About a dozen chief executives on the panel and all of them were jittery. They weighed their words carefully and in a measured, patient tone answered a volley of questions to balance the popular opinion. They were neither evil nor irrational.
On 16 August, the drug regulator expanded its control of the medical device industry and capped prices for orthopaedic knee implants, too.
The fear of the advancing price cap tsunami has gripped the medical device manufacturers. But who should be worried more?
The scale of worry should tip towards the Indian patient. It isn’t evident right now. But soon, it will be.
Two multinationals, Abbott and Medtronic, asked the regulator in April to let them withdraw their ‘next generation’ stents from the Indian market, as these had become commercially unviable at capped prices.
Abbott, Medtronic and Boston Scientific, all of whom are headquartered in the US, have nearly 70 percent of the Indian market share. Even local manufacturers, who constitute the remaining 30 percent have something to lose – their incentive to innovate.
Mumbai-based Meril Lifesciences, which received the drug controller’s approval for a new kind of stent after a fortnight of price capping, is unable to sell its new product in the Indian market at capped prices. The company has not put a price on its innovation yet because India is no longer a market for it.
Just as in stents, advanced and expensive knee implants will disappear from the market. The companies – Stryker and Smith & Nephew – that brought robotics for orthopedic knee surgeries as recently as last month to India, do not see India as the country for advanced products.
But the strategy is changing.
Price control in India, a policy move applied to controlling prices of essential drugs which are largely produced in India, when applied to devices is against patients’ interest.
The price cap slapped on stents for the first time in February has shown that a reduction in the price of an implant does not result in affordable healthcare and pushes the latest product away from the patient.
The trend, for now, is leaving the patient weaker.
On 13 February, when the regulator fixed the ceiling price for stents, it noted three reasons – high margins, high incidence of coronary artery disease and information asymmetry between the patient and doctors.
The government order indeed cut down the margins, but did the crackdown help with the latter two?
The regulator has not made public any data to show if the sale of stents increased, which would imply increased access.
Moreover, the hospital chain has brought down the price of angioplasty procedure only marginally. “Doctor consultation, other equipment, hospitality and other charges that the hospital can control with an aim to profit, it does one way or another,” he added. He doesn’t want to be identified.
At Daksham, a Delhi-based Indian Alliance of Patients Groups, CEO and co-founder Ratna Devi has been taking feedback from cardiologists. She believes that the quality of patient care is subjective.
The cost of training surgeons and innovation are major costs incurred by a medical device company, which affects the price, argued Mtai, in a press release on 9 August.
With regard to new technology, orthopedic surgeon Dr Harpal Singh at 1300-bedded Dayanand Medical College & Hospital, Ludhiana, compares primary (first surgery) orthopedic knee implant – which ranges from Rs 55,000 to about Rs 2,50,000 and is now capped at Rs 76,600 – to cars on Indian roads.
“It was developed by and used in private sector, which is where growth was expected. Till date, government hospitals do not buy even 10 percent of knee implants sold in the Indian market,” said an executive from one MNCs selling knee implants in India.
While the basic hallmark of quality is certification, Meril Lifesciences is one of the few Indian companies that have the same level of certification as the multinationals. But experience matters in medical devices.
Sharma asserts that the MNCs won’t leave the market because India is too big, but withdrawing newer products is a trick that these companies can use.
A better way to bring the price down without compromising on quality is scale.
He was referring to the applications for withdrawal from Abbott and Medtronic. The regulator has asked Abbott and Medtronic to wait for at least nine months since the price capping was enforced in February. It may extend this period or let them withdraw after that.
The proof of the pudding is in eating, assert manufacturers.
“How do you measure if an implant has higher longevity? How do you measure pain? Or the ability of a patient to sit cross-legged after knee surgery? You wait for a long period of time once the product is in the market,” a knee implant manufacturer asked.
Either way, Meril’s Sharma says India is one of the fastest-growing markets and not a place a multinational wants to withdraw from.
But the threat to withdraw some of their newer products that are commercially unviable under price regulation in India is something they are very likely to go ahead with.
There are 22 devices that are legally considered as ‘drugs’ by the regulator, including condoms, two kinds of stents, orthopedic implants, which include knee implants, the regulator has already capped prices of four of these.
Prices of many more could be capped. And that would leave the patient much weaker in the long-term.
(This article has been edited for length. It was first published on The Ken and has been re-published with permission. The author, Ruhi Kandhari, has written for various publications, including The Economic Times, Down to Earth and Tehelka. At The Ken, Ruhi writes on health care and the intersection of technology and policy.)
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Published: 22 Aug 2017,03:16 PM IST