Affordability Versus Quality: The Implant Debate Rages

Affordability Versus Quality: The Implant Debate Rages

A model showing the working of the knee and a knee implant’s function 

While the Centre attempts to cut prices of stents and other medical devices, manufacturers say that quality will take a hit if prices are capped

In February 2018, the National Pharmaceutical Pricing Authority (NPPA) slashed prices of stents further, in an effort to make these crucial implants more affordable for the Indian masses.

Drug-eluting stents have become further cheaper, at Rs 27,890 from the earlier cap of Rs 29,600. This price slash came a year after the NPPA had already cut the prices of stents by 85% one year ago.

“(Union Minister) Shri Kumar informed that now the ceiling prices of Bare Metal Stents (BMS), having 10% market share, has been capped at Rs 7260 and Drug Eluting stents (DES), having 90% market share, at Rs 29,600. These prices are exclusive of VAT and other local taxes. The Minister further stated that since most of the States have 5% VAT on stents, the MRP of BMS and DES would be Rs 7623 and Rs 31,080,” stated a PIB press release, quoting Union Minister for Chemicals & Fertilizers and Parliamentary Affairs, Ananthkumar.

The minister also claimed that the prices of stents before the price cap had been marked up by 380% by manufacturers. He also stated that “based on price reduction, patients will get average benefit of (Rs) 80-90 thousand per stent resulting into a gross relief of Rs 4450 crores in one year.”

The Ministry of Health and Family Welfare included coronary stents in the National List of Essential Medicines, 2015 on 19 July 2016 and the Ministry of Chemicals and Fertilizers incorporated coronary stents in Schedule I of the Drug Prices Control Order 2013 on 21 December 2016.

According to the Government of India, cardiovascular diseases are a major cause of death in the country, totalling about 25% of all deaths.

Of these, 90-95% deaths happen due to coronary artery diseases.

The 2015 report of the National Commission on Macroeconomics and Health states that the prevalence of coronary artery disease in India is about 61.5 million.

Another report by the Health Ministry states that over 3.5 lakh procedures were done in 2015 alone which used 4.73 lakh stents. In 2016, the figure of cardiac stents was above 5 lakhs.

Currently around 30% of stents are made in India, while MNCs enjoy the other 70% of the market.

“In recent years, the number of angioplasty with stents has tripled as it is safe, effective and non-surgical procedure (no scar on the chest, no anaesthesia) and just one-day hospital stay has made it more popular option,” wrote Dr IB Vijayalakshmi, Professor of Pediatric Cardiology at the Bengaluru Medical College and Research Institute, Bengaluru. “However, the prohibitively expensive stents made it difficult for the poor and lower middle class people to go for this. Ordinary citizens could not afford to foot the bill in corporate hospitals due to whopping cost of the drug eluting stents (DES) which are considered to be far better than bare metal stents.” This article titled “Stent Price Cap – A Bold Pro-People Step” was published in the Press Information Bureau site in May 2017.

“The average landed cost of an imported DES was only Rs 16,918 (ranged between Rs. 12,920 to 19,040 ie $190 to $280). The cost of BMS ranged between Rs 4760 to 6120 ($70-$90). But various hospitals were giving package deals – Angioplasty (With 1 Stent) from Rs 2,20,000 to 3,60,000. The question arises if the original cost was so low, then why the hospitals were charging so exorbitantly?

The reason was evident, when Maharashtra FDA gave the report to the then state government; it found that a prominent multinational healthcare company was selling DES at Rs 40,710 instead of Rs 19,040 in India, making a net profit of Rs 21,670 on each stent.

Further the Indian distributor was selling at Rs 73,440 (making net profit of Rs. 32,730) while a well-known private Hospital was implanting the stent for Rs 1.1 lakh.

In the bill, it was reflected as Rs 1.2 to 1.5 lakhs per stent. In the process, making a neat profit of Rs 76,560 per patient.

This sort of middle man making money at three levels was going on throughout the country and had become a big business as more than 5.5 lakhs stents were being used per year.

The international companies looked the other way when their distributors were selling the stents at triple the cost on which the DES were being imported.

More stents were sold as Indian distributors, who hiked prices for DES, used part of the proceeds to encourage doctors to recommend more and more stents,” wrote Dr Vijayalakshmi.

It is not just about stents though. Orthopaedic implants comprise a major part of medical devices. Orthotics, which include joints, knee and hip replacements, and prosthetics, which are artificial limbs, are very much in demand.

And as per capita income of the average Indian rises, more patients are opting for these procedures. The story is the same among orthopaedic implants as it is with cardiac stents.

“The price cap is necessary in a country like India,” said Dr Madan Mohan Reddy, senior consultant orthopaedic surgeon with Apollo Hospitals, Chennai. “Middlemen are making more money, which is not necessary. The packing and marketing costs are all added to the cost of the implant making it very expensive. For example, the bulk manufacturing cost of any orthopaedic implant will not be more than Rs 7000 to Rs 8000. But even after the cap, a knee implant costs Rs 54,000. So prices can definitely go down further,” he said.

