Hard negotiations

Ahead of Modi visit, a group of US lawmakers have backed medical device makers by urging India to reconsider its decision to reduce prices of heart stents. This will be one of the key issues discussed during Modi’s visit to the United States.

A member of the US Congress said they were "troubled" by the price cap, warning that it could deter firms from launching new medical products in India. The Indian government had set the price cap at 7,260 rupees ($113) for the older generation metal variants and 29,600 rupees ($461) for drug-releasing variants.

New Delhi earlier this year regulated the cost of stents - used in angioplasty to facilitate blood flow in the heart -- cutting the price of some by as much as 75 % to make it more affordable. But drug companies such as Boston Scientific, Abbott, and J&J have condemned the move by arguing that such government intervention would inhibit their investments in cutting-edge technologies. They have also warned that India's $5 billion medical-technology market would lose out on the latest in medical advances.

Stent

The stent was first introduced in 1986 in France. In medicine, a stent is a metal or plastic tube inserted into the lumen of an anatomic vessel or duct to keep the passageway open, and stenting is the placement of a stent. There is a wide variety of stents used for different purposes, from expandable coronary, vascular and biliary stents, to simple plastic stents used to allow the flow of urine between kidney and bladder. Stent is also used as a verb to describe the placement of such a device, particularly when a disease such as atherosclerosis has pathologically narrowed a structure such as an artery.

Coronary stent

A coronary stent is a tube-shaped device placed in the arteries that supply blood to the heart. It keeps the arteries open in the treatment of coronary heart diseases.

Analysis

US lawmakers have warned that people would be denied access to the latest medical advances if companies backed away from India's $5 billion medical-technology market. The sudden and unprecedented nature of the decision threatens citizens' access to the newest and most innovative medical technologies and raises strong concerns about the business environment in India.

The US Department of Commerce is likely to raise the issue with Modi during his visit on June 25-26, according to an industry source aware of the plans.

Johnson & Johnson, especially is worried about potential price curbs on its imported knee, joint or hip implants, another industry, adding the company was working with trade groups to write letters to the government.In February, it termed stents as "essential" devices, noting cases of heart disease were rising and the stent pricing was "restrictive and exorbitant". It did not differentiate among types of drug-releasing stents as the industry desired.

The US lawmakers echoed concerns raised by the medical device industry, saying India's interventionist policy on pricing would hamper innovation and jeopardise investment. They are worried that comments by government officials signal the intention to double down on this dangerous policy and expand price cuts to other medical devices.

There should be compulsory licensing & violation of the code will carry penalties that can range from a warning to cancellation of licence depending on the seriousness of the offence. The government proposes that multiple laws can be invoked to punish offenders. There shouldn’t be lack of transparency.

Previously the stents were being sold with a 400% profit margin. Over 90% of stents implanted in India are DES, which were sold at an average price of Rs 1.21 lakh, while BMS are sold at an average price of Rs 45,095. The price caps have been fixed after taking into account manufacturing, R&D and marketing costs as well as "ethical" profit.

In the US for an average heart stent placement surgery, they charge around $11,298-$36,221. Countries like US give health care benefits and zero money is spent by an individual on the health care. But in India it’s vice-versa.

Assessment

Our assessment is that, reduced prices would benefit a lot of people. However, it should not come at the cost of putting the brakes on the evolving technology that is so essential to ensure patients' well-being.

The capping of the stent price will result in saving of Rs 80,000-90,000 per piece and gross relief of Rs 4,450 crore in a year for cardiac patients. The health ministry should take steps to curb unethical practices by hospitals such as charging more from patients for procedure, treatment and post-care, to recover their losses due to reduction in stent prices.

The number of stent procedures in India have also tripled over the last five years. According to the National Intervention Council (NIC) 5 lakh stents were implanted last year. But this constitutes just 2% of the need. If India starts manufacturing stents in the country, then the prices will fall further and it might lead to profit for the industrialists & manufacturers.