India and the Coronary Stent Market
Getting the Price Right
- costs and cost analysis
- drug-eluting stents
- percutaneous coronary intervention
- socioeconomic factor
On February 13, 2017, India’s National Pharmaceutical and Pricing Authority (NPPA) made a landmark decision to fix price ceilings for coronary stents at 7260 rupees for bare metal stents and 29 600 rupees for drug-eluting stents (US equivalents of $108 and $444, respectively).1,2 Stents had been placed on the National List of Essential Medications (NLEM) in July 2016 by the health ministry.1 In India, stents turned out to be subject to substantial price markups on their journey from manufacturer to patient, at times exceeding 4 times their original imported value.1,2 The recent decision by the NPPA precipitated immediate price cuts of up to 85% in some cases, which has been lauded by consumers and patient advocates, but drawn criticism from others who are concerned that it may lead to shortages and stifle innovation.3
The fight to cap stent prices began in a hospital near New Delhi (Figure). A lawyer, Birender Sangwan, was visiting a friend who had undergone percutaneous coronary intervention and subsequently received a bill exceeding $4500. Sangwan attempted to procure the bill for the stent on behalf of his friend to determine its retail price; the physician refused. Galvanized by suspicion, Sangwan investigated and noticed substantial price variation in the cost of stents among New Delhi hospitals. He ultimately filed a public interest litigation advocating for stents to be placed on India’s NLEM, a significant move for a medical device. This fueled an inquiry by the NPPA that revealed stepwise price markups by distributors and hospitals.2 In some cases, maximum retail prices were marked up >6-fold above their original landed cost, which is the cost of an import when it reaches its port of destination.2 By placing stents on the NLEM, it poised them to be declared scheduled formulations under the Drug Price Control Order, allowing the Indian government to set a price ceiling on the devices if they saw fit. This process already exists for high-priority drugs like clopidogrel, which allows them to be subsidized and widely accessible.4
Before the decision, bare metal stents and drug-eluting stents in India averaged $676 (range, $375–1125) and $1821 (range, $600–2971), respectively, according to the NPPA. By comparison, prices for stents in the United States have been dropping for years, and a 2016 Modern Healthcare/ECRI Institute Technology Price Index placed drug-eluting stents at ≈$1200. This substantial gap between the 2 countries in prices is even further distorted if one considers relative differences between average incomes of their workers. For example, purchasing power parity as demonstrated in the Economist’s famous Big Mac Index (http://www.economist.com/content/big-mac-index) suggests that workers in New Delhi typically have to work nearly 5 times as long to earn enough to purchase a Big Mac as workers in New York, despite the fact that the sandwiches are half the cost in New Delhi ($5.06 versus $2.49). This suggests that an average stent price in India would equate to nearly 4 months of work at a 40-hour-work week by a New Delhi worker versus 1 week for a New York worker.
Thus, it appears that low- and middle-income countries such as India, which already bear a disproportionate burden of cardiovascular disease, may be concomitantly afflicted by disproportionately high device costs in the absence of price control policies. India’s shift in policy is an effort to correct for this and ensure financial accessibility to stents, and it will have a large impact. Abbott, Medtronic, and Boston Scientific stents collectively comprised approximately two-thirds of the Indian market share in 2015 (data from India’s 2016 National Interventional Council Midterm Meeting, Hyderabad, Dr N.N. Khanna). These imported stents are more expensive than their locally manufactured counterparts and, subsequently, are most likely to be affected. The specific price ceilings were not arbitrarily constructed, but calculated, taking into account average landed cost for the stents plus cost of production and price to distributors with fixed percentages of markups included. For drug-eluting stents, price ceilings that have been set are above the landed cost of all available stents in India to ensure no one is selling at a loss. A provision exists to review prices later if a new stent arrives that is clinically superior and higher priced.
It is not surprising that the move to incorporate stents into India’s NLEM has potentially far-reaching implications for patients. In the past 2 decades, noncommunicable diseases have outpaced communicable disease in low- and middle-income countries. Worldwide, cardiovascular disease is the leading cause of death, with the majority of cardiovascular deaths occurring in low- and middle-income countries. India is no exception; cardiovascular disease is now the leading cause of mortality and accounts for one-quarter of deaths.5 Major risk factors such as diabetes mellitus, hypertension, and tobacco use have taken root and predominate disease burden in India.5 Although efforts continue to focus on prevention, ensuring that the affordability of stents will be paramount to tackling cardiovascular disease without catastrophic costs for patients.
Stent price ceilings will also have an effect on local markets. In India, anecdotal reports already suggest companies have withdrawn stents from the market, presumably in response to dramatic price cuts. This has created concern of a manufacturer-driven faux shortage of coronary stents. In response, the Indian government invoked the Drug Price Control Order, mandating that manufacturers maintain their supplies at previous levels for at least 6 months to ensure no precipitous drops in supply. However, once India emerges from this 6-month safety window, it is unclear how it will meet the demand for stents if multiple companies decrease supply in a now less profitable market. Because foreign companies constitute a majority the stent market, the new price regulations may allow Indian stent makers to claim a larger portion of the market and further cultivate domestic production, but much remains uncertain. As the new price ceilings are implemented, updated economic evaluations of stents in India and other low- and middle-income countries may be required to determine the cost-effectiveness of different revascularization options, including locally manufactured stents and bypass surgery.
Finally and most interestingly, the decision to include devices like stents on an Essential Medications List is noteworthy and may have implications for conditions beyond cardiovascular disease and India. There is a precedent for devices, with prior inclusion of intrauterine devices and other reproductive technologies. However, these devices deal with a narrow set of services and largely preventative measures. Now that stents have paved the way, reports suggest the NPPA is already scrutinizing the cost of other devices frequently suspected to be subject to price inflation, such as artificial heart valves and orthopedic implants. Securing price ceilings for such devices could make prohibitively expensive procedures more accessible to those in need.
In summary, India’s rampant price markups of coronary stents catalyzed a policy shift that will affect treatment of cardiovascular diseases in a country with growing burden of noncommunicable disease. The decision to include stents on the NLEM ensures better pricing and the potential for greater access, although the ultimate impact on market supply remains to be seen. It also represents a shift in paradigm because devices on the NLEM now recognize the nonpharmaceutical portion of the therapeutic arm. Capping prices of other devices could dramatically change affordability and access to procedures for many conditions, but only time will tell. Because India is a major player in the Asia-Pacific region, other low- and middle-income countries burdened by the potential for price inflation may follow suit.
The authors acknowledge Devraj Sukul, MD, and Ravi Anupindi, PhD, for their comments and input on an earlier draft.
The opinions expressed in this article are not necessarily those of the editors or of the American Heart Association.
Circulation is available at http://circ.ahajournals.org.
- © 2017 American Heart Association, Inc.
- 1.↵National Pharmaceuticals Pricing Authority Order. Government of India, New Delhi: February 13, 2017. Gazette of India Extraordinary. http://www.nppaindia.nic.in/ceiling/press13Feb2017/so412e-13-02-17.pdf Accessed March 1, 2017.
- 2.↵Memorandum: Display of Price Calculation Sheets for Notified Ceiling Price of Coronary Stents on NPPA’s website. Government of India, New Delhi. February 28, 2017. http://www.nppaindia.nic.in/order/Displayofpriecalculation28022017.pdf Accessed March 1, 2017.
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- Huffman MD
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- Jeemon P,
- Roy A