The February 2017 order by the National Pharmaceutical Pricing Authority (NPPA) for fixing the price ceiling for cardiac stents—a device that normalises blood supply to the heart—brings to fore the old debate on the influence of business in healthcare in India. In view of the increasing number of catheterisation laboratories in the country, and the rise in the use of cardiac stents, this article discusses, inter alia: (a) the role of price controls in controlling costs in health care; (b) the role and interaction of economic regulations and related market forces in managing healthcare costs; (c) the importance of costing systems and outcomes-based measurements in managing healthcare costs; and (d) the contribution of evidence-based policymaking in managing healthcare costs. The paper suggests that India needs greater transparency in costing systems and outcomes-based measurements, and that evidence-based policymaking is an imperative.
Introduction
In India, cardiovascular diseases (CVDs) have now become the leading cause of mortality, with a quarter of all deaths in 2015 attributed to the disease. According to the Global Burden of Disease (GBD) 2015 study, the age-standardised CVD death rate for India stands at 272 per 100,000 population, although other recent, large prospective studies have shown a higher age-standardised CVD mortality rate (225-525 per 100,000 in men and 225-299 per 100,000 in women).[i] Even with such figures, CVD in India remains highly under-diagnosed though the number of Percutaneous Coronary Interventions (PCIs)[ii] is growing every year. Estimates from the National Intervention Council (NIC) Registry of the Cardiology Society of India (CSI) show that the number of catheterisation laboratories[iii] in the country has risen from 251 in 2010 to 630 in 2015, with a 51-percent increase in total coronary interventions between 2014 and 2015. In 2015, 475,000 stents were used for 375,000 coronary interventions, or an average of 1.27 per procedure (Table 1).
Table 1: Details of cath-labs, coronary interventions and stents, 2010-2015
| 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | |
| Cath-lab Centres | 251 | 332 | 369 | 404 | 396 | 630 |
| Coronary interventions | 117420 | 152332 | 177240 | 216817 | 248152 | 375000 |
| Coronary interventions per centre | 468 | 459 | 480 | 537 | 627 | 595 |
| Total stents | 146719 | 193728 | 215662 | 262349 | 248152 | 475000 |
| Stents per procedure | 1.25 | 1.27 | 1.22 | 1.21 | 1.00 | 1.27 |
Source: Estimates compiled by authors from various presentations and reports made by the National Intervention Council over the years[iv]
The recent order by the National Pharmaceutical Pricing Authority (NPPA), F.No. 19(837)/2016/Div.II/DP/NPPA, dated 2 February 2017, fixed a ceiling on the price of cardiac stents. In issuing its order, the NPPA stressed that margins have become exorbitant and irrational, and profiteering was rampant at various levels in the supply chain including the private hospitals and cardiology clinics. NPPA said these raised various economic and ethical arguments in the health financing sphere. The order also states that the levels of margins indicate a “failed market system” where asymmetry of information has resulted in unethical practices.[v]
In December 2014, lawyer Birendra Sangwan took up the battle on the exorbitant pricing of cardiac stents by filing a query under the Right to Information Act. Sangwan challenged the NPPA and referred to the case of a friend’s father who was charged a massive INR 1.20 lakh for his cardiac stents by a Faridabad-based private hospital. In its reply, the NPPA said that since stents were notified as ‘drugs’ under the Drugs and Cosmetics Act and are not part of the National List of Essential Medicines (NLEM), no ‘ceiling price’ was fixed on them.
Sangwan went on to file a PIL in 2015. Initially, the government did not respond to the High Court’s order to include stents in the NLEM and set a cap on their prices. Only after a petition for contempt was filed in July 2016 did the government in December that year include stents in the first Schedule of the Drug Prices Control Order. Finally, in February 2017, the prices of stents were capped at INR 7,260 for bare metal stents (BMS), and INR 29,600 for drug eluding stents (DES).[vi] Before that, the average retail price for a bare metal stent was INR 45,000, while drug-eluding stents were priced at around INR 1.2 lakh, generating profit margins that ranged from 270 percent to 1,000 percent.[vii] The government then took credit for the massive slash in the price of cardiac stents.[viii]
It is noteworthy that the share of DES in the total use of stents has been steadily increasing: a CAGR of 53.52 percent compared to 22.86 percent for total stents for the period 2002 to 2015 (Figure 1). Recent studies have shown that the clinical effectiveness of DES in comparison with that of BMS is not significantly different, and is cost-effective only among patients with specific risks. A 2016 randomised controlled trial involving 9,013 patients showed that for patients undergoing percutaneous coronary intervention (PCI), at six years, no significant differences between those receiving drug-eluting stents and those receiving bare-metal stents in the composite outcome of death from any cause and non-fatal spontaneous myocardial infarction were observed.[ix] With regards to cost-effectiveness, a 2012 systematic review of cost-effectiveness studies comparing DES vs. BMS found DES to be cost-effective only in studies reporting a greater risk of restenosis or with multiple vessel disease.[x] This evidence has to be seen in the light of the fact that over 43.9 percent of the financing of the coronary procedures in 2014 in India were conducted through out-of-pocket expenditure (see Figure 2). According to the analysis of the NSSO 71st round, one-fifth of hospitalisations due to CVD were paid for by borrowings or sale of personal assets. The same survey found that 53 percent of the population suffered from ‘catastrophic’ health expenditures.[xi]
Figure 1: Usage patterns of stents and drug eluting stents (DES) in India [xii]
The country’s hospital associations, meanwhile, contend that their profit margins are “justified” as they are required to invest in capital assets to ensure they are able to run their operations and provide services to their patients. The NPPA, however, argues that private hospitals do not provide any value addition and thus must cease the practice of seeking top-up margins.
Analysis and Recommendations
The NPPA order has trained the spotlight on the debate about the influence of business on healthcare, and the ethical arguments about healthcare financing in India. The questions involved in this debate include, among others: (a) the role of price controls in controlling costs in health care; (b) the role and interaction of economic regulations and related market forces in managing healthcare costs; (c) the importance of costing systems and outcomes-based measurements in managing healthcare costs; and (d) the contribution of evidence-based policymaking in managing healthcare costs.
Role of price controls in controlling healthcare costs
Many countries are, like India, grappling with a complex set of economic and ethical challenges in healthcare financing. The introduction of penalties, fines, and price caps have become common policy tools to address some of these dilemmas. The assumption is that creating such deterrence around decisions will moderate the behaviours of various players. However, keeping the rest of the eco-system unchanged around these decisions, such interventions lead to actions and decisions that may not be enduring. The NPPA order raises questions on the efficacy of price-caps and similar such strategies.
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