Hospitals charging over 500% for angioplasty devices: Maharashtra FDA
Report submitted to NPPA for action
The National Pharmaceutical Pricing Authority’s (NPPA’s) move to cap the price of cardiac stents has solved only half the problem faced by patients. Balloon and guiding catheters, essential devices in angioplasty, are still exorbitantly priced, a study conducted by the Maharashtra FDA (Food & Drug Administration) from December 2016 to April 2017 has shown. Business Standard has reviewed the report which has been submitted to the NPPA for action.
In the supply chain, hospitals make the highest profits, the study reveals. For instance, balloon catheters are being sold by them at over four times the landed price by hospitals. Guiding catheters are being sold at over five times the landed price. The study mentions the profit margin for hospitals is 472 per cent with respect to landed price in the case of balloon catheters and 529 per cent for guiding ones.
The profit margin for distributors ranges between 20 per cent and 211 per cent for a balloon catheter, while for guiding catheters it’s between 64 per cent and 119 per cent. For manufacturers, profit margins lie anywhere between 17 per cent and 120 per cent for balloon catheters and 3 per cent and 154 per cent for a guiding one.
The study has been based on invoices from 12 major hospitals in Maharashtra, including Fortis (Mulund), Wockhardt Hospitals (Nagpur), Hiranandani Healthcare and Asian Heart Institute (Mumbai), among others.
The survey has found that over 70 per cent of the cost paid by patients for a balloon catheter is the profit margin of three stakeholders —manufacturer, distributor and hospital. In the case of guiding catheters, more than 47 per cent of the cost paid by the patient is the profit margin of the three stakeholders.
An example cited is that of a balloon catheter manufactured by German device maker Biotronik. While it landed in the country at ~4,229, it was sold to a distributor at ~ 5,918, who then sold it to Fortis at ~7,950. Finally, a patient bought it for ~22,000 at the hospital.
In another example, Abbott’s balloon catheter priced at ~4,534 at the time of landing was sold to a distributor at ~7,532. This was sold to Fortis Hospital at ~9,500. For the patient, it was priced at ~22,000.
In both cases, the hospital made a profit of over 200 per cent and 300 per cent, respectively. The patient ended up paying 500 per cent more than the landed price. Usually, two balloon catheters are used for one angioplasty.
In the case of Johnson & Johnson guiding catheters with a landed price of ~1,425, if a distributor got it at ~3,627 and the hospital at ~5,325; the patient’s bill ran up to ~7,550. The hospital earned a profit of more than 150 per cent and the patient ended up paying 529 per cent more than the landed price of the guiding catheters. One or two guiding catheters are required in the process of stenting.
“During the study, it was observed that most of the hospitals are not procuring balloon catheters with proper invoice purchases, instead they are providing this drug notified medical devices to hospitals with a delivery challan, in some cases these are directly supplied to the cathlab,” the report said. This amounts to violation of the Drugs and Cosmetics Act, according to the study.
An Abbott spokesperson said, “Different countries have different health care systems, and the price of a product in a specific country is dependent on various factors related to that country, including its business model, bidding process and the distribution methods. In addition to manufacturing, the cost of a product depends on various factors that include R&D, quality control, on-going clinical studies to ensure product safety, pharmacovigilance, short expiry and unique product packaging result.”
The other companies, including hospitals, did not respond to Business Standard’s queries.
This is the case in other essential devices such as oxygen bags and urinary bags as well, Maharashtra FDA has observed. Hospitals sell oxygen bags at a price which is 300 per cent more than what at which they procure. Urinary bags are sold at a price which is 500 per cent higher.
The trend is the same even for intraocular lenses. The difference between the price to hospital and the maximum retail price is somewhere between 200 per cent and 300 per cent, says a letter written by the Maharashtra FDA commissioner to the central safety controller.
It was the same situation in the case of coronary stents before the NPPA capped its price. Margins on coronary stents were anywhere between 270 per cent and 1,000 per cent.