HLL Lifecare, the public sector company that acts as the government’s central procurement agency for personal protective equipment (PPE) for healthcare workers is charging mark-ups of up to 50% on components of the protective gear it is providing to government hospitals. With HLL having floated tenders for 10 lakh coveralls and 40 lakh N95 masks recently, that would amount to almost Rs 22 crore as mark-up on coveralls alone and Rs 8 crore on N-95 masks.
Sources in HLL said that the mark-up was to account for transportation costs, which was high especially in the period of lockdown when it was difficult to find truckers willing to transport the kits. HLL’s letters to institutions states that the rate includes cost of road transport of the items.
In some cases, HLL might also need to send kit by airfreight, which would cost more, said HLL sources. However, HLL letters to institutions state that if airfreight was required that would be “charged extra” to the institution placing the order.
HLL has also told institutions that they cannot order most components of the PPE kits separately, N95 masks being an exception. Thus institutions could get stand-alone consignments of N95 masks, which have the highest mark-up of 50%.
The letters also warns that since “there is acute shortage of the items in the market”, the price is highly volatile. If the purchase price changes, accordingly the final price will change, it added.
Many PPE kit component manufacturers, who are bearing the cost of transporting the finished items of PPE kits to collection centres identified by HLL, expressed surprise at the high mark-ups by HLL. Their contracts state that the price they are being paid by HLL includes transportation cost to collection centres. This has raised questions about how a public sector company can levy such high mark-ups on supplying to government institutions during a national health crisis. HLL has been under a cloud over recent controversies about lack of transparency in their procurement process.
“It is indefensible that the public sector company is making a high profit on supplying government health institutions during a national health emergency,” said Malini Aisola of All India Drug Action Network (AIDAN).
Despite the high mark-ups, doctors in hospitals struggling to get PPE said that HLL prices are possible only because it is buying in such huge volumes, as the price of an N95 mask has shot up to more than Rs 200 in the open market and even at these prices it was difficult to find any.