Feb 16, 2017 06:29 PM IST | Source:

NPPA justifies stent price cap, says cos can still make a profit

The National Pharmaceutical Pricing Authority (NPPA) on Wednesday justifying its price ceiling indicated that it still left enough room for the stent makers to make a decent margin and the drug price control order (DPCO) has provision for separate prices for superior products – two main concerns raised by the stent manufacturers.

NPPA justifies stent price cap, says cos can still make a profit

Viswanath Pilla
Moneycontrol Bureau

In response to stent makers' concerns over fair pricing, The National Pharmaceutical Pricing Authority (NPPA) on Wednesday indicated that its decision to lower the pricing of the heart scaffold still leaves enough room for the manufacturers to make a decent margin. The regulator also added that the drug price control order (DPCO) has a provision for pricing superior products differently.

“The average landed cost of 52 brands of drug eluting stents (DES) imported by 9 companies is Rs 16,918. Out of these only 5 brands are landing above Rs 26,900,” NPPA said on its twitter handle.

NPPA on Tuesday capped the prices of bare metal stent at Rs 7260 and drug eluting stent (DES) and biodegradable stents at Rs 29,600. Both the prices are exclusive of value added tax. DES constitutes 95 percent of the market.

NPPA ruled out any possibility of giving more time for the manufacturers to comply with its notification. NPPA quoting Supreme Court said price capping of essential drugs will come into immediate effect, adding that inconvenience in implementation cannot outweigh public interest.

NPPA decision has caused quite a heartburn to stent makers. The stent manufacturers associations have expressed disappointment over the NPPA price cap saying that it reduces the options available for Indian patients and sought 45 days transition time for compliance with NPPA order.

“The singular focus on controlling ceiling price of stents, without attempting to address the larger picture and correct inefficiencies in the healthcare ecosystem will not achieve its stated benefit, in the long-run,” said Advamed, the lobby group that represents large multinational stent manufacturers.

Another industry body Medical Technology Association of India (MTAI) said the broad-brushed announcement of price capping of coronary stents will reduce the options available for the Indian patient, MTAI said in a statement.

The association sought 45 days to comply with the order. It said that the maximum retail price of such scheduled formulation does not exceed the ceiling price. 

The association main grouse is that the stent manufacturers haven't been given any transitio time, which is normally provided to the industry.

"Sudden implementation of this order will result in an overall disruption in the market and supply chain, leading to non-availability and chaos for patients in need,” MTAI said.

The hospitals who are blamed for high prices of stents responded cautiously to the NPPA price notification.

Naresh Trehan, renowned cardiac surgeon and Chairman of Medanta in an interview to CNBC-TV18 welcomed the move saying that it improves access and brings in transparency, but said the policy doesn’t address issues such as pricing of special stents and those in inventory.

Medanta operates super specialty hospital in Gurgaon outside Delhi.

Trehan asked the government to consider flexible pricing for new technology stents.

“Stents price cut makes angioplasty more accessible, Apollo welcomes the intent and will pass on benefits to patients,” said Sangita Reddy, Joint Managing Director, Apollo Hospitals, one of India's largest multispecialty chain.

Devi Shetty, renowned cardiologist and Founder-Chairman of Bengaluru-based hospital chain Narayana Hrudayalaya welcomed the NPPA decision on grounds of making stents affordable – but cautioned against patients losing access to some of the most advanced stents.

“The good news is that today every Indian can aspire to have a medicated stent which is US FDA approved for Rs 30,000 that is a good thing,” Shetty said in an interview to ET Now.

In an interview to Economic Times Shetty said that patients preferring to opt for more sophisticated -- and expensive stents -- might not be able to find them in the market as they will have 'disappeared.' 

Analysts say that the government move will surely hurt the margins of the medical device companies, distributors and hospitals but warned hospital providers to resort to upward revision in package pricing components to offset the impact of downward revision in stent pricing.

“The true impact of stent pricing control on patients’ pay-out has to be understood in terms of the potential response that this move is likely to elicit from private hospital providers,” said Kaustav Ganguli, Senior Director, Alvarez & Marsal.

“MRP compression for stents will lead to sale price and margin compression across the value chain thereby impacting medical device companies, distributors and hospital providers. Many hospital providers are likely to resort to upward revision in package pricing components to offset the impact of downward revision in stent pricing. However, such package pricing revision is likely to only partially offset the impact of the downward revision of stent pricing. To summarize, patients’ pay-out will be lowered though not to the extent suggested by the difference between earlier and revised stent prices,” Ganguli said.

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