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Affordable medical devices require much more than merely capping their prices

New Delhi: The issue of capping the prices of critical medical devices has opened a fresh can of worms. Though the capping of prices of critical medical devices has been debated for many years but it kept suffocating between the crawling files every now and then. With government changing hands, the long standing demand, apparently, has got another lease of life with the matter once again out of attic and making way to the desk of National Pharmaceutical Pricing Authority (NPPA).

But the debate this time around is not only restricted to fixing the maximum retail price of the critical devices, but it brings along with it a plethora of demands raised by every stakeholder directly or indirectly in the domain of medical devices.

While, the medical device industry experts favour a flexible price capping regime by taking the domestic industry into confidence, at the first place they have questioned the aptitude of the authority that implements it. The industry reiterates that their problems should be assessed separately from the pharmaceutical industry, as the nature of both the industries and the area they work in are poles apart. Moreover, the price capping will solve only one of the multitudes of problems the ailing industry is dealing with.

Likewise, senior doctors remain compassionate to the needs of patients and strongly favour capping of prices. They suggest that only an indigenous production of the medical devices is the lasting solution to be totally self-sufficient in healthcare sector besides saving crucial domestic cash outflow by means of using country made products.

Amidst the divergent views, the NPPA has assured that it is studying the matter and charting a new road map would be possible only after a balanced assessment of the status quo is complete.

A senior official of the NPPA, on condition of anonymity, told India Medical Times, “We are only studying the issue at present. We are analysing and comparing the prices of imported and domestic devices and their actual cost by the industries. But the fact remains that there is a huge mark-up in the prices of the medical devices which makes a consumer pay twice or thrice the actual amount. We are trying to assess what is contributing to such sky rocketed prices and what steps need to be taken. We would be able to comment further after the study is done and we have unequivocal results in hand.”

Representing the common view of the medical device industry, Association of Indian Medical Device Industry (AIMED) opines that some level of controls and disincentives to increase the MRP (maximum retail price) are required but not by the way of NPPA or DPCO (Drugs Prices Control Order). It believes that before deciding on a fixed price regime, the government should first study the medical devices industry labyrinth economics – right from manufacturing, till it reaches the final consumer, to protect the interest of domestic manufacturers. As India is primarily a consumer and not the manufacturer of medical devices, the domestic manufacturers should be treated fairly.

Rajiv Nath, forum coordinator, AIMED, told India Medical Times, “Pricing is a sensitive topic with a very complex and daunting regulatory mechanism for pharmaceuticals which is as yet unfamiliar to us from the consumer engineering business of medical devices. It is one of the most important factors stunting the growth of our domestic industry. There are many factors that together play a role in deciding the prices. Some of our products go through two stages before reaching consumers and some even through five stages. Distribution and warehousing costs, margins, freight and interim taxes are added at each stage. Varying margins are needed to compensate costs which vary from metropolitan cities to rural areas as well as varying payment terms as manufacturers need to satisfy the need of retailers on highest cost factor.”

Nath further said, “The imported medical devices should carry retail price on unit pack too and not only on shelf box to discourage corporate hospitals and chemists shops from selling at any price they wished that creates artificial inflation. There should be stringent enforcement at ports of imports as is done for drugs by the CDSCO as it is easier to control this at few ports than at thousands of hospitals and retail outlets. We recommend the Ministry of Consumer Affairs and the Ministry of Finance should consider bringing in a disincentive mechanism that discourages retail price to be increased by way of a tax mechanism and encourages lowering it by the manufacturer on voluntary basis to arrive at a self-levelling point.”

“The cost of traders get inflated at times by an unreasonably high rental or lease agreements with corporate hospitals and high rentals in malls and premium shopping complexes. Another factor to be considered is the volume of sale and turnaround of stocks and shelf life of slow moving items which may take years to sell compared to fast moving items. The onus of putting MRP on manufactures should be reviewed and shifted to retailers as is the usual practice by all market driven economies,” he added.

Though, India has made an exponential progress in areas like automobile and electronic market but critical medical devices like stents and pacemakers still burn a hole in the pocket of an average earning Indian. The medical device industry plaguing with various problems indeed needs a shot, but the state of affairs gets sorrier when doctors extensively recommend foreign devices even when their domestic counterparts are available.

