World trade war and unaffordable healthcare

Governments all over the world are supposed to deliver healthcare to their citizens as per the laws of their own countries. But what happens when one country tries to dictate to another to change laws to suit its interests and that of its industry? Such a situation came starkly into the spotlight recently. The issue was the cost of stents and other medical appliances.

The government-mandated reduction in the price of cardiac stents has been big news in India. But the move has annoyed the American medical industry. The Washington DC-based Advanced Medical Technology Association, or AdvaMed, an association of manufacturers of medical devices and instruments, has taken the lead in lashing out at India. AdvaMed has members in the US as well as other parts of the world, including India.

Expressing displeasure, its website says, "AdvaMed and its members are deeply concerned about recently implemented price controls on coronary stents and knee replacement implants in India that have slashed prices by as much as 85% and 70% respectively, followed by signals that price caps for additional life-saving and life-improving medical devices may be forthcoming."

AdvaMed says there should be differential pricing, based on innovation. It claims that devices made by its members are much better than those made by others as they are based on innovations. It says each of its member manufacturing companies spends huge sums on medical research. This claim prompted the Indian government to examine its truth. A study was conducted by the National Pharmaceutical Pricing Authority (NPPA) under the Ministry of Petroleum and Chemicals.

The study revealed the ugly, unethical and unholy nexus the foreign companies have established with hospitals and the medical fraternity in India by giving huge kickbacks to boost their sales and profits. As for the claim of innovations, there were not really any except some marginal tinkering on the original product. Abbott Healthcare, Boston Scientific, and Medtronic, well-known US-based multinational companies manufacturing stents, failed to produce any evidence of innovations.

This study crushed the myth of innovation and, in addition, brought to light the extremely high mark-ups on stents (for example, 436% for bare metal stents and 654% in the case of drug-eluting stents, on average). This high price resulted in huge burden on the Indian patient.

The investigations made by the food and drug administration authorities in Maharashtra and Odisha have repeatedly documented the unethical practices with respect to numerous other medical devices. It was based on all these findings and a Public Interest Litigation (PIL) that the government decided to intervene and cap stent prices.

It should be noted that none of these companies faced any charges in India for the high price outrage. Just compare this with what happened in the US, where the companies were fined millions of dollars for charges ranging from hiding defects in their products to bribing doctors to use them. In addition, the US Department of Justice (DoJ) raided several hundred hospitals and imposed fines totalling $300 million for inappropriate charges. American lawmakers couldn't do much about the action taken in the US, but they supported US stent-makers by compelling India to reconsider its decision to cap prices.

The capping of the prices undoubtedly irritated the American companies and they threatened to stop supplying stents to India on the ground that their companies would face huge losses if they did under price caps. The US-based companies were cleverly trying to thwart much-needed governmental intervention to correct the prevailing situation of market failure and widespread exploitative pricing in medical devices.

Under threat

It is well known that often the policies of the American government is dictated by its big and powerful companies. So pertinently, AdvaMed approached the US Trade Representative which, in turn, demanded that India roll back the price caps. Else, the USTR would suspend benefits for India under the Generalised System of Preferences (GSP).

The Generalised System of Preferences is a US trade programme to promote economic growth in developing countries by providing preferential duty-free entry and other benefits for certain products from some 129 countries around the world. The threats by the US to withdraw the GSP benefits to India have resulted in a mammoth outcry by civil society.

The All-India Drug Action Network (AIDAN) called the American threat "a barefaced attempt to intimidate the Indian government and retaliate against its decision to fix the retail prices of cardiovascular stents and knee implants in the public interest and exposes the unabashed greed of the US medical industry and its willingness to hold poor peoples' health at ransom for the sake of maximising profits."

This is not the first time that the US has tried to bully India. When the Indian Patent Office in early 2015 rejected granting of patents for the drug 'sofosbofir' - a drug used in treating hepatitis C, it created huge waves. The US-based drug industry, with the backing of their government, tried to pressure the Department of Industrial Policy & Promotion (DIPP) under the Ministry of Commerce to grant the patent to sofosbofir. Attempts to grant Compulsory Licensing to Dasatinib, a drug used to treat cancer, by India was opposed by US-based drug companies. The list is endless.

Healthcare will remain unaffordable for most Indians, thanks to such trade war tactics.

(The writer is President, Drug Action Forum, Karnataka)