NPPA Limits Stent Margins for Hospitals, Distributors
Regulator caps margin at 8%; hospitals can’t levy additional charges over ceiling price
New Delhi: India’s drug pricing regulator has restricted the margin on cardiac stents for hospitals and distributors to 8% in a move expected to curb profiteering at the expense of heart patients.
The decision elicited a positive response from some domestic stent makers, which had feared they would be forced to beat down prices of stents to satisfy distributors and hospitals seeking to maintain high margins after price controls were imposed.
The National Pharmaceutical Pricing Authority (NPPA) capped prices of drug eluting stents (DES) and bioresorbable vascular scaffolds (BVS) last week at .₹ 29,600 and bare metal stents (BMS) at .₹ 7,260. After including VAT, these stents are expected to cost .₹ 31,080 and .₹ 7,623, respectively. The NPPA clarified on Monday that hospitals and distributors together have to share a total margin of 8% from the ceiling price of cardiac stents — a steep drop from the margins on the devices before they came under price control.
Distributors used to charge as much as a 196% margin when supplying DES, used in a majority of stenting procedures, to hospitals, according to NPPA. Hospitals then charged over 650% when billing the devices to patients, while distributors supplying directly to patients would enjoy as much as 892% in margins.
Now, patients purchasing stents at their maximum price won’t pay hospitals margins of more than .₹ 2,400 on DES and BVS and about .₹ 581 on BMS.
The margin has been built into the calculation of the ceiling price and, except for local sales taxes or VAT, hospitals can’t levy additional charges over and above the ceiling price, specified NPPA. The margin also adequately covers any hospital handling charges, added the regulator.
“Considering the high-end value market of coronary stents, this 8% trade margin would cover margins across the trade channels working from the level of manufacturer/importer to the end user i.e. consumers/patient,” stated NPPA. “Legally as well as ethically, hospitals cannot and should not charge margins,” NPPA chairman Bhupendra Singh earlier told ET.
While global stent makers are yet to convey their views on NPPA’s latest message, some Indian stent companies have lauded the cap on margins. “Manufacturers would have been hurt the most when the government reduced the prices of stents, but by capping the margin, the channel margin has reduced, thereby ensuring advanced innovative products to the end consumer,” Ganesh Sabat, CEO of Indian stent maker Shajanand Medical Technologies, told ET.
According to him, distributors and hospitals used to enjoy 80% of the total margins made in the supply chain, even though manufacturers were the ones invested in innovation.