Earlier this year, the National Pharmaceutical Pricing Authority (NPPA) capped the prices of stents to end exploitative pricing and vulgar profiteering.
By Rajiv Nath
Earlier this year, the National Pharmaceutical Pricing Authority (NPPA) capped the prices of stents to end exploitative pricing and vulgar profiteering. Data collected by NPPA showed that cardiovascular stents were being sold by hospitals at extremely high markups (for example, 436% for bare metal stents and 654% in the case of drug eluting stents, on average). It is ironic that whereas, on one side, the whole world is applauding the Indian government’s huge step of price cap towards making essential medical products available across the country at affordable prices, on the other hand three US multinationals—Abbott, Boston Scientific and Medtronic—are trying to arm-twist the government to reverse its decision on price cap of medical devices in India. Thus creating fault lines between India and US relations. The first bogey raised by these importer MNCs was that their products demanded differential higher pricing when it was being decided that stents are an essential medicine and price capping was inevitable. However, they were unable to demonstrate superiority and clinical benefits to patients between their own brands and other equivalent Indian brands to the National List of Essential Medicines (NLEM) committee appointed by the ministry of health & family welfare.
Post price caps, the importers protested against the unreasonably low price caps and claimed that this action would be harmful to patients as this move would deny access to innovative medical devices, hurt manufacturing in India and discourage FDI in the medical devices sector. This was blatant misinformation as both NPPA and the Indian Medical Association (IMA) had clearly spelled out that differential pricing for new range of stents could be considered in the future, subject to claims of superior technology to be backed by clinical data. The bogey went bust when Abbott Vascular was asked by the US Food and Drug Administration (USFDA), EU regulators, Therapeutic Goods Administration of Australia and also by the Drug Controller General of India to withdraw its Absorb bioresorbable stents on charges of public safety concerns, since the Absorb had higher side-effects for patients in terms of stent thrombosis globally.
The price cap has resulted in simultaneously boosting domestic medical devices manufacturing, increasing the market size due to higher affordable access. When they realised that the government was being firm and relentless, it was shocking to see how US MNCs were lobbying with the United States Trade Representative for using threat of access to the US market by Indian exporters to suspend or withdraw Indian exporters’ import duty benefits under the Generalised System of Preferences (GSP) to arm-twist the Indian government in creating differential pricing for USFDA-approved stents. The fact is that it’s the Indian medical device manufacturers who face discrimination in India and in the US. Every country encourages indigenous products as they would contribute to low dependence on imported products, but Indian stent manufacturers are challenged in their own country. There were many government tenders where Indian companies couldn’t participate as the same had unfair specifications demanding a USFDA-approved product.
The US has TBTs—technical barriers to trade—under USFDA, but these are near non-existent in India for US device companies. Indian manufacturers are barred from selling to the US government-funded health programmes and defence, as India is not listed in their TAA (Trade Agreements Act). India medical device manufacturers are also discriminated against as the US has the Buy American policy. No such government support exists in India for domestic medical device manufacturers. USFDA has increased registration charges by 33% to 126% with effect from 2018. This makes it very expensive for Indian manufacturers/exporters to register for the US as applicable fees for Section 510(k) registration is $10,566 for each product, compared to $4,690 each in 2017, and the premarket approval for high-risk device is at $310,764, up from $234,495. So, a manufacturer would need to be exporting and selling at least 50 to 100 times these values to justify absorbing such high costs.
Now, the question is, should India bow to such threats by a group of MNCs when the US itself is suffering from very high healthcare costs—which are three times that of the UK? The Indian government must uphold the constitutional obligation on right to health and reject any pressure to review reasonable price controls on medical devices. Also, reasonable price controls should be urgently expanded to cover 19 additional categories of medical devices classified as drugs. In fact, both the government and the Competition Commission of India (CCI) must expedite investigation on the reported anticompetitive practices in healthcare. The US government must also investigate the unethical trade practices that US medical device companies indulge in in India. Such misinformation has the potential to harm the good relations between the world’s two largest democracies. Clearly, if they have to sell in India, they have to respect Indian laws and regulations; same as Indian companies do when they sell in the EU, the US and other countries.