The Catch-22 the Centre must be finding itself in now may perhaps finally show the government what a bad idea price-capping is. The National Pharmaceutical Pricing Authority (NPPA) had capped the prices of coronary stents in February this year to spare patients what it perceived as unduly high prices charged for the device. But, soon enough, it had to face the unintended consequence of cheap Chinese stents starting make their presence felt in the market. The department of industrial policy and promotion had flagged this to the PMO—saying that this may “adversely affect efficacy of treatment”—and the PMO, in turn, asked the health ministry’s expert panel to study if the latest generation of biodegradable stents possess “futuristic innovations”, and could thus be classified under a separate category from the two categories subject to the cap and get a reprieve from price capping. Unfortunately, as per The Indian Express, the expert panel has concluded that “no evidence or data” exists for the biodegradable stents to merit separate classification and be kept out of price-capping. MNC stent-makers who had been holding on to this last hope to sidestep price-capping have now started requesting NPPA to allow them to withdraw their latest-generation products from the Indian market.
Pharma companies incur considerable R&D expenditure in the development of new drugs and devices—taking pricing freedom away from them thus becomes a way to disincentivise research. The worst sufferers of pharma/medical device companies exiting the Indian market or pulling out products will be patients as they will no longer be able to access the latest generation products, whether or not they are labelled “futuristic innovations”. Restricting free market operations is not good for any economy as it erodes business confidence in policy though there may be short-run gains from populism. While The Indian Express report quotes a domestic stent-maker heading an industry association to say that price capping has allowed domestic players to grow their market share, bear in mind the market share of the Chinese has grown too.