Not surprisingly, since last week, three multinational stent manufacturing companies — Abbott, Medtronic and Boston Scientific Corporation — have sought to withdraw their cutting edge stents from the Indian market, stirring concern about the long-term impact of such an exodus on patient care in India. The companies, as well as several hospital administrators, argued that as the government’s price control order treated all drug-eluting stents as equivalent, disregarding differences, it should not in principle have any objection to companies withdrawing some stents and maintaining a steady supply of others. But stung by this withdrawal, the government has invoked an emergency clause in the Drug Price Control Order (2013) and has asked the manufacturers to maintain uninterrupted supply of all types of stents. Unfortunately, by doing so the government has just compounded its initial mistake.
The original decision of the government to cap the prices of stents betrayed a lack of understanding of how the market would respond. There were two sets of problems, one of which pertained to the government’s ability to enforce such a cap. It was feared that while complying with the government diktat making it mandatory for hospitals to bill stents separately from surgical procedures, hospitals would simply charge more for other services. Anecdotal evidence suggests that this is what happened. In any case, there was no way the government could monitor this. But the bigger problem was about the scarcity of quality stents. Companies such as Abbott find it is not profitable to supply its best stents below the price ceiling. When the price cap was announced, some doctors did say that in the absence of quality products, patients needing critical care would have to compromise by using inferior Chinese stents. Reports suggest Chinese stents are gaining massively from the gap created by the shortage of stents from the US.
Clearly, none of the outcomes till now has helped consumers. And this is not surprising because price control is a poor policy choice unless it is thought through. At the very best it provides some temporary relief and only helps in creating a grey market. Invoking an emergency clause to ask companies to maintain supply of stents is a desperate solution. The government and the stent industry will eventually need to converge on a policy to help make available the full range of stents to patients in India. Differential pricing has to be the answer when it comes to the entry of the latest technology into India.
