NPPA moves to prevent distributors from taking higher cuts on stents
NEW DELHI: India’s drug pricing watchdog has moved to plug a loophole that may have helped some distributors grab higher profits on cardiac stents than the government has allowed.
A cardiac stent is a wire mesh tube used to clear blockages in coronary arteries and prevent heart attacks.
In a new notification on Thursday, the National Pharmaceutical Pricing Authority (NPPA) has tried to stop distributors importing stents on behalf of foreign companies from adding high margins while selling the devices across the value chain. According to the regulator, only 8% margin can be added on the cost of the stent.
In its notification, NPPA has clarified that those without a registration certificate from the central drug regulator who are importing stents with an undertaking from companies that have a registration certificate will also be considered as a ‘distributor’.
Through this move, NPPA has plugged the gap for ‘manipulating’ trade margins in coronary stents, the regulator’s chairman stated on social media networking platform Twitter. He could not be reached for further comments on NPPA’s move.
“Some foreign companies were appointing local importers to directly import their stents from other countries,” a senior government official told ET on condition of anonymity. According to this official, these companies and distributors were trying to circumvent the limits imposed on the mark ups they were allowed on the devices.
So far, the government has found around five cases of companies and distributors that had engaged in such a practice and the pricing watchdog was calculating the margins these suppliers got away with as a result, said the official. In some cases, the margins taken on the landed cost of these stents were higher than 8%, the official added.
The official declined to reveal the names of the companies and distributors found in violation of NPPA’s orders.
In a separate notification, the regulator has flagged Metro Heart Institute with Multispecialty, a hospital in Faridabad, for overcharging patients for these devices. According to NPPA’s letter to Metro, the hospital was expected to deposit a total of Rs 1.27 lakh for overcharging patients in bills they had printed on and after February 14, 2017.
More hospitals may receive similar demand notices for overcharging patients, according to another senior government official who did not wish to be named.
Soon after NPPA slashed prices of stents by up to 85% in February, the regulator had begun a probe to look into hospitals that had allegedly overcharged patients on these devices despite price caps.
"The process is complete and hospitals have been given enough opportunity to explain," the official told ET.
Prices of drug eluting stents, earlier as high as Rs1.65 lakh, have been capped at Rs 30,180 and bare metal stents at Rs 7,400, excluding Goods and Service Tax (GST).
Distributors and hospitals were found to be among those making the highest profits in the stent business in India. According to data released by NPPA earlier this year, distributors even marked up prices of drug eluting stents nearly 900% when selling directly to patients, while hospitals would make as much as over 650% margins while billing patients for the devices.