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National Pharmaceutical Pricing Authority's move to cap pricing of coronary stents would adversely affect well-to-do patients and medical tourism industry in India

After the Delhi High court passed the order to slash the price of stents, National Pharmaceutical Pricing Authority (NPPA), a government regulatory agency issued a order on 13th Feb, 2017. This order came as a boon for the BJP Government which was busy with their UP & BMC campaign. PM Narendra Modi made it sure, that price capping of stents becomes an USP during his election speeches. Neither the Government nor the NPPA took suggestions from doctors, hospitals before issuing new regulations.

To summarise, stents were capped in 2 broad categories.
1. Bare Metal Stents - Rs.7260
2. Drug Eluting Stents and Bioresorbable Vascular Scaffold/Biodegradable Stents - Rs.29600

As of now, Abbott and Medtronic have filed for withdrawal of their premium coronary stents from the Indian market, as it wasn't commercially viable after the price cap. Boston Scientific might withdraw their premium stents too after the completion of their corporate sustainability review. Now Indian patients won't have access to high end stents even if they are ready to spend money. Government has every right to make doctors work for the poor, but they can’t deprive middle and upper class of what they can buy. This is not beneficial for a democracy. This is extreme health care rationing. Bare metal stents could be made of stainless steel, cobalt or platinum. The pricing of these differs.

It's the basic law of economics. If tomorrow, Government decides to put a price cap of Rs.30,000 on smartphones. Then Apple will only sell older iPhone models like SE, 6 and won't sell newer 7, 7S models.

To make matters worse, NPPA has rejected the withdrawal plea of Abbott and Medtronic. They also directed stent manufacturers to have stock for 6 months or face action. Basically forcing them to sell their high end products at a loss. This lame restriction could be easily evaded by importing only basic stents while not importing premium stents. Imagine, Mercedes Benz being forced to sell their high end car for Rs. 10 lakhs. This is borderline insanity, Government can't dictate companies to sell their non-essential, premium products at a specific price. This isn't North Korea.

If Government is serious of public healthcare in India then why does it spend a meagre 1.4% of the GDP on healthcare? Because that doesn't favour their PR based governance. BJP's print advertisement on the eve of BMC election read, “expensive angioplasty stent now cheaper by 85%; decision of a sensible government”. Modi Government isn't interested in reforms and instead prefers managing headlines over economy.

What should the Government have done to help the poor as well as to not harm the middle/upper class?

1. Create 4 classes of stents instead of current 2 classes.

2. Leave the last one uncapped, so those who could afford have access to newer tech.

3. Adopt an ala carte approach, making available stents at Rs. 7000, Rs. 28000, Rs. 85000 and uncapped.

4. Provide first two only through RGJAY and other schemes.

5. Use the expertise of public sector rate contracts and declare the rates at which all varieties of stents can be bought into India. Get these prices in public domain for everyone’s knowledge and information.

6. Audit the procedures in public and private hospitals through a third party.

7. Audit individual cardiologist’s annual performance to know for which class he is working more.

8. Consider SEZs for implant companies to manufacture these high end products in India.

These suggestions were provided by Dr. Sanjay Oak in his article in Mumbai Mirror.

This is how a handbook of bad policy would read. First, impose price controls. Then watch goods disappear from the market. And finally threaten producers with punishment for the shortages that your price controls have created. Multi-speciality hospitals across the country are reporting a fall in foreign patients due to shortage of premium stents. Patients are instead getting operated in Singapore, Bangkok. Thanks to this move, we are now losing valuable foreign currency too. Why is Indian Gov't promoting reverse medical tourism? Undoubtedly we need to care more for our poor, but we can’t at the same time ignore the desires of millions of people who belong to upper and middle class and who are honest tax payers. Why should they be denied a choice?

