India Investigating Alleged Device Price Gouging

Orthopedic implant makers, including Zimmer India, Johnson & Johnson, India Medtronic Corporate, Braun Medical India and others have been asked to produce a “slew of documents” by the Indian National Pharmaceutical Pricing Authority (NPPA).

According to a December 8, 2014 Pharmabiz.com posting by Ramesh Shankar, the request comes under the NPPA’s authority to monitor price movement of medical devices. The agency reportedly wants to examine the extent of price variations of devices in the Indian market.

“Exorbitant Prices – High Profit Margins”

Shankar wrote that the agency’s “knee-jerk action” comes after recent media reports that the prices of devices “regulated as drugs under the Drugs and Cosmetics Act and Rules, ” have been sold at “exorbitant prices with high profit or trade margins, particularly the prices of cardiac stents, drug eluting stents, orthopaedic implants, etc.” He also wrote that there have been reports that the prices of the devices have increased “significantly” in the recent past.

Overcharging Information Sought

“In this regard it has been decided to seek the following information/documents in order to examine price variation, if any, in respect of notified medical device manufactured/imported/marketed by the company”, the NPPA said. Shankar reports the documents include “product specification with brief description/literature for different types of notified medical devices manufactured/imported by the company; a copy of the current price list in Form-V under provision of DPCO, 2013; and details of price revision carried out during the last two years for each type of medical device.”

On September 15, 2014, The Times of India (TOI) ran a story titled, “Patients pay three times import price for stents”. The story said Indian patients pay more for some devices than Europeans because the country has no regulator “to ensure that medical device companies do not overcharge patients. The result is loot.”

India FDA Report

India’s Food and Drug Administration (FDA), according to the story, had submitted a report after investigating “overcharging” for various medical devices to the NPPA. The agency recommended that devices “be brought under price control.” The FDA’s report included pricing details devices such as “cochlear implant, bone cement and orthopaedic implants and pointed out that the price of most devices was hiked by over 100% at least.”

Orthopedic implants, among other devices, “are notified as drugs under the Drugs and Cosmetics Act, 1940 but not included under the Drug Price Control Order (DPCO). Hence, their prices are neither monitored nor controlled. The multinational companies that dominate the market import the devices and mark MRP at whatever level they think the market can bear in the absence of any regulation. These devices even get customs duty concessions, ” stated the TOI story.

At the time of the September 15 story, the NPPA had not replied to the Indian FDA a year after the report was submitted, nor had it taken any action on pricing. “When contacted, NPPA chairperson Injeti Srinivas told TOI that he was not aware of the FDA report as he had joined recently (in June this year) and that he would look into it.”

It now appears Mr. Srinivas has looked and asked for documents. Looks like device companies will have some explaining to do.