Matters of the heart: Price ceiling on coronary stents
According to the WHO reports, cardiovascular diseases caused 17.9 million deaths in 2016, representing 31% of all the global deaths, and 85% of these deaths were due to heart attack and stroke. Cardiovascular diseases (CVDs) are a group of heart and blood vessels disorders, including coronary heart disease, cerebrovascular disease, peripheral arterial disease, rheumatic heart disease, congenital heart disease, deep vein thrombosis, and pulmonary embolism. CVDs have become a leading cause of mortality in India, thus increasing cardiac interventions. However, with increased cardiac interventions, the affordability of cardiac procedures was a significant concern. Therefore, the National Pharmaceutical Pricing Authority (NPPA) in February 2017 effectively slashed the price of coronary stents by 85% and fixed the price ceiling for them. As a result of the uniform price ceiling, the drug-eluting stent (DES) and bioresorbable vascular scaffold (BVS) costs were reduced to ₹29,600, and bare-metal stent to ₹7,260. This move came as a response to making coronary stents affordable. Usually, Government imposes a price ceiling on products and commodities to control the maximum prices that suppliers can charge.
In December 2014, Lawyer Birendra Sangwan filed a query under the Right to Information Act to challenge the exorbitant prices of coronary stents by the NPPA. To Mr. Sangwan’s question, the NPPA replied that the stents are notified as ‘drugs’ under the Drugs and Cosmetics Act, and since they are not part of the National List of Essential Medicines, no ceiling price was fixed on them. In 2015, Sangwan filed a PIL, and after a long legal battle, the Government in December 2016 included coronary stents in the Drug Price Control Order (2013). These high prices generated profit margins ranging from 270 percent to 1,000 percent.
The market dynamics have changed from 2017 mainly because of the stringent price caps imposed by the Government. There has been a 30–40% increase in usage due to improved affordability. The market share of the local manufacturers has also increased from 35% (2016–17) to 60% (2019–20).
The price ceiling of coronary stents led to the ripple effects resulting in various unintended consequences. First, the price ceiling affected the hospitals’ profit margins, leading to clinical distortions. So previously, the patient’s actual price of a stent included heavy cuts at every level of the trade. The price control affected the entire supply chain resulting in hospitals charging more for non-medical items. Second, the uniform price ceiling on coronary stents led to the withdrawal of foreign manufacturers leading to a reduction of foreign investment in developing new technology in coronary artery diseases. Third, price regulation has allowed better margins for Indian companies increasing their value from 30% (2016–17) to 55% (2019–20). With price controls, local manufacturers have captured a more extensive market within India. Fourth, as an outcome of a uniform price cap, there was a push from the pharmaceutical companies to use more BVS over the base-metal stents. Since the price difference between the BVS and the base-metal stunt is approximately ₹20,000 (after the price-ceiling), a higher-value product was used to maximize profits. Finally, a uniform price ceiling essentially grouped various grades of stents under one price cap with no differentiation in the quality or technology of the stents. As a result, the manufacturers worked from a profit maximization perspective to make the ceiling price their target price with a limited focus on improving the quality.
In my opinion, the price ceiling on coronary stents was a singular motive intervention that caused unintended consequences within the healthcare ecosystem. Instead, differential pricing would have worked better where the patients could choose stents from a range of options based on their pocket size. This could have also prevented market distortions and allowed indigenous stents to be internationally competitive.
