LOOTING: The Central government has not brought all implants under the Food & Drug Administration which regulates the prices of items which hospitals use on patients. Cardiologist Devi Shetty of the Mysore-based Narayana Hrudayalay Hospital charges only Rs65,000 for open heart surgeries in contrast to the several lakhs charged by private hospitals. It must be noted that both angioplasty and open heart surgery are performed freely at the cardiac unit of the GMC.
By Abhay Shukla
While the material for a knee transplant or an eye implant after a cataract operation costs much less, pharmaceutical companies stock them and corporate hospitals inflate the price when they do a knee implant or fit an eye lens to replace the damaged original lens of the eye…
For price caps to be effective there should also be standardised costs of medical services and standard treatment guidelines. On February 13, the National Pharmaceutical Pricing Authority or NPPA issued a path-breaking order to regulate prices of cardiac stents across the country. Acting upon PILs filed in the Delhi High Court by lawyer Birender Sangwan from February 2015 onwards, and on direction from the court, the Health Ministry included cardiac stents in the National List of Essential Medicines in July 2016. In December 2016, the Department of Pharmaceuticals covered stents under the Drug Price Control order. This was the background based on which the NPPA finally fixed the maximum prices allowed to be charged for cardiac stents. This single move has brought down the prices of cardiac stents in India by 85%. However, the struggle to ensure affordable rates for angioplasty procedures, which had been grossly inflated until now, may just have begun.
The NPPA had estimated that the average “landed cost” at the point of import of a cardiac stent was about Rs 13,000, while the average “price to distributor” was around Rs 28,000. Compared to this, the average retail price being charged for a stent was nearly Rs. 1,05,000, allowing a huge profit margin averaging Rs. 77,000 per stent. With about 4.75 lakh stents are implanted in India annually, the staggering scale of this “stent scam” is enormous. Ordinary patients have been ripped off to the tune of Rs. 3,500 crores in a year.
With prices of the commonly used drug-eluting stents capped at Rs 29,600 per stent, profiteering through overpricing stents will now be checked. However, following the NPPA order there has been news of suppliers withdrawing stents from hospitals on pretext of re-labelling them, though it is suspected that more expensive stents might be withdrawn to maintain profit margins and artificial shortages of stents might be created as a retaliatory tactic.
Acting swiftly to avert any manufactured shortage, the Department of Pharmaceuticals on February 21 ordered all manufacturers to ensure supply of stents. The department has also ordered stent manufacturers to submit weekly reports on the number of stents they have produced and distributed.
Signaling that capping stent prices might just be the start of a wider process to check overpricing, the NPPA has declared that pricing of other implants such as orthopedic implants, intra-ocular lenses and heart valves is also being scrutinised, since here too, upto 600% profit margins are not uncommon. Heralding greater transparency, the NPPA has also ordered hospitals to prominently display the revised prices of stents so that informed patients need not pay more than the regulated amounts.
Returning to business as usual?
While a major channel of profiteering has been blocked through regulation of stent prices, there are indications that hospitals might hike up the cost of angioplasty procedures, in order to compensate for their losses. For example, a hospital that was earlier charging Rs 80,000 for the cardiac stent can now only charge Rs 30,000 following price regulation. But other components of the angioplasty procedure might now be hiked by around Rs 50,000, bringing the total cost for the patient to the same level as earlier. Such fears are strengthened by statements such as those from president of the Indian Medical Association, who has argued that hospitals must be free to charge as much as they like for performing angioplasty procedures, since this should be left to market forces. Since prices of medical procedures are presently not regulated in India, such a strategy of inflating prices of procedures will be difficult to challenge legally, even though it might be found morally reprehensible.
Another area of concern is the possibility of hospitals now pushing patients with heart problems towards major procedures like cardiac bypass operations, in preference to simpler angioplasties. Again, since today in India there is no standardisation of conditions for when an angioplasty should be performed, or when a bypass operation should be preferred. This choice depends on discretion of the doctor and hospital.
A long way to go
We thus see that developments related to stent pricing in the last few weeks reinforce the need for urgent reform of the private medical sector in India through effective regulation. While a good start has been made, piecemeal regulation is not sufficient. For such regulation to be effective, further steps towards standardising costs of medical services, and development of standard treatment guidelines should be taken. Fortunately, the national Clinical Establishments Act (2010), especially the associated rules of 2012, contain provisions for standardisation of costs, and standard guidelines for medical procedures, that can form the framework for effective regulation of these key aspects of healthcare. So far, resistance by powerful sections of the medical industry has prevented such regulation from being operationalised.
However, now public opinion as well as bureaucratic initiative is moving in direction of more effective regulation of the private medical sector. We saw the Prime Minister himself stepping in to take credit for the decision to cap stent prices, indicating that the political terrain is also shifting. Capping stent prices can prove to be a first step for much larger and long overdue regulatory reform of private hospitals. Patients groups, active citizens, civil society networks and organisations, groups of ethical doctors, and public minded officials, all need to join forces to ensure that the current policy window is widened, allowing much needed winds of change to sweep through and clean up the private medical sector in India.
The writer is a public health physician associated with the health networks Alliance of Doctors for Ethical Healthcare and Jan Swasthya Abhiyan.