On July 20, 2016, the Union Ministry of Health of India announced the addition of Coronary Stents to the National List of Essential Medicines (NLEM) 2015 with immediate effect, bringing them under the Drug Price Control Order.
Reacting sharply to this development, the medical device industry commented, with an undertone of threat, that this price cap could stop manufacturers from introducing technologically advanced stents in India.
However, without contributing to any further knee-jerk reaction, let me try to analyze in this article, whether the never-enough profit motive of the imported stent manufacturer prompted the Government to resort to price control for these life saving devices.
The use of stent:
In the treatment of coronary artery diseases, cardiac stents are now widely preferred in India, just as many other countries of the world. These are small expandable tubes, usually made of metal mesh, and are used to treat narrowed or weakened arteries in the body.
One of its most extensive usages is in patients with Coronary Heart Disease (CHD), caused by the buildup of plaque, where stents are used to open narrowed arteries and help reduce the symptoms, such as, chest pain or angina, or to help treat a heart attack. This procedure of a percutaneous coronary intervention (PCI) is called angioplasty.
According to the report of an experts’ sub-committee formed by the Government in October 2015, around 25 percent of deaths in India is attributed to Cardio Vascular Disease (CVD). Coronary Artery disease (CAD) is the commonest CVD accounting for 90-95 percent of all CVD cases and related deaths.
However, for a large majority of the Indian population, the cost of angioplasty is prohibitively high. A patient may have to shell out anywhere between around Rs. 60,000 and Rs. 150,000 for a stent coated with drugs, called Drug Eluting Stent (DES), to curb restenosis, according to published reports.
Even for most Government staff, the cost of angioplasty could well be several times more than their maximum reimbursable limit fixed for angioplasty. Thus, only around 3 out of 1000 needy coronary heart disease patients are treated with angioplasty in India, as compared to 32 in the United States.
An opportunity to shape up:
Despite DES being notified as drugs under the Drugs and Cosmetics Act, 1940, the coronary stents did not feature in the National List of Essential Medicines (NLEM) prior to the above notification, and therefore, were not covered by the Drug Price Control Order (DPCO), so far.
For a long time, this situation offered an important opportunity to the imported stent manufacturers to shape up with responsible pricing…but did they?
Why is angioplasty cost so high?
While trying to find out a credible answer to the above question, the following details on DES of Abbott Healthcare are worth looking at. This information was sourced from a Maharashtra FDA report, and referenced by Rema Nagarajan in her article published in the Times of India on September 25, 2014 to highlight why is DES so expensive for patients in India.
Although, pricing details are of 2014, nevertheless, it gives a flavor of the prevailing situation:
|Cost per Unit (Rs.)
|DES imported into India at
|Sold to Distributor Sinocare at
|Distributor Sold to Hinduja Hospital
|1,20,000 (threefold increase of import price)
(Source: Maharashtra FDA report)
The saga of ‘Market driven pricing’:
Both the drug and the device companies apparently make valiant efforts to package such ‘arbitrary’ pricing as so called ‘Market Driven’ ones, though such price tags keep crippling many cardiac patients financially too. Ironically, the saga still continues.
Taking advantage of the free-pricing environment in India for Coronary Stents, to attain market dominance many global majors, possibly believe that they can print any Maximum Retail Price (MRP) on their import cost. It was happening even when the Government does not levy any customs duty on stents. Do these companies ignore its optics too? Who knows?
Like most drugs, market forces do not play any significant role in the medical device pricing too, globally.
In June 2013, a research study published in the ‘American Heart Journal (AHJ)’, compared the use of Bare-Metal Stents (BMS), Drug-Eluting Stents (DES), and Balloon Catheters according to company presence in the hospital. It concluded that Medical Representative (MR) presence was associated with increased use of the concerned company’s stents during percutaneous coronary interventions. The effect was more pronounced with the use of DES, and resulted in the higher procedural cost of US$ 250 per patient.
