Medical Device and Wound Care News and Analysis Blog

India's Cap on Knee implant Pricing May Slow Revenue Growth

Written by Lisa Mahan | 9/5/17 3:41 PM

Max Retail Pricing for Knees in India Dropping up to 78%

The Indian Government enacted price controls for knee implants capping the price significantly below current market rates. According to a report in  IndiaToday , the move is the latest step in the government’s move to bring down the cost of medical devices and pharmaceuticals. The price controls for knee replacement implants caps the price of CoCr knees at ~$852 (54,720 rupees). Ananth Kumar, Minister of Chemicals and Fertilisers, stated current implants are priced at up to ~$3,895 (250K rupees) at Indian hospitals...

The new maximum retail price (MRP) list set by the Indian Government reduces the prices of knee implants by an estimated 30-78%. Lowering the price should increase the number of patients who can afford the surgery down the road. However, this steep pricing drop may put the brakes on double-digit revenue growth in India. And, if this tactic proves successful for India, pricing caps could grab the attention of other countries anxious to get healthcare spending under control.  

In May, India’s National Pharmaceutical Pricing Authority (NPPA) began monitoring the devices with the expectation of bringing them under price regulations. Companies were asked to submit their pricing data for review by the end of that month. NPPAs analysis showed importers, distributors and hospitals were earning significant trade margins on knee components ranging from 67% to as high as 449%, according to a  Times of India article. National average trade margin for a complete total knee system was 313%.

The  NPPA Order states the move will curb unethical profiteering at the cost of patients by lowering “exorbitant prices” which affects patients who can’t afford the expense and may be suffering in pain. NPPA also cites the prediction that India is likely to be one of the leading countries with citizens immobilized by osteoarthritis.

The NPPA Order requires all manufacturers to comply and implement the ceiling prices under the applicable categories no matter if the implants are cemented, uncemented, gender specific or unisex. However, manufacturers with uncemented implants can petition NPPA with supporting documentation for fixation of a separate ceiling or retail price. Ceiling prices outlined in the order document include all components and consumables used during knee replacement surgery that remain in the body of the patient.

Manufacturers considering limiting their implant offering to lower cost, generic implants will have to think again. The NPPA Order requires all manufacturers to continue to provide all brands with no disruption in the supply chain linked back to the printing of the new MRP list. Increasing patient access and moving patients to knee replacement sooner could be key to continued growth in the Indian market.