AIDAN’s statement on negotiations on medical devices in the context of US-India trade deal

20 September 2019

The All India Drug Action Network (AIDAN) is shocked and alarmed at the developments this week that threaten a reversal of India’s long held position on safeguarding its sovereignty to control and regulate prices of essential medical devices.

It is evident that the government’s control of prices on medical devices has been the most prominent issue in negotiations around what is being referred to in the media as a “mini trade deal” between India and the United States (US). The US Government has applied extraordinary pressure on India against the price caps on coronary stents and knee implants. It is an indisputable fact that these price caps were greatly beneficial to the public and reduced out of pocket expenditure of families undergoing procedures involving these devices.

India’s price control regime operates under the Drug Prices Control Order (DPCO) issued under the Essential Commodities Act. Implemented by the National Pharmaceutical Pricing Authority (NPPA), price controls on stents were imposed in after irrefutable evidence gathered by the NPPA showing gross abuse and overcharging in the pricing of these essential medical devices.

At the behest of US medical device manufacturers, the issue of these price controls became a sticking point in US and India trade discussions and were among the reasons cited for the withdrawal of India’s GSP privileges by the US. At the time of the withdrawal of GSP benefits, the Indian government itself noted that the impact would be on a minor segment goods exported from India to the US. A letter by 44 US lawmakers has confirmed this and indeed pointed out that exports from India to the US have in fact increased. In light of this, it is extraordinary that the Government is proposing to endanger access to medical devices for crores of Indians.

The US pressure on India is aimed at preventing India from using further price controls to make medical devices affordable – critical interventions to address the dire unmet need in the country and to curb corrupt practices that drive up the costs of healthcare.

The process through which the US has leveled pressure on India leading up to the PM Modi’s visit to the US is deeply problematic and is evidenced by a most shocking incident, US Ambassador Kenneth Just attended meetings at the Commerce and Industry Ministry on September 17 with Indian Government officials where US medical device companies and their US-based lobbying arm, Advamed spoke against price regulations on devices. In our view, this constitutes unprecedented, bold-faced interference in India’s policy making, on an issue that concerns the health of millions of people.

US industry is also pressing India to replace price caps on medical devices with regulation of trade margins.  In the absence of price caps, the affordability of medical devices will continue to be compromised because trade margin rationalisation is a much weaker form of regulation that will finally leave retail prices unchecked, will not correct serious market distortion in medical devices and exclude manufacturers and importers from the ambit of regulation.

AIDAN believes that the attempt to secure trade margin rationalisation is a backdoor attempt to neutralize the price caps, which is the most effective way to make critical medical devices accessible to patients.

The US pressure is attempting to gravely undermine India’s laws (such as the DPCO) and its institutions, therefore ultimately harmful to the interests of Indian patients.

AIDAN urgently calls in the Indian government to uphold the rights of Indians to affordable medical devices. We urge the Modi Government to not negotiate any compromises on medical devices and to retain the full policy space to take measures to protect and advance public health. In particular, we reject any attempt to dilute price controls through the smokescreen of trade margin regulation.

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