Report on stent over-pricing not for faint-hearted

Unreasonable mark-up of final cost of stents to the patient when compared with the ex-factory cost.

GN Bureau | February 15, 2017


#health   #hear patients   #stents   #National Pharmaceutical Pricing Authority  


Stent prices have been a rip-off in India, till the government stepped in to bring it below Rs 30,000 per piece. The prices have now been slashed as much as 85 percent.
 
A National Pharmaceutical Pricing Authority (NPPA) report on stents said that based on analysis of the information submitted by manufacturers/ importers of stents, it is seen that there is unreasonable mark-up in the final cost to the patient when compared with the ex-factory cost or landed cost, as the case may be. It is seen that bulk of stents consumed in the country are imported, and the maximum retail price (MRP) in many cases is ten times the landed cost, the bulk of which is accounted for by distributor/ hospital margins and promotional expenses.
 
 
The report referred to the prices of 9 companies, including those of market leaders such as Abbott, Medtronic and Boston Scientific that together account for nearly 60 percent of the market share of stents in the country.
 
In the case of Abbott, the difference between landed cost (LC) and price to distributor (PTD) ranges between 68 percent to 140 percent across different brands; that between PTD and MRP ranges between 72 percent to 400 percent; and finally between LC and MRP ranges between 294 percent to 740 percent. Abbott makes institutional supply to CGHS with a margin of 100 percent to 200 percent only. This indicates the quantum of margin in the distribution channel, which is totally detrimental to consumer interest.
 
In the case of Medtronics, the margin between LC and PTD ranges between 82 percent and 232 percent across different brands; that between PTD and MRP ranges between 170 percent and 325 percent; and finally that between LC and MRP ranges between 498 percent and 854 percent. Similarly, in the case of Boston Scientific, the margin is between 43 percent and 105 percent across different brands; that between PTD and MRP ranges between 175 percent and 809 percent; and finally that between LC and MRP ranges between 464 percent and 1200 percent.
 
The report notes that the prices of stents in India are very high when compared with the UK and the US. In purchasing power parity terms it is more than 10 times costlier in India as compared to the UK and the US. This is a cause of deep concern, as only 60 percent of cases are covered by government (45 percent)/ private insurance (15 percent). In the remaining 40 percent cases, the cost is being met by way of out-of-pocket expenses.
 
While it is difficult to state in exact terms the total market of stents in India in the absence of a comprehensive registry in place for this purpose, the current market size for stents in the country as per Interventional Council of India is 2.62 lakh (2013). The consumption of stents in the country has risen from 1,46,719 in 2010 to 2,62,349 in 2013, which indicates how rapidly the market is growing. The market is currently growing at a rate of around 15 percent every year and is poised to become the second largest market after China by 2020.
 
Currently, the market is dominated imported stents manufactured by multinational companies such as Abbot (26.4 percent), Medtronic (22.46 percent), Meril Life Sciences (11.90 percent), Vascular Concepts (8.46 percent), and Boston Scientific (8.34 percent). Sahajanand, an Indian company, accounts for 5.10 percent. Others manufacturers include ATL Therapeutics, Biosensors, Vasmed, Choksy, MIC, Lancer, Cordis, B Braun, Optocircuit, IBM, Biotronik, Heartbeat, etc.
 
The report went on to say that the dominant players determine the market dynamics related to price points and product promotion activities, but they are hugely influenced by the dictates of major coronary centres performing coronary interventions. Here again the market is highly concentrated with 44 percent of angioplasty done in the country by 54 centres, which represents 13 percent of the total of 404 centres. Unlike India, where more than National Pharmaceutical Pricing Authority three-fourth of stents used are imported, in China, bulk of the stents used are indigenously manufactured. Though standard Indian stent brands are far more economical compared to popular imported brands, and they fully meet international specifications, the demand for them is very low, which may be attributed to steep information asymmetry and aggressive promotional practices of big companies, which does not enable the patient to make an informed decision.
 
The number of cardiac interventions in the country has grown more than five-fold during the past 10 years, from around 40,000 in 2006 to nearly 2,20,000 in 2013. Coronary Atherosclerotic Heart Disease (CAD)is a common form of cardiovascular disease in India, which afflicts around 32 million people with a mortality of around 1.6 million per annum. Cardiacstent is specifically used for treatment of coronary artery closure. Nearly 2 percent of CAD patients are treated with angioplasty.
 
Angioplasty procedure is very common these days, but the high cost of cardiac stents is a major cause of concern, as it seriously affects the ability of the common man to access it. A cardiac stent is a small expandable tube, which is used to treat narrowed or weakened arteries in the body. It is typically made of metal mesh, and implanted in narrowed coronary artery during a procedure called a Percutaneous Coronary Intervention (PCI) or angioplasty. Unlike coronary artery bypass surgery, stenting is minimally invasive because it involves no major incisions.
 
Ministry of Health & Family Welfare has recently circulated draft of “The Drugs and Cosmetics (Amendment) Bill, 2015 to further amend the Drugs and Cosmetics Act, 1940. The proposed amendment Bill primarily provides for separate provisions for “medical devices” distinct from “drugs” and also for “clinical trials”. NPPA, while giving its comments to DoP on the proposed amendments, had very clearly emphasised that Ministry of Health and Family National Pharmaceutical Pricing Authority Welfare may like to elaborate as to who will regulate the medical device market and how.
 
 
 
 

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