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Hospitals make a killing on stents: NPPA

Aesha Datta New Delhi | Updated on January 12, 2018 Published on January 17, 2017

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Enjoy high trade margins in the range of 11-654%



Hospitals are taking the scalpel to patient’s hearts and pockets, a document shared by the National Pharmaceutical Pricing Authority reveals.

It shows a staggering increase in prices of stents with hospitals enjoying unimaginably high trade margins — as much as 654 per cent.

The Authority, which has proposed several different pricing mechanisms as the essential devices are set to come under price control, shared a document comparing the minimum and maximum prices at different stages — landed cost, price to distributor, price to hospitals and retail prices — for imported and domestic bare metal and drug eluting stents.

The data show that the prices of imported bare metal stents with landed cost between ₹4,192 and ₹16,749 would finally cost the patient and his family anywhere between ₹30,000 and ₹50,000. The price differences for domestic bare metal stents also fall in the same range — finally weighing in at ₹25,000 to ₹75,000 for the patient.

For patients in need of drug eluting stents the maximum retail price burns a far bigger hole. With landed cost of such imported devices standing between ₹5,126 and ₹40,820, the final retail prices, however, come in at ₹40,000 to as much as ₹1.98 lakh.

The biggest inflation of this price takes place between the distributors and hospitals, since manufacturers — domestic or international — do not sell to hospitals directly.

Manufacturers’ margin

The data, which has been collated by the NPPA over the last year, show that manufacturers enjoy margins in the range of 20 per cent and 56 per cent when selling to distributors. The distributors then keep a high margin — a minimum of about 11 per cent to as much as 196 per cent, according to NPPA.

The hospitals, further keep a margin in the range of 11 per cent to 654 per cent.

For some stents this means a trade margin of 1026 per cent over the price at which the product is sold to distributors. The proposal to bring stents under a price control mechanism has come under severe fire from the pharmaceutical industry, which is claiming the mechanisms arrived at by the authority needed to be more “rational.” The move would hurt the “Make in India’ attractiveness of the country,” according to Rahul Khosla, President of Healthcare Federation of India. Khosla is also the President of the Max Group.

The price capping options derived by the NPPA currently include several mechanisms, such as a 35 per cent margin over landed cost, or a fixed 16 per cent margin over the price to hospitals. Such mechanisms will bring down the prices by over half in some cases, with proposed prices of bare metal stents falling under ₹12,000 and those of drug eluting stents staying below ₹68,000.

Published on January 17, 2017
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