FDA probe of seven hospitals in Maharashtra led to cap on stent prices
The FDA’s probe report, which established the chain of profit sharing in Maharashtra’s stent industry, eventually set the plan in action to bringing stents under the National List of Essential Medicines (NLEM) and finally led to the nationwide cap on pricesmumbai Updated: Feb 21, 2017 10:05 IST
Hospitals in Maharashtra, in order to eliminate commission-seeking middlemen from the stent import industry, contacted manufacturers directly and placed their own agents to get a higher share of profits, the Food and Drugs Administration (FDA), Maharashtra, found during its investigations in 2015.
The FDA’s probe report, which established the chain of profit sharing in Maharashtra’s stent industry, eventually set the plan in action to bringing stents under the National List of Essential Medicines (NLEM) and finally led to the nationwide cap on prices.
A team under Dnyaneshwar Fadtare, FDA joint commissioner (vigilance), after a tip off from NGO Society for Awareness of Civil Rights, started the probe in January 2015, with orders of then newly appointed commissioner – Dr Harshdeep Kamble.
The team, focusing on alleged malpractices by the multinational companies and their agents in India, found out that MRP of stents was inflated several times its original price, with patients paying between 336.42% and 1,282.79% more than the actual import cost to the company
“For six months, we investigated the role of seven prominent hospitals [four in Mumbai, two in Pune and one in Nashik], six distributors and one manufacturer, who had a clientele right from government and private hospitals performing specialty and super specialty surgeries. We procured original bills at every stage, such as manufacturing, wholesale and retail, and were able to establish the profit margins,” said Kamble.
While the profit margin earned by manufacturers was about 48.13% to 298.72%, distributors in turn made anything between 60% and 371% profits by selling the stents to the seven hospitals. The patients were charged 7.42% to 25.38% over and above the existing costs by the hospitals.
“Since there was no price capping on the stents and products were not sold with their MRP, we failed to take any direct action against the stakeholders. The only way to stop the exploitation was to inform NPPA (National Pharmaceutical Pricing Authority) and the health ministry about the irregularity and urge them to bring the stents under NLEP,” said Dr Kamble.
Another top official from the FDA, who was a part of the probe, said that with time, hospitals eliminated the usual distributors and placed their own agents as middlemen to procure the stock from manufacturers. “Since the hospitals legally didn’t have a drug distribution license, the stents would be imported under a different banner. The hospitals claimed entire share of profit and there was no legal remedy to establish the same,” said a former official from the vigilance department.
Two days after the investigation report was submitted to NPPA, Girish Bapat, former minister of food and civil supply and consumer protection, wrote to JP Nadda, union health minister, bringing to his notice the loopholes in the industry.
“Appropriate directions are to be issued in the public interest so that reasonable and uniform prices of cardiac stents are maintained throughout India,” said Bapat in his letter to Nadda.
The Maharashtra FDA findings were highlighted in the 48th meeting of Drugs Controller General of India (DCGI), the highest body that acts as an appellate authority in case of any dispute regarding the quality, manufacturing, selling, import and distribution of drugs in the country. The officials, pulling up central government for its inaction, said, “Central government has not seriously shown any concerns in this regards to include the various costly indigenous and imported medical devices under the purview of DPCO. It is suggested that the above devices shall be included in the list of NLEM.”
Sources from NAPP said after the initial report, they had to conduct their own investigation to find out if there is a nationwide uniformity. In addition to the report, hearing a public interest litigation, seeking directions of the court for inclusion of ‘Coronary Stents’ in NLEM, the Delhi high court passed an order on February 2, 2015, directing the respondents to treat the petition as a representation and pass an appropriate order in accordance with law within a period of three months.
Finally, in December 2016, both the Bare Metal Stent (BMS) and Drug Eluting Stent (DES) were included in the NLEM and the prices were capped this month.