JOIN USCoronary stents ruling magnifies confusion for investors
As the medical device industry captures a lot of public attention these days, it is noteworthy that this
sector is capable being in news for many other good reasons than just for pricing-related issues.
While we juggle through the several news items on medical device price cap, it is important not to take away the merits that this sector has brought to modern healthcare delivery system and to credit all stakeholders for where we stand today, if not as far as we had envisioned.
As we read back in time into the process of price capping of a coronary stent, it is clear that the intent of all stakeholders concerned — industry, government, regulator and the patient bodies — was same, that is, increased affordability among all patient segments. What differed though was the choice of mechanism through which affordability was intended to be achieved. While what happened is now well known and stakeholder views on that may differ, it is always important to learn from past, act in present and move on into a better future.
The call for affordable healthcare to all is a very reasonable and justified one by the government, and industry will always remain a key partner in achieving this. As we aspire to walk into a healthy future for all, it will be the key to foster mechanisms which are agile and dynamic enough to pass the test of time and changing technology.
A regulatory structure in today’s knowledge economy must not disrupt industry. It should rather allow disruption by the industry which scales and economises. In the current context and in all technology intensive sectors, it is critical for economies to value innovation and to be able to protect them as much as we strive for democratising technology to make it affordable.
Firstly, the right levers with right ingredients are a must to be able to achieve the desired outcome. In the recent example of coronary stents, the role of a proper Health Technology Assessment (HTA) body had gone missing in the entire process. In any other established healthcare market, the recommendation for a price control would have entirely got initiated through an HTA body and then implemented by the national pricing regulator.
The National List of Essential Medicine (NLEM) essentially cannot be pitched equal to an HTA in this case. It is therefore critical to have an ecosystem and process in place before the system can actually work towards price regulations. Secondly, in addition to the ecosystem requirement, it is more important for the policy makers to have a 360 degree view and show sensitivity to give credit to innovations which are lifesaving and emerge out of well-established technology ecosystems.
In recent times, such sensitivity has been missed by clubbing several technically apart generations of drug eluting stents (DES) into one price category. These stents differ technologically and differ in outcomes in acute performance cases - where driving and delivering the stent safely through complex anatomies and disease progression states is a challenge.
Therefore, a balanced approach in meeting the parallel objectives of ‘affordability and access,’ and ‘rewarding innovations in high-end technology medical devices to become globally attractive as a destination for R&D and Make in India’ is recommended in further policy interventions in technology intensive areas.
Thirdly, a free and competitive marketplace has ever been the best economiser for commodities and we have seen the same in India for this sector if we compare from the past. Our healthcare today is cheapest in the world, which has given India its place in medical value travel. The cost of an angioplasty has been on a constant decline since it came into being.
Lastly, the regulators and policy makers must remain cognisant that profitability expectation of a nascent sector is not to be set by them, rather it is an outcome of investor expectations. Any letting down of shareholder/investor return on capital employed will leave them with free choice of exiting this sector and investing in more profitable industries, thus jeopardising a sector which has no access to adequate government funding.
Protection of innovation
And now, we hear some of the high performing DES are getting withdrawn from the market because business viability could not be established after they were clubbed in the same price band with their earlier generations. In an economy like ours, which needs more value creation and where medical device is a focus sector for Make in India, decisions like these may give a wrong signal to incoming investments in R&D and manufacturing.
Investment is a business choice; it goes where business sees protection of innovation and fruitful adoption of innovation. The current ruling on coronary stents has magnified the confusion for an incoming investor in a regulated high technology sector. Here, on the one side India wants to rise on Ease of Doing Business and achieve global competitiveness in attracting investments while on other, we end up clubbing the price band of a highly innovative product with an old generation technology owing to lack of evidence, which takes its own time in getting established.
Since the NLEM opined that there is no difference between several generations of DES, companies marketing stents should have a free choice to withdraw some generations as long they have kept a broad range still available in India. Else, the government must reconsider in favour of DES classification.
From this instance, there is a lot to learn and we must as a country, try to uphold the values of free trade to encourage industry growth and partnerships in our vision for an affordable healthy future, as we remember that the opening of our economy in the 1990s to a business-friendly marketplace has led to the India that we so cherish to live in today.
(The writer is Chairman, FICCI Medical Devices Forum)