India. Opinions are personal.
