After capping the price of coronary stents in February, the National Pharmaceutical Pricing Authority (NPPA) imposed price control on Orthopaedic implants on August 16 to “check overcharging and unethical profiteering and make healthcare affordable.” That is the first step towards controlling their prices. However, it would be interesting to analyse if imposing price caps would end price-rigging and profiteering by unscrupulous private hospitals.
Private hospitals are found to jack up the overall cost of healthcare services and makes it unaffordable to many in a country where out-of-pocket medical expenses are as high as 70% of the total. Thus, it makes sense to impose price control.
However, the imposition of price caps only on knees or stents may choke the supply of medical devices. Subjecting major bulk drugs to price control vide the Drugs Price Control Order, 1995, led many pharmaceutical companies to gradually move out of production that had a cascading effect on the supply of formulations made from price-capped bulk drugs. It’s no secret that India is now heavily dependent on the import of bulk drugs and active pharmaceutical ingredients (APIs) from China.
Post the imposition of price cap on stents, many suppliers threatened to stop manufacturing and importing coronary stents, though the government momentarily forced them not to do so. However, it’s safe to conclude that India may have to rely even more on imports of price-capped medical devices. As the latest innovations are expected to be expensive, price caps will induce the import of low-quality devices that will ultimately perform poorly and cause patients to suffer. Indigenous manufacturing of orthopaedic implants plays an important role in matching to the high demands in Indian scenario. The only problem remains is quality control in manufacturing of such high end implants which needs to perform perfect for many years in a human body and should not increase the grievances of suffering patients further.
The capping of orthopaedic implants has one more important flaw, the cap is only on knee replacement implants only. Knee replacement is done as an end stage treatment of osteo-arthritis. It’s an incredible innovation in orthopaedic field. However the fracture implants, plates, screws nails that are needed for masses of all classes are left un-capped. Accidents and fractures are in evitable and hence the need of trauma implants at price-controlled rate should have been the first move in orthopaedic industry. Just like stents are life saving in cardiac field, so are orthopaedic implants un-like the knee replacement. It sounded on media, like a great move by government to help the masses but knee replacement is needed for just a handful orthopaedic patients.
Moreover, capping on knee implants can also dampen the prospects of India’s fast-growing medical tourism industry in Knee & Hip replacement. Worse, it may induce nationals who can afford to go abroad for medical treatment.
India’s healthcare services sector is an under-supplied industry. Private healthcare providers account for over two-thirds of all patients, as overcrowded and underfunded government hospitals are always short of beds, doctors, devices or essential medicines. There’s always a long waiting list for critical surgeries and a patient needs influence (or a little help from touts) to jump the queue. As a result, patients either go to private hospitals if they can afford or suffer from deteriorating health. Thus, it’s the appalling state of government hospitals that forces even the poor to go to private hospitals.
Roughly 60% of medical and surgical devices used in India are imported. Unlike medicines, India’s underdeveloped indigenous medical device industry can’t really supply the country’s ever-growing requirements. Moreover, imposing price caps on medical devices will induce private hospitals to raise the charges of procedures/fees/bed rentals (to compensate for lower margins on devices). The government should instruct all healthcare providers—private public—to display all charges and fees for all kinds of treatment, including prices of medical devices and instruments, on their websites, so that the buyers of healthcare services can decide where to go and which facilities to use. This will reduce information asymmetry and improve transparency.
Though overcharging and profiteering is a serious problem, imposing price controls is a bad medicine that will have many side-effects, including reduced investment and shortage of life-saving medical and surgical devices in the country.
