NPPA shows high trade margins on knee implants: manufacturers oppose price curb

Leading manufacturers of knee surgery implants on Wednesday claimed they operate on “wafer-thin margins” and any undifferentiated price control by the government would be detrimental for the industry.
 
The responses from the medical device industry follows two price analysis by the National Pharmaceutical Pricing Authority, which showed how the manufacturers enjoy a price margin as high as 449% and 369% on some of the components needed in for primary and revision knee surgeries respectively.
 
Countering the NPPA, the manufacturers argue that a large chunk of the margin is used to manage a complex inventory because a single surgery involves maintaining an inventory of hundreds of items in a hospital.
 
The maximum retail price of the components required for knee surgeries was one of the lowest in the world, the companies argued after a meeting with the NPPA in which officials of Johnson and Johnson; Stryker, Smith and Nephew, Zimmer India and a representative from Medical Technology Association of India were present.
 
Last week, the NPPA came out with the first analysis to show that for femoral, tibial plate, insert and patella implants, the average total trade margin varies from 211-449% whereas for the total knee system, the total trade margin is 313%.
 
On Wednesday, the regulator came with a second set of analysis for revision knee surgery demonstrating how the total trade margin varies between 182-277% for femoral, tibial plate, insert and patella implants.
 
For joint component of knee system in a revision surgery, the total trade margin is 369%, based on the data provided by a single company.
 
Each years, there is an estimated 120,000 knee surgeries and 60,000 hip surgeries requiring implants. In addition, there are 2.7 million trauma cases, many of which need the orthopaedic implants.
 
“If price control comes in the same way (as done in the case of stent), the industry will vanish as our net margins are wafer-thin,” commented Sushobhan Dasgupta, managing director, Johnson and Johnson Medical India.
 
Following the NPPA's decision to bring coronary stents under price control, public health activists and a section of doctors are asking the regulator to bring several other medical devices also under price control in the same manner as essential medicines, whose ceiling prices are fixed by the NPPA.
 
“We will submit a proposal to the NPPA to improve patient access. At the moment, the situation is not ideal,” said Pavan Choudary, director general of MTAI.