Dr H K Chopra, chief cardiologist, Moolchand Medcity, New Delhi and president of Cardiological Society of India (CSI), told India Medical Times, “Capping the prices of medical devices will help but I strongly believe that devices like stents, pacemakers should be encouraged to be produced indigenously as an intrinsic part of the ‘Make in India’ vision. Critical devices are very expensive and I, as a cardiologist, see my patients going through a great deal to afford them. There is a cynicism, even among doctors, in India that imported devices are safe and advanced but we have a credible data to prove that stents of two domestic companies are as competent, safe and efficient as internationally manufactured stents. The data on safety and efficiency of country made stents is available with the CSI and we are soon going to deliver a talk to encourage the healthcare professionals to swear by the country made products. We all need to change the mindset, undertake high quality research and analytical studies by trained investigators to substantiate the efficiency of Indian devices.”

Dr Pradeep Chowbey, joint managing director, chief of surgery and director, Max Institute of Minimal Access, Metabolic and Bariatric Surgery (MAMBS) at Max Healthcare Institute, New Delhi, told India Medical Times, “Regulation of prices should be in place but it should be within flexible parameters and government should support the Indian medical devices industry. Mr Modi (Prime Minister Narendra Modi) talks about ‘Make in India’, what could be the better time for our industries to push their demands to the PMO (Prime Minister’s Office)?”

As the medical device market expands, the young entrants in the medical device innovation and manufacturing also give the thumbs up to the capping. They are optimist that if the indigenous manufacturers get a level playing field, the move will reap benefits in the longer run. However, only an early implementation is what this burgeoning industry demands.

Aanan Khurma, co-founder, Observe Design Inc, New Delhi told India Medical Times, “As a first generation medical device entrepreneur, I feel that the idea of regulating the prices of critical medical devices will have little effect on early stage medical devices entrepreneurs in the country. If anything, this will create a slightly favourable situation for entrepreneurs like us. Firstly, the capping of prices will remain limited to critical medical devices – devices that are well established. Secondly, India as a new entrant into the field of medical device innovation cannot compete against foreign companies on the quality front, at least in this decade, but we are experienced in bringing down the prices. If implemented in earnest, price capping may help to create fair opportunities for local manufacturers of critical medical devices.”

According to experts, one also cannot ignore the fact that for this sunrise as well as critical industry to progress, it is not only important that the devices are no longer regulated as drugs or notified as drugs but the policies should have a consistent application with synchronization between different authorities to prevent confusion and lack of investment in this sector.

Nath pointed out, “We think that as medical devices are not drugs, so the NPPA and DPCO should not be applicable for capping the prices of medical devices. Instead the Department of Consumer Affairs and the Department of Revenue should drive this initiative of safeguarding all consumers. There are 14+8 medical devices being incorrectly and incompletely regulated as drugs. Once the new law or amendments to regulate medical devices differently from drugs are passed, these devices will not be regulated as drugs in any case. Medical devices are not pharmaceutical drugs so they should not fall under the jurisdiction of NPPA.”

Khurma echoed, “Although the price capping of medical devices is proposed to be via a separate pricing policy, there will be clear overlaps between the policies for price regulation of devices and drugs as NPPA is the brain behind both. It still remains to be seen how this idea will help to redefine the medical devices industry separately from drugs, as the officials are claiming.”

Nath added, “We would recommend an inter ministry group of stakeholders ministries, including Dept of Commerce, Dept of Revenue, Dept of Consumer Affairs, Dept of Health and Family Welfare, Dept of Industrial Policy and Promotion, are a part of the review and brain storming exercise for the price capping review related to medical devices and consumer protection along with representatives from consumer groups, corporate hospitals, retail chain and traders associations to enable a win-win for all.”

Today, though we haven’t made any big strides as far as the large scale manufacturing of medical devices is concerned but we have made an incredible progress on both the innovation and small scale manufacturing front. Not that we don’t have local critical device manufacturers here, but the faith in imported devices is so deep rooted that the rapidly increasing industry is not only facing a stiff competition from the foreign products but having a hard time creating a niche for indigenous products in the market. Yes, we also have a whole brigade of medical innovators too, but can we think of winning the battle by arming them with age-old rifles when our competitors are using ultra-modern weapons?

Of course, the scenario is much different now than it was a decade ago. We have intellect, we have resources and most important we have the resolve of medical device manufacturers and innovators to tap right opportunities and present India on the international stage. Keeping this broader vision in mind, price capping should be treated only as a warm up to the marathon we wish to undertake – the ‘Make in India’ marathon.

by Vidhi Rathee

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