Price War

Two global majors seek to withdraw stents after price cap. But the NPPA is unlikely to budge

On April 26, the National Pharmaceutical Pricing Authority ( NPPA) scuttled plans of global medical device manufacturers Abbott and Medtronic to withdraw some high-end cardiac stents from the market. Abbott had sought permission to discontinue the marketing of Xience Alpine and Absorb BVS brands while Ireland-based Medtronic wanted to withdraw its ‘Resolute Onyx Zotarolimus Eluting Coronary Stent System’. Their reasons were the same -- these had become commercially unviable after the NPPA’s February order capping prices of stents that can be sold in India.

The order brought all stents under two categories - bare metal stent ( BMS) and drug eluting stent ( DES) and fixed a maximum retail price of about ` 7,500 for the former and `30,000 for the latter. The stents that Abbott and Medtronic wanted to discontinue had a price tag of `1,00,000-plus. In a way, the move was surprising, as prices of most high- end stents sold by global medical device majors in several European markets are closer to the NPPA’s cap. The companies also knew that the withdrawal was not going to be easy as the NPPA’s notification had safeguards to ensure continued supply. It, for instance, instructed that anyone intending to discontinue production or import of stents shall inform it at least six months in advance and follow the cap till government clearance. The applications of Abbott and Medtronic were rejected on technical grounds.

This is the first round of the fight. The application is an indication that without pricing freedom, global stent makers may not be keen on launching high-end products in India.

The issue is not with the pricing of BMS devices, whose market share has been steadily declining. The device makers are miffed with the decision to put all categories of DES in a single bracket. With all their future launches, and existing expensive ones (some used to be sold at even `1.5 lakh) in the DES category, the companies wanted sub-categorisation and differential pricing. Imported stents account for almost 70 per cent of the domestic market, the size of which, as a Future Market Insights report estimates, is around $531 million. The threat to withdraw the products was thus a pressure tactic. Will the government budge?

Unlikely, for several reasons. First, the market share of stents sought to be withdrawn is not substantial. Second, local and foreign companies are offering similar products. But the most important reason is that the decision was well thought of and there is a provision for special ceiling or special retail price too. All that the companies have to do is to apply to the NPPA for special prices based on superior therapeutic claims, supported by independent evidence that can be scrutinised by a committee of experts of the NPPA. On existing products also, the NPPA position is clear -- prove the superiority, the special feature or special therapeutic rationale, distinguishable from similar products in the DES category, before seeking any special classification.

So far, the companies have failed to produce such evidence. Until that happens, attempts to withdraw products may not have any impact. ~

THE COMPANIES HAVE TO APPLY TO THE NPPA FOR SPECIAL PRICES BASED ON SUPERIOR THERAPEUTIC CLAIMS, SUPPORTED BY INDEPENDENT EVIDENCE