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US and India’s relationship souring over price capping?

Prime Minister Narendra Modi meets with US President Donald Trump and First Lady Melania Trump at the White House in Washington D.C., US in June 2017.

Just a few months ago the relationship between India and the US was touted by President Donald Trump as having “never been stronger”. Will India’s policy of price capping medical devices sour this relationship?

The US Trade Representative (USTR) is reportedly considering revoking the special tariff with India if it continues to implement price caps on medical devices manufactured by American companies.

This potential decision comes amidst escalating tensions between the US pharmaceutical industry and a number of other nations. Stephen Moore, President Trump’s former economic adviser has accused a number of nations of abusing US pharmaceutical patents. He specifically mentions Mexico as producing “knock off” versions of US drugs, infringing on patent laws as they do so.

Trump himself has launched an investigation into China’s apparent misuse and theft of US intellectual property. Beijing has expressed “strong dissatisfaction” with the decision, calling the move irresponsible and claiming it may damage trade relations.

The rising hostility of the US towards trade partners could cause problems  in India. Issues have already arisen from India’s price capping, with US pharmaceutical company Abbott Healthcare withdrawing several cardiac stents from the market.

Some hospitals within India were reporting an 85 percent reduction in profit margins on cardiac stents following the price cap. Abbott noted the reduction in profit margins and applied to the National Pharmaceutical Pricing Authority (NPPA) to withdraw two of their stents from the market, citing their sale as being no longer financially viable.

The issues with the price cap were not limited just to US companies. The US Government outright requested the Indian government to not extend price caps. There has also been a request that, should companies based in the US no longer wish to provide their devices in India, they be allowed to withdraw from the market, referencing the decision by the NPPA to keep some brands of stents on the market for a set period before their withdrawal.

The price capping of medical devices was inevitably going to draw a degree of hostility from those exporting these devices, as profit margins are now limited.

The decision was made in response to high mark-ups in prices at every level of sale, from the imported stents to the hospital level. The increase in cost from the point of import to the patient was often as high as one thousand percent, prompting the imposition of an eight percent trade margin.

1 thought on “US and India’s relationship souring over price capping?”

  1. Many Sovereign Nations have laws to protect their citizens and consumers – these are to be respected. Indian exporters respect US & EU laws and it’s expected that US exporters should know Rules of the Game and respect and abide by Indian Laws . The US & other suppliers of Stents were allowing profiteering from Stents Labelled Pricing to over 1000 % mark up by hospitals and were unwilling to self regulate these to reasonable levels when they had a chance to do so . Similar was case of Orthopaedic implants where they assured NPPA Chairman of willingness to self regulate but did not act promptly and later some of them under another lobby group made fun of attempts of self Regulations by AiSNMA for Syringes & Needles .
    It’s unfortunate that the onus of US India souring of relations has been put on Indian Government attempts to protect its citizens from profiteering rather than the 3 US MNC who used the platform of ADVAMED to lobby for roll back or no no extension of Price Controls ( including Price Caps) on no other medical devices so that this profiteering and unethical marketing that lead to exploitation of hapless patients may continue. Both NPPA and IMA have gone on record to support differential pricing for Stents on proven clinical evidence of superiority from any future superior technology. They have yet to submit this proof .
    Abbot had to withdraw and was permitted to withdraw a claimed highly superior technology based Brand on serious patient safety concerns in EU and other countries. The law to restrict overnight withdrawal is to ensure no disruption in supplies by Dominant market players who have abused and excessively profited from the skewed market( until the market was corrected by the regulator ) and players disciplined. If Abbot and others are making losses as being claimed (though they are reported to sell at lower than these prices in EU) then they can withdraw from market as per defined procedure but not timely filling forms , filing an application and then blaming Government and Threatening a sovereign nation is despicable bullying tactics at negotiations- remember, an elephant has long memories.
    It’s the USA who disallows Indian exporters by discriminatory Non Tariff barriers of TAA to sell to US public healthcare. Have these 3 cry babies reported the cases of Indian Public Healthcare discrimination against Indian Mfrs in India by asking for mandatory US FDA approval to bid for Indian Tenders ? USA should be investigating US Mfrs for complaints of unethical marketing and join on going investigations by CCI ( Competiton Council of India ) to discipline those Mfrs who bring a bad name to USA instead of siding with those who have not been seeking reasonable profits from reasonable priced products.

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