Posted on 11th May, 2023 at 6:07:09 AM
Recently the capping of costs of cardiac stents by the government of India has raised strong feelings on either side. Many patients and doctors feel that this is a laudable measure and will stop private healthcare from fleecing patients, making the cost of these procedures more affordable to the common man. Doctors being taken on ‘freebie’ trips and even being paid commissions casts them in the role of hard-hearted profiteers, and corporate hospitals who are chasing their bottom lines and targets are also cast as the villains. This line of thinking appeals to populist sentiments. We have seen statements like “We are in an industry where a simple plastic adapter costs thousands (if not Lakhs), vitrectomy probe costs 10000, whereas a hair trimmer that works on the same principle costs 1000. Ram of your A scan which calculates about 5 formulas costs 50000, where as the RAM of the most advanced PC costs 2000. Reason: We are considered elite, exclusive customers with a limited market (and very deep pockets)” (source anonymized). So doctors are also being cheated by the industry and feel that they are being overcharged for basic devices.
Well, let us take a step back and look at some of the actual facts on the ground. Why is private healthcare so prevalent in India? The reason is that the government has abdicated its responsibility to provide health care and spends about 1% of GDP on healthcare (amongst the least in the world, the world average is 5.3%), so over 80% of healthcare spending is paid for privately. Even where reasonable government facilities exist a large percentage of patients choose private providers because they didn't have a choice. In the underperforming public system where the secondary expenses of treatment is more and the time taken to go back to work is more, they are forced to seek care from private providers.
Secondly, healthcare costs are amongst the cheapest in the world. “Even the most expensive hospital in India is 10 times cheaper than USA or West. But an iPhone or a Mercedes is pricier in India than in the West and nobody objects to that. People don't mind paying for expensive articles in India anymore — it is expensive only when you have to pay for your health! Indian healthcare is cheap as our human resources are cheap. You can't employ even a junior doctor by paying? 40000 (600 dollars) in the US. That is the minimum wage for a doctor in India. You can't hire a nurse for? 15000 in the U.K. Most of our equipment is imported. All our CT scans and MRI Scans are imported. We pay the same price as the developed world does in dollars and on top of that we pay import duty. Even then we charge 1800 dollars for open heart surgery when it cost 100000 dollars in the US. This is mainly because our doctors and nurses are paid less.” We see the few ‘successful doctors who are living a plush life (and working very hard too), but of course, those doctors who have an average middle-class life are of no interest to the masses, press, or government… but I digress.
The fact is that the cost of medical devices is not merely a function of their manufacturing cost. There is a huge outlay in developing a medical device, be it a cardiac stent, a joint prosthesis, or a new drug. They go through a complex process of development, trials, licensing, regulation, and post-marketing surveillance. How is this outlay going to be recovered? Also remember that every drug or device, even the ones which look promising initially does not make it to clinical use, and thus the investment in them is totally lost to the company developing it. Why is drug or medical device development so expensive and heavily regulated? The simple answer is safety. When regulatory laws are relaxed (or where stringent regulatory laws do not exist) in an effort to keep prices down, mishaps occur and patients are put at risk. In my specialty, a ‘biosimilar’ which was hailed to cut costs of the innovator product, hailed as a success of the ‘Make in India’ initiative, had to be withdrawn very soon after its introduction in 2015, because it had gone through a very abbreviated licensing regime (permitted under Indian law) because patients eyes were being put at risk by unanticipated reactions.
In my field, ophthalmology, at least three drugs were withdrawn at advanced stages of development very recently. Today’s headline was “Ohr Pauses Enrollment in Phase III Trial of Squalamine for Wet AMD” Although the product was seen as very promising and granted fast-track designation by the FDA. This was against the backdrop of two other recent withdrawals of combination therapies in the same field of retinal therapy.
–ophthotech's Fovista, an anti-platelet-derived growth factor agent being studied in combination with Lucentis in two Phase III trials in wet AMD, missed its primary endpoint of mean change in visual acuity at 12 months;
–Regeneron’s aflibercept (Eylea) co-formulated with rinucumab, an anti-platelet-derived growth factor receptor beta antibody, performed worse than Eylea monotherapy in a Phase II trial in wet AMD.
So the money lost on these, and they run into billions of dollars have to be made up from those drugs which do make it to clinical use and provide meaningful clinical benefit for our patients.
A blanket cap on prices is a very blunt tool which appeals to the popular sentiment, but can potentially result in many dangers. I have already discussed the potential or reduced research into new therapeutic modalities or even the stopping of such research as companies find it to be no longer viable financially to do so. Secondly, blunt price capping may simply remove more expensive options of drugs, stents or prosthesis, making them unavailable to patients who would benefit from them. On a lesser note, it may increase ‘reverse’ medical tourism, with patients travelling to neighbouring countries to get the procedure with the implant of their choice or to get treated with drugs which are no longer available in India.
Price capping as a very targeted tool, used with discretion for very selected life threatening situations can work wonders, for example South Africa’s decision to allow cheaper generic versions of drugs which were still in patent for HIV treatment in 2001. But even this did not come without a cost and stirred up many dilemmasiii.
