Efforts to bring in transparency on medical device pricing falter at enforcement level, says survey

PT Jyothi Datta Mumbai | Updated on July 23, 2019 Published on July 23, 2019

Proposed shift to trade-margins cap would make enforcement more cumbersome

The Centre’s efforts to bring in transparency in the pricing of medical devices by controlling the price of cardiac stents, for example, may be skidding at the altar of enforcement, finds a recent consumer survey.

And enforcement is set to get more cumbersome, say industry-watchers, if the government rolls back its intention to extend price control to more medical devices and goes instead with a proposal reportedly being discussed to cap trade margins on devices at between 30 and 50 per cent.

A survey by LocalCircles, a community social media platform, found that hospitals were not disclosing the MRP (Maximum Retail Price) on medical devices to patient families, though they are mandated to do so.

Stents are wire-like meshes used to remove heart blockages and the National Pharmaceutical Pricing Authority capped the prices on cardiac stents about two years ago. Hospitals were mandated to disclose prices from January 2018 following an amendment to the Legal Metrology Packaged Commodity Rules 2017.

Respondents in the survey were asked whether hospitals had made available to them the packaging of the medical device used in treatment in the last one year. About 38 per cent said that hospitals had never made it available, about 20 per cent said they don’t make it available even on request and 42 per cent said hospitals do make it available, but on request, the survey found.

“All medical devices like stents, knee/hip replacements, catheters etc. are now supposed to have MRPs as per law,” but only 28 per cent of the respondents said they came across medical devices with its MRP, according to the survey of over 8,000 affected patients or their family members.

The responses reflect the need for greater enforcement of the NPPA’s directives on the ground for it to benefit patients, says Sachin Taparia, Founder of LocalCircles. And if this was the situation with price-controlled products, enforcement would only get more difficult if trade-margin capping comes in, Taparia told BusinessLine.

Complexities increase

In fact, in a letter to the NITI Aayog, Taparia said, changing the model from direct price capping to capping of trade margin would increase enforcement complexities “manifold”.

“Every medical company could have a different cost for the same products and this cost in theory could be dynamic based on customs duty, logistics costs, country from which its is imported, etc. With hundreds of line items, potentially going into the thousands, across the 24 medical device categories, an inspector will not be able to figure out whether MRP calculated is accurate or not.”

If the government decides to implement trade margin capping, it must ensure all medical devices when they leave the factory or arrive at a port in India have MRPs/cost etc on them and this be captured by government systems, the letter said. Data analytics should then be utilised to identify any red flags and drive enforcement, it added.

In the absence of such an enforcement system, Taparia recommends that the direct price cap model be followed for price control of medical devices. A regulatory authority like the legal metrology controller could check hospitals to see that patient families were getting what they are billed for, he said. And this would help the government nail where the malpractice was taking place.

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Published on July 23, 2019
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