For A Stan­dards Body for Med­i­cal De­vices

The Economic Times - - The Edit Page -

The con­tro­versy over the Na­tional Phar­ma­ceu­ti­cal Pric­ing Author­ity’s fix­a­tion of price caps on coro­nary stents has not died down, not sur­pris­ingly. The miss­ing piece in the reg­u­la­tion of stent prices is a cred­i­ble stan­dards-set­ting and cer­ti­fy­ing author­ity for stents and other med­i­cal de­vices. The ab­sence of such a body thwarts the full ex­tent of com­pe­ti­tion pos­si­ble in stents and other med­i­cal de­vices. There are In­dian com­pa­nies that can and do ex­port stents to a coun­try like Ger­many but is un­able to sell their prod­ucts in In­dia. A vi­tal rea­son is the ab­sence of a body whose stamp of val­i­da­tion is suf­fi­cient to elicit pub­lic faith in the ad­e­quacy of a crit­i­cal med­i­cal de­vice like the coro­nary stent. Aprice cap is a blunt in­stru­ment in a sec­tor that un­der­goes rapid tech­no­log­i­cal evo­lu­tion. There are mul­ti­ple mar­ket -based al­ter­na­tives that would not ei­ther choke off re­search and de­vel­op­ment, whose cost might prove pro­hib­i­tive within the price caps, or the sup­ply of the reg­u­lated de­vice. The choice of a stent to be de­ployed at the site of a coro­nary block that has been re­moved is a clas­sic ex­am­ple of the in­for­ma­tion asym­me­try between seller and buyer that makes the health­care mar­ket very dif­fer­ent from the nor­mal mar­ket for con­sumer goods. It is pos­si­ble to re­duce this asym­me­try with­out ev­ery pa­tient ac­quir­ing a med­i­cal de­gree. In­sti­tu­tion of stiff, bank­ruptcy-threat­en­ing penal­ties for eth­i­cal vi­o­la­tions on hos­pi­tals and a mar­ket for in­sur­ing the risk of such vi­o­la­tions is one step.

Clas­si­fi­ca­tion of stents into broad cat­e­gories based on ther­a­peu­tic ef­fi­cacy, ac­com­pa­nied by strict cer­ti­fi­ca­tion of stan­dards, is an­other. If the same com­pany of­fers both life and med­i­cal in­sur­ance, there is no in­cen­tive to ei­ther scrimp on health­care costs or to fund ex­trav­a­gant treat­ments.

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