Will price caps treat India’s ailing hearts
At the centre of any robust healthcare reform is strong policy decisions. These policies are the roadmap of what the future of healthcare will look like in the coming decades. At a time when the Indian healthcare industry is all set to reach the $280 billion mark by 2020 with the medical device market estimated to exceed $8 billion by the end of 2020, every policy decision can play the role of a game-changer in the quality of care we bring to our people. India must, therefore, look at policies that bolster our stake in this market with solutions that encourage innovation and investment.
Today, the world is looking at us as a potential medical hub - a great opportunity for India to strengthen both medical tourism and innovation. However, at a time when the government should be giving the medical industry the impetus it needs, it has capped the prices of medical devices like heart stents, eventually leading to the withdrawal of some world-acclaimed quality stents.
The government added this cap on heart stents hoping it would increase affordability for the angioplasty procedure that would in-turn result in an increase in the number of angioplasties performed. But did it happen? There are studies that state otherwise. “There is no significant change in the growth trend of angioplasties across hospital segments post stent price control and angioplasties continue to grow at a historical rate,” quoted a study by IQVIA.
The Case of Contrasting Realities
It is important to study what moves the needle in favour of heart stents. As doctors, the primary objective is to give our patients the best quality medical device available. It is important to understand that the quality of a product influences every aspect of healthcare decision-making. Over the years, we have relied on globally manufactured heart stents to treat our patients. Even today, India relies heavily on imports of medical devices, and the numbers have gone up by 24% in FY19. India’s per capita medical device spend is USD 3, lower than China. The swelling numbers of imports indicate that the market is relying on globally manufactured devices to address the patient needs. The quality and efficacy of these devices have earned them the trust over the years.
Also, price caps are depriving patients of an informed choice. A patient will not choose a heart stent only because it’s cheaper. As a doctor, I would never advise my patients to opt for a mediocre quality stent. The debate loses its ground at the very thought of making a medical device just affordable, without throwing light on a solution that bridges the gap between quality and affordability. For instance, a tool like Trade Margin Rationalization (TMR) can be used to ensure affordable access to medical technologies. TMR allows for market-based differentiation of product prices while controlling the level of mark-ups to avoid potential abuse. As the government inclines towards TMR with on-going discussions on the ceiling, it is imperative to consider initiatives that encourage global research-based firms to sell and manufacture in India with reasonable profitability for these companies.
The government should look at imposing a cap on the margins across the value chain, rather than capping ceiling price of devices. Price capping is only disincentivizing innovation, and not rewarding it. Again, TMR alone cannot solve the problem. If we want foreign players to continue investing in our markets and meet the needs of patients, we need to give them fair and reasonable trade benefits. The government cannot discriminate against global research-based companies that import their innovative medical devices into India.
The medical sector needs policies that bring together synergies of the government and private sector to find affordable and accessible healthcare solutions. For devices like heart stents, we must understand that innovation is the key driver of the segment. For continued innovation, we need to look at sustainable solutions and foster an environment that helps companies bring quality care to India, especially at a time when the country shares a small share in the global MedTech sector. It is critical to bring the focus back to patients from price caps.
Dr Sanjiv Kumar is the Director, International Institute of Health Management Research (IIHMR) Delhi and Former Executive Director, NHSRC
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Updated Date: Sep 10, 2019 17:12:33 IST
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