Why NPPA didn’t wait for govt to make knee implants ‘essential’

Why NPPA didn’t wait for govt to make knee implants ‘essential’

In a first for a medical device, the public interest provision in the Drug Price Control Order (DPCO) 2013 was used by the National Pharmaceutical Pricing Authority to cap the price of knee implants. The NPPA cited "exorbitant prices being charged from patients in a non-regulated market" and "a failed market system where asymmetry of information between patient and the doctor has resulted into unethical practices and exorbitant profiteering" to use para 19 of DPCO 2013.

Para 19 states that the government may in extra-ordinary circumstances, if it considers necessary to do so in public interest, fix the ceiling price or retail price of any drug.

NPPA must move urgently under Para 19 to correct the distortions in the existing market for eliminating profiteering and ensure a fair price to people, stated the record of the discussion on ceiling price for knee implants. Making a strong case for the "extraordinary circumstances" called for in Para 19, the authority pointed out that an estimated 1.5 to 2 crore Indians who may be fit for orthopaedic surgery interventions were largely either undiagnosed or are diagnosed but cannot afford the high cost of implants and the knee surgery and thus lead a life of low mobility and productivity. It added that in a failed market system, any further delay in price fixation would deprive patients of likely savings.

Usually, NPPA goes for price capping only when a drug or device is included in schedule-I of DPCO 2013. All drugs included in the NLEM are notified as schedule-I drugs. The price capping of stents had been delayed because each step in the process -- constituting a committee, it deciding to include cardiac stents in the NLEM, and stents being notified as a schedule-I drug - took months. The entire process took almost one and a half years. Price capping of knee implants in contrast has happened in less than six months.

Explaining why the NPPA had decided to intervene despite orthopaedic devices not being included in the NLEM, the authority stated that the analysis of pricing data revealed the huge trade margins involved, especially in the case of knee implants. An examination of import price, price to distributors/ stockists and the maximum retail price showed that the margins were "exorbitant and irrational, indicating unethical 'profiteering' at every level and mostly at the level of distributors and hospitals". It argued that waiting for knee implants to be formally notified as 'essential' under NLEM would be as bad as allowing an exploitative system to continue.

NPPA quoted the Supreme Court judgement in a 2014 case involving a pharma company which stated: "Profiteering, by itself, is evil. Profiteering in the scarce resources of the community, much needed life-sustaining foodstuffs and life-saving drugs is diabolic. It is a menace which has to be fettered and curbed. One of the principal objectives of the Essential Commodities Act, 1955 is precisely that." In yet another case, the apex court had stated that "the right of the citizen to obtain essential articles at fair prices and the duty of the State to provide them are transformed into the power of the State to fix prices and the obligation of the producer to charge no more than the price fixed".

NPPA pointed out that with increased life expectancy and an expanding ageing population, the significance of orthopaedic care in India would keep increasing, and hence stepped in to cap prices of knee implants.