Despite price caps hospitals are paying hefty sums to meet daily oxygen needs

An oxygen cylinder sits next to a bed in a makeshift ward at an emergency Covid-19 care center set up in the Shehnai Banquet Hall at the Lok Nayak Jai Prakash Hospital Annexe in Delhi on 24 June 2020. T Narayan/Bloomberg/ Getty Images
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22 October, 2020

Hospitals across the country are spending up to three times more on oxygen compared to before the COVID-19 pandemic. The National Pharmaceutical Pricing Authority, an office attached to the department of pharmaceuticals under the ministry of chemicals and fertiliser which regulates the prices of drugs, lowered the ceiling price for medical oxygen in late September. This move was in response to the surge in demand during the epidemic in India. However, doctors, hospitals, manufacturers and dealers of medical oxygen said that the overall cost has skyrocketed due to a surge in transport and labour charges.

Swapan Sood, the director of Patel Hospital, a 30-bedded COVID-19 care-centre in Punjab’s Jalandhar city, said in early October that he paid around Rs 350 for a jumbo oxygen cylinder measuring seven cubic metres, excluding the cost of transportation. “Before the pandemic we used to pay Rs 165 per cylinder, and this was the cost inclusive of everything, plus the vendors delivered these at our doorstep,” he said. Now, Sood’s hospital has to pick cylinders up from their vendor, and pay Rs 1,250 to transport a batch of 25 jumbo cylinders. “Regardless of the NPPA order, the cost has remained upwards of Rs 400 per jumbo cylinder including transportation cost and goods and services taxes,” Sood said.

In March 2020, the NPPA released a scheduled revision of ceiling prices for essential medicines in which it fixed the price of oxygen at Rs 17.49 per cubic metre. This cost ceiling did not make a distinction between liquid oxygen and oxygen gas. As the epidemic spread, the ministry of health and family welfare took note of news reports of spikes in oxygen prices and of black marketeering. On 23 September, it wrote a letter  directing  by the NPPA to further regulate oxygen prices. Three days later, the NPPA capped the ex-factory price of liquid oxygen at Rs 15.22 per cubic metre and that of oxygen cylinders at Rs 25.71 per cubic metre. The ex-factory price is the selling price of a product at the manufacturer’s end. The NPPA’s notification said that these price caps will be in effect for six months. The NPPA also said that this cost ceiling is exclusive of GST and “subject to transportation cost fixation at state level.” 

Several doctors said that the September price cap has been ineffective. “The only difference this NPPA order has made is that now the supplier I purchase oxygen from has divided the bill into the price of oxygen and overhead charges,” Amit Thadhani, the managing director of Niramaya Hospital, a 30-bedded COVID-19 centre in Maharashtra’s Navi Mumbai city, said. Thadhani said he paid Rs 590 per jumbo cylinder since oxygen demand surged at the start of the epidemic. He paid an only slightly smaller amount of Rs 525 after the new price cap came into effect on 26 September.