War of words on medtech pricing

201711ehm02When Commerce and Industry Minister Suresh Prabhu met US Trade Representative Robert Lighthizer for the 11th round of the US-India Trade Policy Forum (TPF) in late October, he did well to stand firm on the issue of market access to medical technology products. As this was the first formal interaction between the trade authorities of the two countries after the Trump administration came to power, it was a particularly significant meeting.

The minister reportedly did take note of the US’ concern on price caps on medical devices like stents and knee implants but pointed out that public health is a priority issue for the Indian government and they “would have to balance between the commercial interest and the larger public interest.” He also left some room for negotiation, mentioning that a review is due early next year, during which concerns of the US would be relayed back to the reviewers.

He threw the ball back into his counterpart’s court by reportedly encouraging US companies to take benefit of the “Make in India” policy and establish manufacturing facilities in India which would considerably bring down the cost of the medical devices. He used the same strategy, suggesting a win-win policy framework, when he argued that if the US tightened the norms to issue H-1B and L1 visas, targeting IT professionals from India and other countries, in order to protect US workers, the reality was that this would ultimately hurt the interests of the US. He reminded Lighthizer that the US economy had reaped the benefits of the work of these IT professionals as it had improved productivity. In an effort to remind the US trade forum that India represented a huge market for US products and services, the minister also referred to orders for over 300 aircraft worth “several billions” by Spicejet and Jet Airways.

But, midst the diplomatese between Indian and US governments, is patient interest still the topmost priority? The medical device pricing strategy is turning out to be one of the more stringent reforms of the current administration. To further muddy the waters, this is a policy that Prime Minister Modi himself has championed and any wavering on this issue could impact his run for a second term.

So we can expect the chorus for withdrawing or  tempering price controls on medical devices to subside before it reaches a crescendo once again, just before the review early next year. Price control on medicines has already reached unprecedented levels, feel industry lobby groups. Starting with price caps on drug-eluting and bare-metal stents in February this year and following up with certain knee implants in August, the medtech fraternity is worried that more bad news will follow.

Soon after the price caps on knee implants, Advanced Medical Technology Association (AdvaMed), an association representing the interests of global medtech companies, put out a statement that ‘Price Control’ is a blunt instrument and stress on affordability ignores the other two As, awareness and accessibility, required for “effective, appropriate and sustainable delivery of quality healthcare.” Unhappy with the lack of action, it was AdvaMed members who
approached the US TR to intervene and demand partial, full suspension or withdraw all India’s benefits under the Generalized System of Preferences (GSP).

Along expected lines, the Association of Indian Medical Device Industry (AiMeD) countered this stance, saying that the price cap on medical devices such as knee implants and heart stents is helping the domestic medical device market grow manifold. The All India Drug Action Network (AIDAN) has drawn parallels with what it calls the ‘bullying tactics of the US-based medical device industry’ to the opposition to compulsory licenses on patent-protected cancer medicines by MNC pharma companies.

Besides manufacturers’ margins, the government is also cracking down on trade margins and costs levied by hospitals and surgeons, so the former cannot claim to be singled out. This is surely not the last we have heard on this sore point. It is a game of wait-and-watch for now. Rather than choosing sides, it would be best if all stakeholders choose patient interest as the uppermost priority.

Viveka Roychowdhury