Com­ply or Get Pe­nalised: Govt Warns Stent Mak­ers Tough talk fol­lows ar­ti­fi­cial scarcity cre­ated due to with­drawal of the product by some cos

The Economic Times - - Companies: Pursuit Of Profit - Our Bureau

New Delhi: The gov­ern­ment has re­it­er­ated that com­pa­nies, dis­trib­u­tors and hos­pi­tals have to com­ply with its or­der slash­ing prices of car­diac stents by over 75%, and warned them of penal­ties if they vi­o­late the di­rec­tives.

Ear­lier this week, the Na­tional Phar­ma­ceu­ti­cal Pric­ing Author­ity (NPPA) capped the prices of drug elut­ing stents and biore­sorbable vas­cu­lar scaf­folds at .₹ 29,600 and bare metal stents at .₹ 7,260. In­clud­ing VAT, th­ese stents are ex­pected to cost .₹ 31,080 and .₹ 7,623, re­spec­tively.

A coro­nary stent is a wire mesh tube used to clear block­ages in coro­nary ar­ter­ies and pre­vent heart at­tacks.

AR­TI­FI­CIAL SHORT­AGES

Fol­low­ing the NPPA de­ci­sion, some com­pa­nies have re­port­edly with­drawn high-priced stents, lead­ing to an ar­ti­fi­cial short­age of the product.

Al­though sup­pli­ers, such as Ab­bott, have de­nied with­draw­ing stents al­ready stocked at hos­pi­tals, some man­u­fac­tur­ers are ex­pected to with­hold high-end vari­ants of the product. “We con­tinue to mar­ket our full range of coro­nary stents avail­able in In­dia. In cer­tain cases, we had ini­ti­ated the process of re­la­bel­ing to com­ply with the re­vised pric­ing no­ti­fied by the gov­ern­ment,” an Ab­bott In­dia spokesper­son said.

A car­di­ol­o­gist told ET on con­di­tion of anonymity that some com­pa­nies, es­pe­cially im­porters, have asked hos­pi­tals not to use stents priced higher than the ceil­ing. “But there is no short­age of stents,” the car­di­ol­o­gist pointed out.

Ac­cord­ing to sources, some hos­pi­tals have also de­cided to sell only those stents priced within the ceil­ing fixed by NPPA. A health­care provider said stents are still in stock, but many pati- ents are wary of us­ing the ones of­fered by th­ese hos­pi­tals be­cause they are out­dated. “We have de­cided not to sell any stent priced above .₹ 30,000. But some pa­tients in­sist­ing on high-end stents think they’re get­ting sub­stan­dard treatment when we tell them we can’t pro­vide th­ese third or fourth generation stents any­more,” the provider said.

At the same time, sev­eral hos­pi­tals have stated they will pass on the ben­e­fits of the price cap to pa­tients. “We will see to it that all pa­tients get ben­e­fited by this or­der,” stated a spokesper­son for Apollo Hospi­tal Groups.

NEW RE­AL­I­TIES FOR STENT COS

Stent mak­ers wounded by NPPA’s price cap are now scram­bling for ways to plug gaps and re­main prof­itable. While some com­pa­nies said they are still fig­ur­ing out how they may adapt to the de­ci­sion, oth­ers are al­ready con­sid­er­ing cost-cut­ting op­tions, such as dis­card­ing mid­dle­men who sup­ply to hos­pi­tals.

Ac­cord­ing to In­dian stent com­pany Sa­ha­janand Med­i­cal Tech­nolo­gies (SMT), most of the mar­gins made by stent mak­ers go into pay­ing the dis­trib­u­tor. “What we have de­cided to do now is to get a drug dis­tri­bu­tion li­cence our­selves to save on the work­ing cap­i­tal cost. We al­ready started the process of reach­ing out di­rectly to hos­pi­tals,” SMT CEO Ganesh Sa­bat said, adding that re­duc­ing the sup­ply chain cost would help com­pa­nies run a sus­tain­able busi­ness. Stent mak­ers may also trim in­vest­ment on mar­ket­ing, train­ing and aca­demic part­ner­ships, which could con­trib­ute at least 10-15% to their rev­enue, an in­dus­try ex­ec­u­tive said.

CURB­ING IN­NO­VA­TION

Sev­eral in­dus­try of­fi­cials also ex­pressed fears that the price cap may pre­vent multi­na­tional and do­mes­tic stent com­pa­nies from mak­ing next-generation stents avail­able to In­dian pa­tients. Ashutosh Raghu­van­shi, CEO, Narayana Health, said the mech­a­nism used by the NPPA for pric­ing may lead to the In­dian mar­ket miss­ing out on some newer multi­na­tional prod­ucts.

Ac­cord­ing to do­mes­tic stent mak­ers, the NPPA capped the price “too low” and their ex­pec­ta­tion was any­thing be­tween .₹ 40,000 and .₹ 50,000. “The move could dis­cour­age re­li­able stent mak­ers and lead to a growth in com­pa­nies that pro­duce poor qual­ity stents,” said Gurmeet Chugh, man­ag­ing di­rec­tor of In­dian stent com­pany Trans­lu­mina Ther­a­peu­tics.

Global stent mak­ers say the NPPA dis­re­garded the evo­lu­tion of coro­nary stents over decades and didn’t pay heed to sev­eral stake­holder rep­re­sen­ta­tions seek­ing to dif­fer­en­ti­ate stent prices based on tech­no­log­i­cal dif­fer­ences.

“The sin­gu­lar fo­cus on con­trol­ling ceil­ing price of stents, with­out at­tempt­ing to ad­dress the larger pic­ture and cor­rect in­ef­fi­cien­cies in the health­care ecosys­tem will not achieve its stated ben­e­fit in the long run,” said a spokesper­son of Ad­vaMed, a lobby group for global stent com­pa­nies like Ab­bott In­dia, Medtronic and Boston Sci­en­tific.

Stent mak­ers wounded by NPPA’s price cap are now scram­bling for ways to plug gaps and re­main prof­itable

EN­SUR­ING COM­PLI­ANCE

Com­pa­nies, dis­trib­u­tors and hos­pi­tals found vi­o­lat­ing NPPA’s or­der by over­charg­ing pa­tients for the de­vices would be pe­nalised, Min­is­ter of Chem­i­cals and Fer­tilis­ers Ananth Ku­mar had said ear­lier. In some cases, they could even be black­listed, he had said.

“Strict ac­tion would be taken against vi­o­la­tors,” said Jai Priye Prakash, Sec­re­tary-Depart­ment of Phar­ma­ceu­ti­cals, Min­istry of Chem­i­cals and Fer­tilis­ers. Ac­cord­ing to him, the gov­ern­ment would also use var­i­ous pro­vi­sions of the Es­sen­tial Com­modi­ties Act to pe­nalise those found il­le­gally and un­eth­i­cally prof­i­teer­ing or hoard­ing stents.

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