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 1 June, the Medical Technology Association of India (Mtai), representing multinational companies like Bausch + Lomb, Boston Scientific, Johnson & Johnson, and others, met at the Le Meridian hotel in Delhi to present their side of the story, three months after stent prices were capped in India.
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 multinational manufacturers, who have a global market of $3.7 billion, out of which India accounts for just over 1.3 percent; or the patients in India, who need medical devices, 75 percent of which are imported.
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’s dissolvable stents, Absorb and Xience Alpine, were priced at Rs 1.9 lakh and Rs 1.5 lakh respectively before the National Pharmaceutical Pricing Authority (NPPA) put a ceiling of Rs 29,600.
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.
We have been selling here in the hope that the market will grow and the scale will lead to better efficiencies and quality but do we have a reason to stay now?Managing Director of one of the four multinational companies – Stryker, Johnson & Johnson, Smith and Nephew and Zimmer.
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.
The robotic arm may not be an implant, but an instrument bought separately by a hospital and is currently out of price control.
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 results of price control on sale of both the devices will emerge within a year. Public health policy experts assert that access to competitive price and quality could be created only if the government expands and provides healthcare by becoming a buyer of devices.
The trend, for now, is leaving the patient weaker.
Who is Making Money?
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.
A cardiologist from one of the largest hospital chains in India told The Ken that the number of angioplasties (procedures where stents are used) conducted in the hospital has remained the same in his hospital over last six months.
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.
Private hospital doctors do not want to take any risk with the quality of care, that is why they attend all the training workshops conducted by medical device companies to understand the new developments in technology. They suggest an implant (orthopedic and cardiac) that suits the patient’s body and lifestyle because they cannot afford to have an upset patient, who continues to suffer in pain.Ratna Devi, CEO and Co-Founder, Daksham
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.
How do you say definitively if a luxury car is better than a budget car? Newer knee implants do offer more flexibility, more size options and claim to better suit the Indian body type. Patient outcomes depend on the skill of the surgeon as much as on the suitability of the implant.Dr Harpal Singh, Orthopedic Surgeon, Dayanand Medical College & Hospital, Ludhiana
Manufacturers of knee implants say the most far-reaching innovation till date, in orthopedic implants is robotics. Sometime in the mid-1990s, the first knee prosthesis was sold in India.
“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.
Can Indian companies compete, if the MNCs leave?
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.
India never had a history of making high-tech medical devices; there was never any focus, environment and infrastructure. We are just starting out and MNCs have huge legacies; 100 years of experience working with orthopedics.Ram Sharma, President of Meril
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.
The Truth or Dare for the Regulator?
They do not have any proof of better clinical outcomes to charge a higher price. We normally don’t stop them if a company does not have a big market share, but in the case of stents, we don’t want scarcity to come in.Bhupendra Singh, Chairman, NPPA
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.
When asked why Abbott and Medtronic were withdrawing their products, the Abbott spokesperson did not respond and Medtronic said the company would not comment on the developments now.
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.
The regulator insists that if a product is proven to be better, it can be sold at a higher price. But the proof is hard to find, while the cost of advanced products is tangible.
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.)
(#TalkingStalking: Have you ever been stalked? Share your experience with The Quint and inspire others to shatter the silence surrounding stalking. Send your stories to editor@thequint.com or WhatsApp @ +919999008335.)
(At The Quint, we question everything. Play an active role in shaping our journalism by becoming a member today.)