MedTech industry needs consensus, not confrontation!

The union government has gone tough on medical technology accessibility and affordability. While the stent prices have been capped, the responsibility to keep them available lies with companies. Industry, of course, is not enjoying it. An analysis that takes you through the latest churning inside the sector

There have been two major policy decisions on the medical technology in last few months. One is the finalization of the new policy draft and another is the price cap on coronary medical stents. Both have created happiness as well as flutter in respective sections of the society. The happy ones are millions of patients and of course the regulators who feel that they have done the justice. On the other hand, the industry is miffed with the decision as they feel that it is arbitrary and doesn’t include their suggestions, not to talk about unbearable revenue loss. Both the indigenous and foreign multinationals are unanimous in their criticism of the government’s order. Yet the good part is that the industry also has appreciated its recognition and separate identity from pharma.
The Indian medical device industry has for a very long time been urging that this inconsistency has been one of the chief bottlenecks for the growth of the industry and hampered its development as a globally competitive on the lines of Indian pharma sector. Currently India imports over 70 percent of its medical device requirements and the total annual market size is estimated at over USD 10 billion.
Mr Simranjit Singh, General Manager, Medical Devices & Diagnostics, Asia, QuintilesIMS calls the move a potential one to bring about breakthrough changes. “The decision to delink medical devices from pharmaceuticals is a much needed and welcome step,” he said adding “The rules provide for a higher level of scrutiny and rigor that will have a long term positive impact on the safety and use of medical devices, in addition to creating a transparent, predictable and safer regulatory regime that will catalyze the entire sector. It is important to note that regulators have taken cognizance of stakeholder feedback to the draft rules in developing the Medical Devices Rules 2017, while not compromising patient safety. Such a collaborative approach by the regulators is appreciated and is a much needed step in a relatively greenfield area.”
Price cap on stents emerges as the new battleground
The Government of India issued the notification for fixing the ceiling prices of coronary stents on February 14, 2017. The step would bring down the cost of coronary stents, currently hiked by about 380 percent, informed Union Minister for Chemicals & Fertilizers and Parliamentary Affairs, Mr Ananth Kumar adding that now the ceiling prices of Bare Metal Stents (BMS), having 10 percent market share, has been capped at Rs 7,260 and Drug Eluting stents (DES), having 90 percent market share, at Rs 29,600. These prices are exclusive of VAT and other local taxes.
The Minister further stated that since most of the States have 5 percent VAT on stents, the MRP of BMS and DES would be Rs 7623 and Rs 31,080. National Pharmaceutical Pricing Authority (NPPA) has fixed the prices within 60 days as required, he added.
The government says that it step is a major decisive action on the unethical margins charged at each stage in the supply chain of coronary stents and also the new prices are not likely to make much adverse impact on industry. The logic is that the average MRP in the market for BMS was Rs 45,000 and for DES Rs 1,21,000. This has been reduced to Rs 7623 for BMS and Rs 31,080 for DES. Thus, based on price reduction, patients will get average benefit of 80-90 thousand per stent resulting into a gross relief of Rs 4450 crores in one year.
Earlier the Ministry of Health and Family Welfare had included Coronary Stents in the National List of Essential Medicines, 2015 (NLEM, 2015) on 19th July 2016 and the Ministry of Chemicals and Fertilizers incorporated Coronary Stents in Schedule I of the Drug Prices Control Order (DPCO), 2013 on 21st December 2016. The Ministry, after reviewing the recommendation of Ministry of Health, had directed the NPPA to hold multi-stakeholder consultations with industry and industry associations, manufacturers, importers, hospital associations, distributors’ associations, doctors and NGOs and other civil society members for fixing the ceiling prices of coronary stents. All the data provided by industry was put on NPPA website and major options for price fixation and prices put in public domain for consultation.
Cardiovascular Diseases account for 25% of total deaths in India: The 90-95 percent of CVD deaths happen due to coronary artery diseases. As per the report of National Commission on Macroeconomics and Health, prevalence of CAD in India is about 61.5 million as per 2015 report. As per Health Ministry report, more than 3.5 lakh procedures were done in 2015 which used 4.73 lakh stents. In 2016, the figure of cardiac stent must have been above 5 lakhs. Presently market size of India made stents is roughly 30 percent.
While the govt acts tough on prices, industry is disappointed
The government says that new ceiling prices decided by it have considered interests of all the stakeholders, the medical technology industry in a much obvious reaction has called the price cap move as disappointing. While the medical device multinationals majority of whom are importers, are very much miffed at the order, the indigenous industry too feels that the action is bereft of any logic.
The Association of Indian Medical Device Manufacturers (AIMeD) had suggested the stent’s average price to hospitals to be the basis for arriving at a price band and had maintained that anything less than Rs 40,000-50,000 for quality stents would be dampening and unfeasible commercially. Overtly concerned over the National Pharmaceutical Pricing Authority’s decision to fix stents prices at a level which defies economic logic or ground realities, Mr Rajiv Nath who is also the Forum Coordinator of the AiMeD stated, “Regulations, however well intended, have to be reasonable and implementable with smooth transition and not disruptive. The worst thing about this notification is that NPPA/DPCO expect all stocks to be available at new price over night.”
Among the other big questions that AiMeD is asking are whether distributors have bought stents at Rs 60000 or so, how can they put MRP of Rs 30000? How can manufacturers recall stocks with 5 years shelf life and keep nothing in markets? Confusion and fights in every hospital of what should be charged?
