It was forty years ago, this month, that a young doctor in Switzerland decided to operate on a heart patient using a radical procedure that was less invasive, potentially cheaper and very effective. The field of coronary angioplasty using stents was born out of the need to innovate and further the cause of medicine, and for nearly forty years, has continued in the same fashion. Every few years, newer advances in stent design and the procedure meant more possibilities for a heart patient.
But forty years of evolution may not have weighed heavily on India’s drug price regulator, the National Pharmaceutical Pricing Authority (NPPA), who effectively pulled the plug on innovations by capping device prices. A popular move, the regulator credited the government for this bold step. Stents were followed by orthopaedic implants, and government sources indicate that there’s ‘more to come’. This template may be applied by the regulator a few more times to more drugs and devices as elections draw closer. Politicians have also implied that they would not allow the industry to ‘loot’, thereby laying the entire blame at the industry’s door.
A regulator's winning formula
The price control formula is a quick-win for a price regulator to show quick results. It requires no accountability towards bettering healthcare, in real terms. At the same time, benefits of ‘sentiment’ accrue because of the inherent populism of the premise. Consider this – the NPPA is slashing prices of devices that it isn’t procuring directly or indirectly, nor is there a commitment on volumes or accountability towards quality. The devices manufacturing industry is in shock with the ‘take no hostages’ nature of NPPA’s edict, hospitals are fending off cost pressures because of shrunk margins, and the patient is deprived of advancements, as companies won’t bring innovations to a market where the hammer can fall anytime. Politics is the only winner.
The recent demonetization project was also thought to be a great idea initially generally. The seductiveness of the ‘big picture’ created an initial aura, but once the real picture emerged in late-August, serious questions on the motive and long term impact have emerged.
Unfortunately, for Indian healthcare, there is no Reserve Bank of India publishing data in its annual report. So, the cost to the patient may never be known objectively.
The price of price control
What is clear is this – six months after the price control was imposed, several hospitals are considering an increase in angioplasty packages; some are increasing angioplasty prices to make them more ‘realistic’. The more creative providers will find ways within the existing billing structures to offset their losses. Leading stent makers have also made their intent clear – they are looking at exiting the Indian market. New innovators, despite being ‘Indian’, aren’t introducing products.
The NPPA is braving it out, for now. They are throwing the rule book at companies to prevent or delay product exodus. A preferred method seems to be that of embarrassing the companies that have applied for withdrawals – one company was called out by the NPPA on safety, when it wanted to effect global stent discontinuation due to low sales. This, after the authority responsible for safety – the Central Drugs Standard Control Organization (CDSCO) stated that the company was justified in taking the step and that it was the company’s prerogative to stop production.
The NPPA also seems to be at loggerheads with other departments - it has highlighted the Department of Pharmaceuticals’ inaction in not exercising powers and restricting withdrawals applied for by companies. Their notices to companies also raise the bogey of ‘shortages’ if companies withdraw particular brand of stents. This is strange, considering that the NPPA itself decreed that all stents were to be priced the same as there was no differentiation. Simple economics determines that when all products are the same, shortages from one company will be made up by the rest.
This leaves us with another possibility - the NPPAknowsthat companies are withdrawing innovative stents, but they cannot admit to the government that they may have made a mistake.
The regulator’s approach by capping device prices unilaterally may be simple, but will it help the government broaden access to healthcare?There are enough indications to show that stent price control will not achieve greater access to affordable and quality healthcare. It has already started to suck innovation out of the country. In future, innovative stents, implants and other devices will never make it to India. Affording patients will go overseas, and for those who cannot, remember Marie Antoinette? The government may be left to untangle the mess, in the long term.
Angioplasty and Innovation: R.I.P
The problem is not so much about making stents cheaper, but of building sustainable healthcare infrastructure, which the government could really push forward. Can the government help hospitals more, to set up catheterization laboratory infrastructure, for performing angioplasties? India doesn’t have even a thousand labs; many are underutilized, beset with accessibility issues. Can the government also help more, maybe even partner industry to expand skill-building in advanced cardiology procedures.
The impact of such price control will be gradual, but profound. It will take a couple of years for the system to start caving under, but the implosion will be quick. The bureaucracy may change, but the government, with its huge public image, may face some tough questions from its electorate. But even with that, nothing will undo the loss. And an innovative cardiac procedure that has saved thousands and thousands of lives will be a collateral damage.
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