For A Standards Body for Medical Devices
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.