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Saturday, February 25, 2017

Monitor stent quality under CGHS: Pricing regulator to government

The National Pharmaceutical Pricing Authority (NPPA), while fixing the price cap on stents on February 13, also decided to request the Union health ministry to monitor the quality of stents that are being supplied under the Central Government Health Scheme (CGHS).

“The Authority also decided to request the Ministry of Health and Family Welfare to be vigilant about the quality of coronary stents under CGHS, in view of the fact that the manufacturers, hospitals and few other stakeholders did accept that the quality of stents supplied under CGHS rate contract was very ‘basic’,” the NPPA said in a detailed note attached with the minutes of the February 13 meeting where the stent price cap was decided.

 The CGHS was started under the Union health ministry in 1954 with the objective of providing cheaper and comprehensive medical care facilities to central government employees, pensioners and their dependents residing in 25 CGHS-covered cities.

“If the perception is wrong, the same should be dispelled by random inspections and clinical trials and issue of necessary clarifications to restore the faith of CGHS patients. This monitoring exercise needs to be made regular and stringent, keeping public interest in mind,” the NPPA added in its request.

A stent is a tiny expandable metal scaffold to open up narrowed or blocked arteries. The ceiling price of bare metal stents (BMS) has been fixed at Rs 7,260 per piece and that of drug-eluting stents (DES) and biodegradable stents has been fixed at Rs 29,600 per piece.

While discussions were on with various stakeholders on how to decide the price cap, stent importers and manufacturers “were opposed to taking CGHS price or cost of production or even landed cost as benchmark, since as per their arguments, those prices neither reflected the actual market conditions, nor was such an option provided for, under DPCO, 2013”.

The NPPA noted: “They (stent importers and manufacturers) unanimously mentioned that stents being provided to CGHS were among the lowest category of DES and many patients had to pay out-of-pocket, if they went for ‘higher quality’ stents. This practice, as per their view, had been officially provisioned for by CGHS and was known practice by all hospitals availing CGHS rate contract.”

On the other hand, civil society representatives held the view that CGHS rates or the cost of production data could be taken as benchmark for price fixation on which a reasonable margin to distributors and hospitals could be provided for. However, the NPPA decided otherwise.

“The Authority also decided that the CGHS-based pricing method should not be taken as a benchmark because CGHS prices are based on open tenders and based on supply of bulk quantities where the manufacturers normally quote at the bottom level. CGHS-based prices do not provide scope for margins for future R&D, innovation and growth and may not be good from the public health policy perspective in the long term. Moreover, CGHS prices are meant for reimbursement and may not reflect real price…” the NPPA stated.

The NPPA also decided that the option of Price to Hospitals (PTH) should not be considered during price cap calculations, as hospitals are not legal entities as retailers and the margins at the level of PTH are too exorbitant to defeat the basic objective of price capping.

“Thus, for the final price calculations, the Authority considered the options of Price to Distributor (PTD), the landed cost (LC) and the cost of production (COP) data and excluded CGHS and PTH for the reasons discussed earlier,” the NPPA noted.
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