In a welcome move, Government has acted against price-gouging medical companies
After first moving against the manufacturers of stents, the National Pharmaceutical Pricing Authority (NPPA) has now acted against orthopaedic implant manufacturers, when it came to their attention that distributors of such implants and also hospitals had begun overcharging them. Unlike the case of stents, where there appeared to be evidence that unscrupulous hospitals were forcing those devices on unsuspecting patients, in this case, there has been no proof to substantiate the claims that some unnecessary procedures were conducted. However, given that prices had reached four-five times the cost of such implants, the Government rightly felt that it needs to intervene. An estimated 1,20,000 knee replacement and 70,000 hip replacement surgeries take place in India annually. And despite the price-caps, operations remain expensive and out of reach for a large number of Indians. However, with Indians living longer, there can be no doubt that the number of such procedures are going to increase in the near future. Indeed, if such implants are made more affordable, the number of people opting for such procedures too will rise. That said, even with the price caps, knee replacement surgery will remain to be costly, as the component is not cheap and hospital charges and recovery costs are still quite high.
Whenever the Government intervenes in pricing decisions, there has to be a gross distortion of the market or collusion between manufacturers. In this case, there was clearly a distortion in pricing. Unlike another example early this week, where the High Court stayed an order by the Directorate General of Civil Aviation (DGCA) on excess baggage, saying that it did not have the authority to impose price regulations because the airlines rightly said that prices are determined by market and airlines are free to offer competitive rates. Making profit is no crime even for a private hospital and medical device manufacturers, and while the NPPA’s decision will do little to bring down grossly inflated hospital costs, much more needs to be done if the Government intends to fulfill its promise of reining in medical costs.
A vast majority of the Indians do not have access to advanced healthcare, both because of lack of reach and because of costs. As the recent tragedy in Gorakhpur has demonstrated, petty corruption has made the healthcare system in India rotten to the very core. Medical insurance remains a luxury in this country and very few section of the population have access to policies and healthcare costs drive thousands of families into penury every year. The Government’s ambitions are lofty indeed but much more needs to be done to rein in costs.