NEW DELHI: In a step towards controlling high prices of commonly used medical devices, the government is set to identify a list of “essential medical devices”, expected to be a precursor to anti-profiteering measures such as capping trade margins in the range of 30-50%.

The list is intended to be the basis for policy action intended to prevent distributors, wholesalers, retailers and even hospitals from seeking exorbitant trade margins on products like stents, catheters and various implants. Capping trade margin in the 30-50% range may at first sight appear high but reflect a balance, sources said.

Currently, medical devices are largely out of government price control. Just four items — cardiac stents, drug eluting stents, condoms and intra uterine devices — are in the National List of Essential Medicines and fall under government’s purview. Apart from these, only knee implants have been recently brought under price control.

Indian Council of Medical Research – the research and analysis wing of health ministry - has called a meeting with all stakeholders on July 26 to discuss concerns relating to the pricing after which it may finalise the list that is under discussion. While some sections call for cap on MRP, the government is inclined to checking trade margins which might find higher acceptance in the medical-pharma sector.

A number of consultations have taken place recently involving Department of Pharmaceuticals (DoP), National Pharmaceutical Pricing Authority (NPPA), Niti Aayog and Prime Minister’s Office (PMO). Last week, commerce minister Piyush Goyal had also sought representations from the industry after concerns over price cap on medical devices were raised, particularly by American companies.

While the government is ready with a plan to cap trade margins, the ceiling is under discussion. The DoP along with NPPA have proposed to cap the margin at 30% of the price to the distributor. However, Niti Aayog had earlier suggested fixing it at 65% but after intervention from the PMO – which felt 65% may be too high – the government think tank has proposed a 50% cap.

However, public health experts feel the problem of high costs cannot be addressed only through capping trade margins and instead requires price fixation. “In fact, margin capping could end up legitimising the real possibility of high landed costs and therefore, higher selling price to the patient. Ceiling price fixation is non-negotiable from the consumer’s point of view,” says Malini Aisola of All India Drug Action Network (AIDAN).

Though both domestic and foreign medical device companies support trade margin rationalisation seeing it as a better option as compared to an overarching price cap on MRP, industry is divided on the formula for capping trade margin.

Foreign companies are seeking trade margin cap from distributor onward, local manufacturers say importers are also traders and ex-factory cost or the import price should be taken in consideration.

“For a level playing field, the policy needs to equate an overseas manufacturer’s first point of sale at which their goods enter India with the ex-factory price of the Indian manufacturers,” says Rajiv Nath, forum coordinator of AiMed – an industry association of local manufacturers.

At present, India imports over 75% of all its medical device needs and around 80% of the imports include high-end products used in critical care. The total market of such products in India is worth about $6 billion, and is expected to grow to $50 billion by 2025.



In Video: Government all set to identify a list of 'essential medical devices'