Government Might Cap Margins on Medical Devices; Cost of Treatment to go Down

With a cap on profits of medical devices, the government aims to curb profiteering and control the high medical inflation rate in the country, which is as high as 20 per cent in the country.

The cost of medical devices might come down substantially, as Prime Minister Narendra Modi is likely to accept NITI Aayog’s, the government think tank, recommendation to cap trade margin at 65 per cent for medical devices. A meeting was held on Wednesday with senior officials of NITI Aayog, the secretary, ministry of health, the chairman of National Pharmaceuticals Pricing Authority, secretary, and department of pharmaceuticals to finalise the draft.

With a cap on profits, the government aims to curb profiteering and control the high medical inflation rate in the country, which is as high as 20 per cent in the country. Device makers, on the other hand, have complained that caps on prices will hurt innovation hurting the medical industry in the long run.

As per NITI Aayog’s formula, the maximum retail price (MRP) of a device will be decided by adding the trade margins in the price at the first point of sale. The trade margin is the difference between the price at which the manufacturers sell to sellers and the price charged to consumers.

As per NITI Aayog’s consultation paper, “Many expenditures are incurred by the importing companies, including clinical education on deployment, and therefore trade margins should start from the first point of sale, that is the stockist.”

The government last year put a cap on the price of knee implants under para 19 of the Drugs (Price Control) Order, 2013. The move has cut the cost of knee plantation significantly.