Cap on knee implant prices in offing as huge disparities found

After having capped the price of coronary stents and lenses used in cataract surgery, the government may be moving towards doing the same for knee implants, as an analysis by the National Pharmaceutical Pricing Authority (NPPA) shows that importers, distributors and hospitals are charging margins ranging from 67 per cent to as high as 449 per cent on key components for knee replacement.

While the minimum and maximum landing price of a femoral implant is Rs10,615 and Rs29,470 respectively, by the time it reaches the patient the minimum price snowballs to Rs26,000 and the maximum to Rs1,69,123, the report found.

When the NPPA authorities looked at the price of the total knee system, they found that the maximum landing price was Rs65,781, which eventually becomes Rs4,13,059 when the margins of the importers and distributors are included. The patient thus ends up paying six times the price of the orthopaedic implants at the end. The distributor, who gets the product for Rs1,67,162, earns a margin of Rs2,45,297, or 147 per cent.

The trade margin for the importer for a total knee system was found to be 76 per cent while distributors and hospitals raked in a profit margin of 135 per cent. The analysis shows that in case of an "insert" - used to replace a damaged bone or cartilage in knee replacement surgery - the average total trade margin is 449 per cent, whereas that on the "total knee system" is 313 per cent.

The government has given manufacturers, traders, distributors, and other stakeholders one week to raise objections following which the NPPA will step in to control the prices.

Apart from substantial trade margins, the analysis shows a huge disparity in the landed price of imported knee implants and their official Maximum Retail Price (MRP). The prices of a range of products available in the market vary drastically. For instance, in case of Femoral - a device used in knee replacement surgery - the maximum landed price is Rs29,470, whereas the MRP is Rs1,69,123. The product is available to the distributor at Rs83,000.

There is also a significant disparity in the range of prices for any particular product. For instance, the MRP of a total knee system varies between Rs59,091 and Rs4,13,059.

The data shows distributors and hospitals earning the maximum margin - ranging from 120 per cent to 163 per cent - whereas importers also keep a significant share of the trade margin, ranging between 29 per cent and 109 per cent, depending on the product.

In May, the regulatory authority had placed several devices on the list of products to be monitored and asked companies to submit their price data by the end of the month.

Initially, the regulator shortlisted 19 commonly used medical devices, including catheters, heart valves, orthopaedic implants and intraocular lenses, and asked companies to submit price and production data. It made recommendations to the health ministry to include more medical devices under the national list of essential medicines.

Though NPPA's analysis of the price data for knee implants forms a strong basis for the government to bring them under price control, it is the health ministry which takes the final call on placing the devices under NLEM. Thereafter, NPPA will be empowered to cap prices.