New Delhi: The Modi government is set to further regulate the medical devices industry, which is pegged at over Rs 80,000 crore, in the next five years.
The government, which had in 2014 capped the prices of stents and knee implants, is now working on a proposal to formulate a pricing policy for over 6,000 medical devices in the country such as pacemakers, hearing aids, glucometers, and blood pressure instruments.
A senior official of the Department of Pharmaceuticals (DoP), which is working on the proposal, told ThePrint that the pricing control aimed to check a loophole in the import of the medical devices.
According to the Association of Indian Medical Device Industry (AIMED), the largest lobby of medical device makers in India, the sector is worth over Rs 80,000 crore at the retail and institutional level but is mainly dominated by imports.
“The foreign companies sell their products directly to hospitals under institutional sales where these imported devices do not carry the maximum retail prices (MRPs),” explained the DoP official who did not wish to be named. “It is one of the biggest loopholes in our system that allows hospitals to charge as much as they want for the device.”
The official added that the government hopes the policy will benefit local players. “The policy is expected to boost the sales of the domestic device makers, who have been bearing the brunt of a strong lobby between foreign companies and hospitals,” the official said. “It will also provide a boost to the Prime Minister’s Make in India campaign.”
A proposal in the works
The pricing control proposal has been prioritised in the DoP’s current five-year vision plan. The DoP is the apex body under the Ministry of Chemicals and Fertilisers that governs laws related to drugs and medical devices.
The vision plan, which ThePrint has seen, has placed the pricing policy under the section ‘strategic initiatives under price regulations’.
The senior DoP official quoted above said the new policy will take into consideration some of the recommendations that a task force, formed in 2014, had concluded with regard to capping prices of the medical device.
“We will take a cue from the task force submission,” the official said. “The discussions have just begun and we may soon reach out for stakeholder suggestions.”
One of the key recommendations of the 2014 task force, under the chairmanship of former secretary of DoP, V.K. Subbarao, was that medical devices should not be classified as drugs and instead called for them to be included in the Essential Commodities Act and regulated under a separate medical devices price control order (MDPCO). Its recommendations were never acted upon.
At present, medical devices are notified as ‘drugs’ after the Modi government in 2014 announced to regulate these devices under the drug pricing and control order (DPCO) — the legislation that regulates the marketing and sales of drugs.
The government regulates only 24 medical devices under drug pricing laws. Of the 24, three medical devices — condoms, cardiac stents, and knee implants — were brought under the price control mechanism by the Modi government.
The remaining 21 such as syringes, cannulas, and catheters fall in the non-scheduled formulations are their makers are allowed to increase the price by 10 per cent annually.
Industry welcomes move
Unlike the pharma industry, which had not been in favour of price controls, the medical devices sector has itself been seeking rationalised price regulations.
“The drug policy is not useful for devices as it doesn’t address the huge price disparity in MRP for similar products nor does it discourage Indian and overseas manufacturers from using exorbitant trade margins to induce hospitals and retailing chemists from pushing their products,” said Rajiv Nath, forum coordinator, AIMED.
“Unlike consumer products, patients do not usually have a choice on which brands of devices are used on them and hospitals usually decide this,” he added. “This decision should be based on a combination of quality and buying price of hospital and not on the basis of margins to be made for pushing a particular brand onto the hapless patient.”
Price controls on devices are essential to contain unethical business practices and for phasing out of sales linked to illegitimate commissions and inducements, particularly to the hospitals, according to Malini Aisola, co-convenor of the NGO All India Drug Action Network.
“The policy in no way should undermine or weaken the price controls imposed on stents and knee implants that have proven to be beneficial to the public,” she said.
“The policy needs to be framed on the basis of a rational mechanism with affordability as its central tenet,” she added. “The prevailing practices have created market distortions and perverse incentives that undermine patients from getting appropriate, cost-effective treatment.”