Cardiac stents and India

The recent decision by the Government of India to cap the prices of cardiac stents is an important one. Cardiovascular burden in India is on the rise. CVDs account for ~25% of all deaths in India with new patients growing at an alarming rate of ~9% y-o-y. In 2015 alone, Indian doctors performed 3.75 lakh angioplasties using 4.75 lakh stents, according to an NIC report. Alarmingly, ~10% of those angioplasties were done on patients below 40 years of age.

India is predominantly an OOP market where patients have to bear the cost of healthcare from their own pockets. Private insurance penetration is low (~20%), and more often insufficient (average coverage ~2 lakh per annum) to cover all the expenses incurred during treatment/procedures. Public reimbursement is limited to a select few categories of government employees (and their families) with most schemes limited in their coverage.

While the actual manufacturer’s cost (price at which a stent is invoiced by the company to the distributor) may not be very high, by the time it reaches the patient, the price can go up 5-10X. The reason behind is that the margins in the stent market are not well defined. This gives 'flexibility' to the distributors, doctors and hospitals to ‘play’ with their margins. I remember doing a project in 2012 where we were trying to assess the margins made by the stakeholders in the stent value chain in India. The revelations were shocking as we realized that the patient was (and still is) bearing the economic burden because of the unethical greed of doctors and hospitals.

Another issue that compounds the whole complexity is that there is no transparency. It is not easy for a common patient to compare the prices of stents across manufacturers or hospitals. Profit driven hospitals find every opportunity to make money from patients.

Considering the points listed above, price capping is done with good intent but as with most government initiatives, this one has its limitations. It can prevent companies from launching costly/premium next-gen stents in the India market, which will deprive Indian patients from new technology. Additionally, the whole approach of capping a price is a static one - which cannot be scaled easily.

Instead of capping the price, or for that matter only looking at the prices of stents, the government should have tried to look at the broader picture of cleaning up the mess i.e. Indian healthcare environment. Some indicative ideas could be (non exhaustive):

1. Regulate the maximum margins that hospitals and distributors can make on stents or other implants. This would ensure that reasonable margins are added at each step and pricing is dynamic
2. Ensure that hospitals provide rate cards quoting prices for their product and services clearly so that patients know the prices of products and services before they choose a hospital/doctor
3. Introduce the concept of MRPs (maximum retail prices) for products such as stents and other implants
4. Set up responsive social media based nodal bodies to quickly listen to grievances of patients and accordingly take actions against hospitals that violate the law (Admittedly, this could be a state government related subject as well as I am not entirely sure if hospitals are controlled by the state governments)
5. Conduct periodic audit of hospitals to ensure that they comply with norms. Those guilty of violation of law are prosecuted strongly

Prima facie, some of the points listed above look difficult to implement considering the complexities in India. However, only capping the prices of stents will not help patients because hospitals and other stakeholders will still try to make their margins and potentially try to make more from other sources (products, room charges, medicines etc.) to offset for the loss of profits from stents. This will pass down the eventual cost to patients. We need holistic reforms that address the end to end value chain of healthcare systems in India thereby giving the best benefits to patients.

P.S: Opinions expressed here are personal and do not reflect the views of my employer. I have quoted publicly available information to substantiate some of my points in the article above