Global med-tech firms, India locked in tussle after stent price sting

NEW DELHI/MUMBAI: A group of global medical-technology companies plans to tell Indian officials next month that any further price control measures would risk future investments and make them less likely to introduce new products in the country, according to an industry source familiar with the matter.

The lobbying effort by Abbott Laboratories, Boston Scientific, Johnson & Johnson and others comes after the government of Prime Minister Narendra Modi in February set a price cap for stents - small wire-mesh structures used to treat blocked arteries - slashing prices that patients pay for some devices by about 75 percent.

That has sparked a growing showdown between the companies and Modi's government in India, where the "med-tech" sector is worth $5 billion. Abbott and Medtronic filed for withdrawal of some of their stents from India, but the government on Wednesday rejected their request, saying it contravened the nation's drug laws.

Modi has in recent years taken a more aggressive stance against multinational healthcare companies, announcing price curbs on drugs used to treat critical ailments such as cancer, HIV/AIDS and diabetes.

At a public event this month, the prime minister said patient interests were more important than "unhappy" companies.

The firms, meanwhile, worry price controls could extend to other devices such as implants or valves, making it economically unviable for them to sell next-generation products in India, industry sources said.

Executives from Abbott, Medtronic and Boston Scientific - which all sell coronary stents in India - along with Johnson & Johnson and others, plan to approach India's health and trade ministries in May to convey that "price control is not the way forward", according to an India executive at a multinational med-tech company aware of the plans.

"There is a lot of nervousness," the executive said.

Johnson & Johnson, for example, is worried about potential price curbs on its imported knee, joint or hip implants, another industry source said, adding the company was working with trade groups to write letters to the government.

Boston Scientific said it was engaging with the government and would abide by regulations.

Medtronic said it intended to again file a plea for withdrawing one of its stents. Abbott said it was speaking with the government to file for withdrawing two stents and would look at reintroducing them if they became "commercially viable".

Johnson & Johnson declined to comment.

Another industry source aware of companies' strategies said the withdrawal pleas were aimed at sending a "strong signal" to the government by disrupting access.

None of the companies commented on planned government meetings or broader industry worries.

National Pharmaceutical Pricing Authority (NPPA) Chairman Bhupendra Singh on Thursday sought to calm industry concerns, saying the authority was in the process of collecting price information for 23 devices but "as of now there is no proposal to cap the prices".

Singh, whose agency is the government's drug pricing regulator, declined to comment on industry jitters or lobbying efforts.

COSTS VS ACCESS

The domestic medical device market in India is expected to grow by 15 percent annually between 2014 and 2020 to $8.6 billion, according to a joint report by consultants Deloitte and Healthcare Federation of India, NATHEALTH.

Rana Mehta, leader of healthcare at consultants PwC India, said many firms had started re-evaluating their India strategy.

"This uncertainty might be detrimental to the growth of the industry," said Mehta, who advises several multinational med-tech companies.

Abbott and the Medical Technology Association of India, which counts Boston Scientific among its members, have in the past fallen short with their lobbying efforts in New Delhi, according to documents seen by Reuters.

In letters written to the government departments of health and pharmaceuticals during August and September, they appealed to Indian officials to have a more liberal approach on stent pricing and not treat all stent devices as the same, submitting dozens of pages of research papers and clinical studies in support.

Abbott wrote this would "encourage" medical device innovation.

But the pricing regulator NPPA ruled against their requests.

In February, it termed stents as "essential" devices, noting cases of heart disease were rising and the stent pricing was "restrictive and exorbitant". It did not differentiate among types of drug-releasing stents as the industry desired.

The price cap was set at 7,260 rupees ($113) for the older generation metal variants and 29,600 rupees ($461) for drug-releasing variants.

Abbott said it was "disappointed" with the decision. An executive at the Medical Technology Association said different types of drug-releasing stents should be treated differently.

Activists have lauded the government's action on stent pricing, saying reduced prices would benefit the masses.

"The government intervention is expected to end exploitation of patients," health activist K.M.Gopakumar said.

But some in the healthcare industry disagree.

"Considering affordability is important but not at the cost of putting brakes on the evolving technology that is so essential to ensure patients' well-being," said Shirish Hiremath, president of the Cardiologist Society of India.