Today it’s cardiac stents, tomorrow it will be orthopaedic implants, and after that, maybe oncology drugs. There is no doubt that the government’s intentions are laudable and the efforts are an attempt to ensure equitable distribution of medical care and to curb medical malpractices. But the execution is misdirected and mal-aligned. Hospitals may hike cath lab rent per procedure and try to bridge the gap. Surgeons may prefer bypass surgical procedures. All these regulations appear as knee-jerk reactions done to control medical malpractice. I am not claiming here that everything was hunky-dory in the stent and implant business. But, putting a cap on prices is not the answer to the problem.

While Modi led BJP came to power with the slogan of, "Minimum Government, Maximum Governance". Their actions are nowhere near it. Instead the License Raj that we left off in the 1980s, is making a comeback.

A lecture at University of Texas, Austin by P. Sainath, sponsored by the University of Texas School of Journalism, the South Asia Institute, AID-Austin and the Society of Professional Journalists UT.

Part 1 || Part 2 || Part 3 || Part 4 || Part 5

So they set up a second commission. The N C Saxena, BPL expert group. I was one of the experts. And it was wonderful, it was scintillating. Some of the expert discussions we had were riveting. 17 guys in a room, in a government building, in an air conditioned room, 17 guys - I emphasize guys - there wasn't a single woman - had a heated debate for hours on whether women are poor.

[addressing someone in audience] Don't look so shocked, finally we decided that you were, because three of us held out boldly. Our argument - the three of us were arguing that in rural India, women headed households have to be automatically declared below poverty line. There is no need of a survey. All the evidence of the NSF and other studies show us that.

The secretary of one of the biggest departments of the Government in India attacked me saying that "Oh, then tomorrow I may also declare that my household is female headed." Actually, I think it would be a damn good idea if his household were female headed. His wife has certainly a lot more brain than he does.

19% of Indian rural households are female headed. That's the official census figure of the last census. However, in areas like Anantpur, Kalahandi, where migrations are large, the percentage of female headed households crosses 50%.

At least we were an improvement over the previous census. You know how they used to count whether women were poor or not? They had actually a sheet - a mark sheet. 1 Sari household. 1-2 saris. 2-3 saris. What happens if the household has six girls? They'd be wealthy.

I'm not saying that was the sole indicator, but it was certainly... we saw that sheet. I had never known of this until I was a member... anyway, unfortunately for the government of India, we decided that 50% of the population were below the poverty line, which infuriated them. It infuriated me also, because I agreed with the first report, therefore the biggest annexure in this report is my note of dissent.

Third commission, Dr. Suresh Tendulkar. Classic champion of neoliberalism and he gives a figure 14% higher than the Government of India. So this is what has happened in four years time on rural poverty. He is saying 42% for rural poverty.

For rural poverty, the Government of India says about 34. Government of India's overall percentage is 27. Tendulkar places it higher, and he places rural poverty at 42%.

So even their handpicked commissions are telling them that the situation has got much worse.

I will leave you with one thing. All of you.. all the Indians here know of Ajanta and Ellora Caves? Do you know how you go there? You go there via a town called Aurangabad.

Aurangabad is one of the poor part of Marathwada, which is one of the poorest regions of the state of Maharashtra.

The per capita income of this region is much lower than the state average, much lower than the National average. State average in this case is higher than the National average. But there is incredible money to be made.

What did we begin with? With Warren Buffett's buying opportunity. When there is that much misery, there is incredible amount of money to be made. A handful of businessmen are walking into the Guiness Book of records. Did you read about it?

In October 2010, the biggest sale made by Mercedez Benz on a single day, to a single group. A hundred and fifty Mercedez Benz were bought in a couple of hours by a group of businessmen in one of the poorer parts of the country.

You read about it, right?

Do you know who paid the money for it? What it wasn worth? SBI covered most of the loan. SBI is the biggest - in terms of branches, maybe - the biggest bank in the world. State Bank of India is a Nationalized, public sector bank and it gave them interest rate of 7%. Out of the 640 million rupees that the deal cost, it gave them 440 million rupees. Most of those guys are politically connected, they will never repay that loan... we know them personally. They will not repay the loan.

Now the rival town of Kolhapur in Western Maharashtra is planning to buy 150 BMWs. Why? Why should they be? They are making a lot of Germans very happpy.