One of the Indian Stent Manufacturers, Mr Gurmeet Chugh, Managing Director, Translumina Therapeutics, calls the move populist and that it will ultimately kill the ecosystem where Indian manufacturers shall keep manufacturing, only  low end technologies. He says, “This MRP is detrimental for the domestic Stent manufacturers and may kill this upcoming Industry. We had asked for average of price to hospital . We are sure that the price points taken for imports and manufacturing are erroneous . The price of imported component is not price of complete assembled product. Morever, the requirement of all stocks in market to be sold at revised price is impractical and unreasonable.”
The self-regulation could have prevented govt’s intervention: Many experts feel that the industry didn’t pay attention towards self-regulation or show empathy towards patients by few actions on ensuring affordability. “Had they self-regulated their product prices in consultation with hospitals, this situation would have not arisen. Instead they indulged in profiteering and big margins while enjoying monopoly over the market,” said a market research analyst based in Mumbai.
AiMeD says it has always been exhorting members and importers for self-regulations whether for patients safety under ICMED quality certification or for consumer protection, a self-imposed price cap for each brand/size to be 4-5 times of ex-factory landed. It says the MNCs have been resisting it. On the other side, MNCs are yet to make any official ststement on self-regulation.
The multinational medical technology firms in the country have expressed strong displeasure on the NPPA’s latest notification putting a price cap on the coronary stents. The industry associations representing them feel that the decision disregards the evolution of coronary stents over the last four decades, and blocking innovation may set our healthcare sector back by at least a decade, when there were far lesser options for Indian patients. They believe that there is a clear, measurable difference between different types of stents and their benefits. They had expected the government to have taken this categorization into consideration before regulating prices.
In a statement, the AdvaMed and its members expressed disappointment with the NPPA’s notification on ceiling price for coronary stents.  “This notification completely disregards all stakeholders representations on the need to differentiate stents, based on their technological differences, it said.
AdvaMed says that while the intent is to cap prices in patient interest, this pricing has the potential to block innovations and limit access to world-class medical care and options to deserving patients. The singular focus on controlling ceiling price of stents, without attempting to address the larger picture and correct inefficiencies in the healthcare ecosystem will not achieve its stated benefit, in the long run.
The Medical Technology Association of India too said that it is disappointed with the announcement of price capping of coronary stents by NPPA as it feels that this move will reduce the options available for the Indian patient for their specific medical condition or deprive them the satisfaction of choosing from the most advanced and cutting edge technologies. “So far, India which was known for its quality of angioplasties, now as a result of the announced price capping, may lose this place of pride eventually. To ensure that India continues to maintain its rightful place in world-class medical care as well as continues to grant the patients the right to choose their treatment, MTaI once again seeks differentiation between the distinct categories of Drug Eluting Stents,” said its statement issued on February 15th.
Patients express happiness! The heart patients cutting across sections are overjoyed due to the decision. Especially, the ones from lower strata of the society are not bothered about the complexities it created but more about the less price they have to pay. One such patient, Vinod Kumar told BioVoice News that he had to shell out Rs 70,000 six months ago for a stent while undergoing surgery at a private hospital. He is happy that others won’t have to sell valuables to save their life. Going by the sentiments, it is clear that the government would be in no mood to reconsider its decision.
Day to day monitoring to keep erring hospitals under scanner
Mr Ananth Kumar said that he will write to the Ministry of Health and Family Welfare to keep a check on increase the price of procedure, doctor’s fee and prolong the patients’ stay by hospitals to make up for losses it and also ensure that price reduction is passed on to patients. He also said that the prices of all stocked stents will have to be revised according to the new ceiling price. The Minister laid stress that the landed price/manufacturing cost of imported BMS is Rs 5,415 and for DES is Rs 16,918, hence the ceiling prices have been set taking into account the ethical profit margins and R&D costs of each member of the supply chain of coronary stents.
On the other hand, the AiMeD’s Rajiv Nath isn’t convinced. He says, “Hospitals will start demanding credit notes for loss made on inventory they hold. Manufactures will be asked to pay penalty for not acting overnight. If importers and manufacturers go to court ultimately public and patient are the one who will suffer. Ideally the implementation should have been from a cut-off date and next batch. The requirement of all stocks in market to be sold at revised price is impractical and unreasonable. Laws and rules should be reasonable and easy to follow.”
Meanwhile the NPPA is constantly reviewing the situation on daily basis. Infact, a few hospitals have been issued show cause notices besides raids as well. The well-known healthcare providers in New Delhi, Gurgaon, Faridabad and Lucknow have been directly asked to explain the reasons behind overcharging patients.  The details on minute by minute actions by the NPPA are also being tweeted by its twitter handle. The same are also being provided to the minister as well.
Way forward
“Time for this sector to fly like butterfly and the pharmaceutical and medical devices to be spun off as a separate ministry of pharmaceutical and medical devices. I have recommended this to the Prime Minister and this request is under active consideration by the PM and PMO,” said the Union Minister for Chemicals and Fertilizer, Mr Ananth Kumar recently.
Notwithstanding the churning happening within it, the big day for domestic medical device industry has finally arrived. Having lived on the side-lines for years, the medical technology industry is one of the biggest opportunity areas in the bioscience sector. With number of patients having medical complications on rise, the growth could be gigantic if right policies are formulated at the right time. To boost ‘Make in India’ program and reduce import dependency, government has thus decided to include back medical device sector as one of the 25 flagship industry to steer the program. Rightly so, the government must now also try to rope in multinationals into the manufacturing plans. If they don’t want to participate, it would be their choice yet government must act in a non-partisan manner.
There is a broader consensus on the need for a robust regulatory system for devices market. Yet it must be in sync with making available the maximum opportunity areas for all the stakeholders. Neither can we achieve excellence by shooing away global investors and companies nor by ignoring our own set of SMEs, indigenous innovators and new age startups. The middle ground for all players should be created for equal opportunities to all. The moot point is that we must build a big medical technology industry in India but also take all the stakeholders into confidence.