Dr Madan Mohan Reddy, senior consultant orthopaedic surgeon, Apollo Hospitals
Dr Madan Mohan Reddy, senior consultant orthopaedic surgeon, Apollo Hospitals

While knee implant prices have been reduced by the Centre by Rs 25,000 to Rs 30,000, hip implants are yet to see a revision in prices.

Dr Reddy points to an experiment, the brainchild of Dr Pratap C Reddy and Dr Preetha Reddy, Chairman and Executive Vice Chairperson respectively of Apollo Hospitals. At the small village of Aragonda in Chittoor district, Andhra Pradesh, they set up a small facility, decided to forgo the frills in order to provide quality orthopaedic care at an affordable rate to the villagers in the area.

Knee and hip implant surgeries conducted at Aragonda at lower rates without compromise on quality, have been a huge hit (Pic Courtesy: Dr Madan Mohan Reddy)
Knee and hip implant surgeries conducted at Aragonda at lower rates without compromise on quality, have been a huge hit (Pic Courtesy: Dr Madan Mohan Reddy)

“We did not take surgeon fees, we reduced the prices of the implants and have done 127 successful surgeries so far,” said Dr Reddy. “But such an experiment requires the support of management and we got that.”

A knee replacement surgery which costs Rs 2,54,000 at Chennai’s Apollo Hospitals costs only Rs 1,30,000 at Aragonda. It is done by the same surgeons with the same implants and patients are given similar post-operative care.

As the news of the knee replacements spread by word of mouth, patients from all across Andhra Pradesh started trickling in.

“It is a wonderful thing to be able to provide quality implants at rural areas,” said Dr Reddy. “The biggest problem with faulty implants is infection. Another problem is loosening of the implants which needs revision surgery, a painful process. And of course, the terrible pain that the patient has to endure affects them a lot,” he said.

Unhappy Manufacturers

But manufacturers are not happy with the situation. The stent market is growing at 15% annually in India and the country is projected to become the second largest market in the world after China by 2020.

It is a golden goose of sorts for manufacturers. AdvaMed, a lobbying group for foreign medical device makers has been attempting to engage with the Indian government to stop slashing the prices of stents and medical devices.

In its website, AdvaMed explains why India is a big market for foreign medical device makers. “The World Health Organization, non-communicable diseases (NCD) Country Profiles, 2011 states that more than 53% of total deaths every year in India are due to NCDs and by 2020, over 60 million Indians will succumb to them.

With over 62 million diabetics, India is fast becoming the diabetes capital of the world.

One of every three adults here has high blood pressure. Hypertension kills nine million people every year.

India’s share of the global disease burden – 20 per cent with 18 per cent of the population – is amongst the world’s most skewed and highest. The share of non-communicable diseases (NCD) in India, such as heart disease, diabetes, osteoarthritis and cancer, diagnosis, treatment and prevention of these is demanding attention like never before.

Medical devices have been playing a tremendous role in mitigating India’s disease burden. Coronary stents have cut the number of patients dying from heart attacks in this country by half, implantable cardiac defibrillators have increased the chances of surviving a sudden cardiac arrest from five per cent to 98 per cent.”

Arguing for an alternative to price caps or price control mechanisms by the Indian government, AdvaMed insists that higher prices for medical devices such as stents are crucial in order for innovation to take place amongst manufacturers. The lobbying group also states that the medical devices industry in India is worth around USD 4.9 billion and is growing at approximately 17% annually in the past few years.

“Alternatives to mechanisms such as price control should be explored, that facilitate differential pricing for innovative medical technologies,” says AdvaMed in a 2018 report called “Medical devices in India – an agenda to effective healthcare delivery”.

“This will pave way for improved healthcare access in the country, making the healthcare ecosystem stronger. What India needs at this juncture is to see the larger picture of improved healthcare access to patients, rather than just focusing on controlling the prices of devices. Therefore, concentrated efforts are required across the value chain to ensure that government policies ultimately benefit patients. This will also help in achieving the government’s long-term goal of universal health coverage,” says the report.

“The cap in pricing is a very good move by the government,” argued Dr Reddy. “But what will supplement that move is a good national registry. Maintaining a registry is tough, no doubt – documentation is poor, patient compliance is poor and follow up is very poor. A registry can be maintained only if we keep revisiting the patients over a period of time,” he said.

Data about the history of the patient, indication for hip and knee replacement, pre and post-operative X-Rays, patient’s pain score, mobility, range of movement and social and recreational activities would all have to be document in the registry.

“A registry makes a load of difference in terms of patients, hospitals, for everyone. It gives a lot of insight into implants and which ones to not use,” said Dr Reddy.

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