Look at the fact, that the same bank, which gave a 7% interest loan on a Mercedes Benz charges 14% interest in the same branch of the bank, for a farmer buying a tractor.

And the cost of a tractor is much less. A hell of a lot less. It's about half a million rupees. About 6 hundred thousand rupees max for a good one. I mean that's what you'll get as a max as a loan anyway.

Look at this. 7% for Mercedes Benz, 14% for a tractor and if you're a poor woman, enjoying that wonderful myth and romance of micro finance, what is the interest rate you pay there? 36%

Thirty-six percent!

It is that SFGs and MFIs - Microfinance systems lend to them and the rates are typically between 24 to 36%. Very often there are concealed costs. The microfinance miracle was started by poor women two decades ago. It's now completely hijacked by the corporations. The same banks, bureaucracies and money lenders whom they sought to avoid. Citibank is a big force in microfinance. ICICI is a big force in microfinance. World Bank, Government of India, State Bank of India are a big force in microfinance. By the time the interest rate goes through major intermediaries and reaches that woman in the village, its 36%.

Andhra Pradesh has brought legislation to curb racketeering by... and many of the farm suicides in Andhra Pradesh in 2010 were linked to microfinance because their repossession methods are worthy of credit card sharks. This is the kind of level... this is the kind of situation that they are facing.

How has it come about? What can you do about it?

I believe in the last 20-25 years, the packages of economic policies have been entirely McDonalds packages. They taste the same everywhere. Whether in India or the United States.

Very briefly these processes.

  1. The withdrawal of the State from sectors that matter to poor people. The state hasn't faded away, it has become more interventionist than before, but it withdraws from sectors that matter to poor people.
  2. Imposition of user fees and charges on people who can't afford it.
  3. The privatization of just about everything. Including intellect and soul. You know twenty years ago, I used to be very curious about this term public intellectual. What's a public intellectual. Now I figured that I am, because the rest have gone private. So those of us who haven't been sold to a corporation, we are public intellectuals. It somehow gives us a certain noble transcendence. Doesn't help one bit though.
  4. and this is central to what has happened in the last 30 years - the untrammeled, unrestrained rise of corporate power. Whether it's water, whether it's food, whether it's banks, whether it's newspapers corporations run the world. They run governments. They run your life.

The subordinance of local governments and elected governments and elected representatives, by corporations, by corporate power and through bypassing ... the biggest ambition... you know for many years, I've been teaching at the IAS academy, the Lal Bahadur Shastri academy in Mussourie - where we train people for the Indian Administrative Serive. Last two years, somehow I haven't gone, because I've been too tied down, but I've been doing that since 95. You run there into probationers with all the idealism young people have. Some of them become excellent collectors, but ten years down the line, everyone has one ambition - how to get deputed to World Bank or to IMF. That is the ambition.

So you're having a complete subordining of the government processes. Incidentally the Prime Minister of India, the head of our Planning Commission, all are former World Bank, IMF Employees. Yes. Manmohan Singh, Montek Singh Ahluwalia - all of them. They draw pensions from the world bank. Do you know that? Go and read their CVs.

Here's the good news for you. It's unraveling. It's unraveling and not just on the Arab Street. The 2008 - the meltdown in 2008 didn't begin in 2008, it did not end in January 2010. A hundred countries have had their meltdowns, but only when it hits the suits on Wall Street you call it a crisis.

When it hits the big boys, then it is a crisis. If it just wipes out thousands of and hundreds and thousands of farms... in Minnesota, Okhlahoma, and other mid-Western states of the United States. That's not a crisis. it's when it hurts the corporations that it becomes a crisis. The fact is it's unraveling, they don't know what to do about it. They have no clue. they seem to be in charge, they seem to be in command, military power is the answer of course to everything that they do, but they are just not in control anymore. It's not just the Arab street.

People are protesting, things are unraveling.

Two conditions are fulfilled. The ruled are no longer willing to be ruled in the old way. The rulers are not able to rule in the old way.

How we take it from there... I hope you and I will find a way of agreeing on what to do.