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Affordability At Cost Of Innovation?

Stents and other cost issues in the context of affordability of healthcare in India assume importance as price control can also affect innovation

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In a major relief to coronary heart disease patients in India, the government earlier this month, imposed a ceiling on the prices of coronary stents. Accordingly, the price of bare metal stents was brought down to Rs 7,260 from Rs 45,000, and that of drug-eluting stents to Rs 29,600 from about Rs 1.2 lakh.

For the technically-minded, a coronary stent is a tube-shaped device placed in the coronary arteries that supply blood to the heart, in order to keep the arteries open during treatment of coronary heart disease. It is used in a procedure known as percutaneous coronary intervention (PCI).

As expected, the move by the government drew reactions, ranging from relief to shock. Patients and their family members were, expectedly, relieved, while hospitals, retailers and wholesales cried blue murder.

According to a research paper published in The Lancet in December 2015, about two-thirds of the expenses incurred by patients/family members out of their personal resources on health-related issues went for the purchase of drugs, pointing to unnecessary use of high-cost medical technologies, such as stents and knee implants. That these technologies were pushed to maximise sales is an open secret. Therefore, a cap on their prices would surely help patients.

The government's move saw the pharmaceutical companies manufacturing absorbable stents withdrawing their stocks and consequently refusing to supply them at the price set by the National Pharmaceutical Pricing Authority (NPPA). Hospitals complain that it has put them in bad light. There is a feeling among doctors that the government should have foreseen this predicament and made available good quality stents in ample numbers before capping the price. They fear the move will give rise to black-marketing of stents. For, they argue, the well-heeled will always be willing to pay whatever price for the latest stents.

"When any product is made unavailable, it naturally creates a ready market for black marketers. This is replete in history. I fear this will be repeated in India's stent market too," said one doctor who refused to be named.

It would be wrong to say the government did not expect to see a sharp reaction from pharmaceutical companies manufacturing these stents. That is why the government has invoked the emergency provision making it mandatory for manufacturers of stents to maintain production and supply of coronary stents at previous levels for six months at least. Also, stent-makers and importers have been told to submit a weekly report on production and distribution levels to the drug price regulator NPPA.

However, multinational companies manufacturing stents say the prices mandated by the NPPA are unrealistic and would hurt research and development (R&D). And without R&D, it would be impossible to roll-out devices using cutting-edge technology in India. This being a capital-intensive industry segment and the cost of working capital in India being high, prices will remain elevated in order to be able to remunerate all stakeholders, argue those on the side of the stent-makers.

"Research and development in the pharmaceutical industry is a very high-cost activity. It has its pitfalls in the form of many products falling by the wayside before one successfully hitting the market. So, the innovators/ inventors need to be adequately rewarded for the risk taken. In the stents market there is continuous innovation, rendering the process and the product expensive. Moreover, stocking these products entail a lot of capital deployment. Who will foot the bill for all this? The government should have thought through all these angles before taking this step. Agreed pricing is high and patients are strained having to foot these bills. Yet, instead of painting everyone with the same brush, they should have taken steps to curtail profiteering. They should have taken the stakeholders into confidence. Medical insurance should be pushed in the same way digital currency is being pushed by the government, so that medical costs are met by insurance companies and not by patients," argues an expert upset at the turn of events.

While a section of the experts say the move will force stent-makers to innovate to keep prices in check, others say government intervention in pricing (and thus not permitting free-market to function in the country) will hurt innovation and in turn, the government's 'Make in India' initiative. They even argue that with high-quality stents being not readily available in the Indian market, medical tourism will take a hit.

"Why should patients looking for heart treatment come to India in the midst of uncertainty surrounding availability of quality stents, when they can go to say, Malaysia or Singapore and get the same treatment, albeit at a little higher cost? This move will buffet India's medical tourism industry, no doubt," said another doctor on condition of anonymity.

For now, the jury is out on the merits of the case. And the tug-of-war between the government and stents-makers/ sellers could get tougher. One way out, though a little long-term in nature, would be make medical insurance mandatory for all in the country. But wouldn't that be tough to achieve in India where the penetration of health insurance is not that satisfactory? Not if one looks at the zeal with which the government forced the people to adopt digital currency and give up the use of cash in everyday dealings.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.


Swadeep Srivastava

The author is founder & Managing Partner of www.indiavirtualhospital.com, personalized e-Valet for Medical Travellers

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