In this particular study, it was found that DESs were used in about 56 percent of the cases, when the MRs concerned were at the hospital, against 51 percent when they weren’t there.
The situation is not terribly different in India too, where also the medical choices are often influenced by the drugs and device makers through, much discussed, dubious means.
According to a market research report of ‘Future Market Insights (FMI)’ dated May 09, 2016, the coronary stent market of India was of US$ 481 million in 2015, and by the end of 2016 is expected to reach at US$ 531 growing at a CAGR of 14.0 percent over the forecast period of 2016 – 2026.
This study segmented the market on the basis of the following product types:
- Drug Eluting Stent (DES)
- Bare Metal Stent (BMS)
- Bioresorbable stent (BVS)
DES segment is expected to exhibit the highest growth and the BMS segment a stable growth, during the forecast period. This is mainly attributed to the emergence of new and more effective stents in the market, the report highlights.
The market is dominated by the imported stents. Abbott, Medtronics, Meril Lifesciences and Boston Scientific, hold together around 60 percent share of the Indian market.
In India, nine of the 11 domestic stent manufacturers are located in Surat and Vapi of Gujarat. These stents are picking up the market share currently hovering around 30 percent, costing even less than half, as compared to the imported ones.
The Government stepped in:
When the industry did not seem to shape up, despite the regulatory opportunity available to keep the stents out of the NLEM, the media started writing about it, strongly and quite frequently. These were intended to bring some sanity into the imported and advanced Coronary Stent pricing system. Still nothing changed, and the Government had to step in.
Ultimately, in October 2015, the Union Ministry of Health constituted a sub-committee of expert cardiologists under the chairmanship of Prof. Y.K. Gupta, Head of the department of pharmacology, All India Institute of Medical Sciences (AIIMS). The mandate of this sub-committee was to examine the issues relating to the essentiality of coronary stents, and recommend whether the coronary stents should be included in the NLEM.
Accordingly, after a series of in-depth discussion with various stakeholders, which included stent manufacturers and the patient groups, the sub-committee recommended the inclusion of two categories of coronary stents, namely the DES and BMS in the NLEM. This suggestion was in response to “the enormous need of percutaneous coronary intervention, or angioplasty with stent.”
By a notification on July 20, 2016, the Ministry of Health announced that the sub-committee has submitted its report to the Government, and after thorough examination of the report, its recommendations have been accepted for implementation with immediate effect.
This decision of the Government is expected to set the stage for the National Pharmaceutical Pricing Authority (NPPA) to work out ceiling prices, which are expected to be 40 percent to 70 percent less than the current prices for these stents.
For the last several years, many stakeholders, including the media and the Government, have been expressing grave concern over the exorbitant prices of the Coronary Stents.
Earlier in 2015, following a petition, even the Delhi High Court directed the Government to monitor the prices of stents in the market.
Indian drug price regulator, the NPPA, and some state FDAs too flagged the point that although locally manufactured stents are much cheaper, doctors and hospitals continue to use the imported ones, for various commercial and other reasons. As a result, the situation remained the same, adversely affecting the health of a large number of cardiovascular patients in India.
The last week’s decision of the Indian Government for inclusion of coronary stents in the NLEM, needs to be viewed under the backdrop of steep increase in the incidence of CHD in India. It clearly poses a significant public health hazard, where the cost of stents becomes a key treatment barrier for the majority of the patients incurring out-of-pocket health expenditure.
Price control of drugs and devices may not be the best way to improve their access to the most of the Indian population. Nevertheless, considering the high out-of-pocket expenditure for health care in the country, instead of behaving responsibly, doesn’t the drug and the device makers’ mindless chase after ‘never-enough profit’ objectives, often prompt the imposition of regulatory price control?
The fact that many global drug and device manufacturers, even after posting over 30 percent standalone net profit growth in India, continue cribbing incessantly about the stifling Regulatory and Intellectual Property Right (IPR) environment in the country, vindicates the above point well, possibly beyond any reasonable doubt.
By: Tapan J. Ray
Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.