Unclogging stent pricing

Heart of the matter: The govt move has been welcomed by patients but will it be a boon or bane?

Over 15 lakh people lose their lives due to cardiovascular disease, the prevalence of which is reported to be as high as 3.2 crore in recent years.

It is estimated that nearly 2% of the patients with Coronary Atherosclerotic Heart Disease (CAD) require angioplasty, a minimally invasive procedure that helps unclog blocked arteries. Cardiac stent is a critical component in angioplasty, and reports suggest that there is a fivefold increase in cardiac interventions, from about 40,000 in 2006 to nearly 2,20,000 in 2013.

At present, in India, three types of stents are used in angioplasty - Bare Metal Stents (BMS), Drug Eluting Stents (DES) and Bioresorbable Vascular Scaffolds (BVS). In terms of reducing number of adverse cardiac events and mortality rate post angioplasty, Global medical literature suggests that DES is relatively effective than BMS. No significant evidence, however, exists about the superiority of BVS over DES. A clinical intervention is not only expected to be rational but economical.

Unfortunately, in India, while preventive care is largely left to the government, treatment in both inpatient and outpatient care settings are largely in the domain of the private sector. Financing and provision of healthcare is largely private in nature. As a result, over 80 million people are impoverished because they have to pay for the treatment. Further, over three-fourth of all health spending in India comes from households. If one were to closely examine households’ health spending, nearly 70% of it goes into procuring medicines and diagnostics.

In such a setting, the nexus between companies producing and promoting stents, the distributors, hospitals and doctors is extremely significant. The difference in quality and price is largely neglected by doctors and hospitals during the decision-making process. Often doctors believe that a high-priced stent is relatively better in quality than a lower-priced one.

Either doctors/hospitals are unaware of the fact that lower-priced stents are equally good in quality or are acting in the interest of making more profit. The latter is more compelling to accept in the Indian context. Even if the patient or the family is well educated, exigencies force them to accept decisions made by doctors, without the comfort of going in for a second opinion. The trend is even more acute among the less educated.

The Indian stent market is largely dominated by multinational corporations, but domestic manufacturers are gradually making inroads. Just five multinational corporations account for over three-fourth of the stents available in India. Stents produced by domestic companies are relatively economical as well as good in quality, meeting global standards. Companies, both domestic and multinational, often find it profitable to produce and convince doctors by supplying multiple brands, whose quality and efficacy cannot be differentiated medically.

Unlike medicines, stents are supplied by the manufacturers directly to hospitals or through distributors. One estimate suggests that distributors used to charge hospitals a margin in the range of 200%, and hospitals in turn would charge the patients in the range of 650% for implanting stents.

The decision to bring coronary stents under price control has been in the works since 2013. The government has been consulting several stakeholders, including the industry, hospitals, academia, civil society, etc. In 2005, the health ministry notified 14 medical devices as ‘Drugs’ under Section 3(b) of the Drugs and Cosmetics Act, 1940, including cardiac stents. Despite requests by the National Pharmaceutical Pricing Authority (NPPA), importers and manufacturers were hesitant to share information about stent prices.

However, before stent prices were regulated, restrictions were imposed on prices of medicines under the National List of Essential Medicines (NLEM) in 2013. Based on evidence and recommendations of a sub-committee, the government added stents under NLEM in 2015, given the high and increasing burden of coronary heart disease and a greater need for utilising coronary stents. Armed with the evidence for inclusion of stents in NLEM, the NPPA, a statutory authority to control drugs prices, issued a notification to bring coronary stents under the provisions of Paragraph 19 of the Drugs Prices Control Order, 2013.

Hitting rock bottom

As a result, sky-high stent prices hit rock bottom – Rs 29,600 for DES/BVS and Rs 7,260 for BMS. It may be noted that the actual landed cost of imported BMS is currently around Rs 5,000, while that of DES/BVS is in the range of Rs 15,000 to Rs 20,000, depending upon different specifications. Hospitals and distributors (if supplying to hospitals) used to charge patients anywhere between Rs 90,000 and Rs 1,65,000.

In order to check profiteering, the drug price regulator capped the margins of hospitals and distributors on coronary stents at 8%. Such a margin is allowed from the ceiling price of stents for hospitals and distributors to be shared between them. Before the price cap, hospitals and distributors together used to share a margin in the range of 900-1,000%, thus extracting usurious rent-seeking price from patients. Such a cap virtually brings down hospital margins to as low as Rs 2,400 on DES/BVS and Rs 581 on BMS.

The immediate fallout of this is potential lawsuits by the producers. The bruised stent producers and distributors are likely to seek status quo. The hospitals which are caught unawares are likely to wage war by proxy, since ethically they have no business charging margins from patients for implanting stents. However, hospitals will gradually continue to uphold this practice by simply jacking up overall package rates (since stents rates are bundled along with other charges), and many of them do not provide the price break-up while charging patients.

The Ministry of Health and the Department of Pharmaceuticals, (under the Ministry of Chemicals and Fertilisers), may have to take a proactive stand in defending its actions with clinching evidence. The court battle could be protracted, as we have seen in the Fixed Dose Combination case. The current episode of price control reignites the case for imposing a minimum set of guidelines and standards on health facilities.

Though the central and state governments have passed legislation and rules to bring all solo providers, clinics and hospitals under the ambit of the Clinical Establishment Act, more action is required. While incremental intervention is certainly welcome, a more comprehensive and coordinated action would be required. This would facilitate healthcare to be effectively delivered and equitably distributed.

(The writer is with the Public Health Foundation of India, New Delhi)