[Ip-health] USTR letter threatening India about price controls on medical devices

Malini Aisola malini.aisola at gmail.com
Fri Oct 27 00:18:00 PDT 2017

Below is the text of the letter sent by Ambassador Lighthizer to the Indian Government criticizing recent moves to impose price controls on coronary stents and knee implants to improve affordability for the public. It also contains veils threats and pressurizes the Government to not expand price controls to other medical devices. 





September 18, 2017
Shri Suresh Prabhu
Minister for Commerce and Industry
Shri Nripendr Misra
Principal Secretary to the Prime Minister
Dear Minister Prabhu and Principal Secretary Misra
I am very much looking forward to working with both of you to strengthen the bilateral trade relationship between the United States and India.
In that spirit, I am writing to follow up on the specific concerns related to the price control policy on coronary stents that Secretary Ross and I raised with Prime Minster Modi during his visit to Washington in June.  I now understand that this price control policy has recently been extended to orthopedic knee implants.
This policy is very troubling to me.  We understand India’s objective is to ensure that citizens have access to medical treatment at affordable prices, but we also believe this objective can be addressed while continuing to encourage innovation and investment in India’s market.  The price caps on coronary stents do not appear to have resulted in the intended effect of reducing patient costs.  We understood that hospitals are compensating for the capped stent prices by increasing fees for the medical procedures required to implant the stents in patients, thereby negating any impact on the patient’s bottom line costs.
The pricing policy has created serious problems for U.S. companies that sell these products in the Indian market.  The National Pharmaceutical Pricing Authority (NPPA) order on coronary stents does not sufficiently differentiate drug-eluding stents based on the level of technology.  This has disproportionately affected the most innovative and advanced stents, most of which are imported.  The ceiling price under the NPPA order is also below the cost of production for the most innovative stents.  Since NPPA has denied applications by U.S. companies to withdraw those products from the market, they have been forced to continue to sell these products in India at a significant loss.  The combined impact of these policies creates an environment that dis-incentivizes companies to orthopedic implants, discourages longer-term investment in the Indian market.  Such policies are neither in the interest of innovating companies, nor in the interest of ensuring access to further technologies for Indian patients.
More broadly, the uncertainty resulting from statements made by government officials about expanding price controls to additional medical device products is already causing U.S. producers to rethink their presence in the Indian market and is discouraging them from introducing their latest technologies for coronary stents and other medical devices, we believe that this situation can adversely affect India’s appeal as a destination for medical tourism, which is a critical contributor to the Indian economy.
The U.S. government is committed to working with you to identify a policy solution that will address Indian government priorities related to patient costs, but will also promote trade, innovation, and access to the most advanced technologies.  Until such a policy is developed, I urge you not to expand price controls to additional medical devices.  I propose that our teams renew their engagement on this important bilateral trade issue with the objective of reaching a mutually beneficial outcome as soon as possible.
Thank you for your urgent attention to this issue and please do not hesitate to contact me to exchange further views.
Ambassador Robert E Lighthizer
United States Trade Representative
Cc:   Shri Arun Jaitley, Minister of Finance, Minister of Corporate Affairs
       Shri Ananth Kumar, Minister of Chemicals & Fertilizers
       Shri Jagat Prakash Nadda, Minister of Health and Family Welfare
       Dr. Rajiv Kumar, Vice Chairman, NITI Aayog

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