AIMED’s reaction on US & India Trade Deal Negotiation on Medical Devices Price Controls
Healthcare delivery public policy discussions are an internal matter of a sovereign nation whether USA or India and should not be part of any bilateral trade discussions.
Price Caps are needed as an over rider on an initial consumer protection safety net of trade margins capping over the import landed prices / or Indian manufacturers Ex Factory price(1st point of sale on which GST is applied 1st time as they enter the supply chain) when for identical product specifications there continues to be blatant price disparity. Businesses need profits to grow and serve their clients adequately but profiteering is a No No in healthcare delivery.
At AiMeD we encourage our members to manufacture responsibly and any move to keep importers who are traders outside purview of trade margins rationalisation will be against Make in India of ethical manufacturers and not fully address consumer concerns.
The trade margin is the difference between the price at which overseas or Indian manufacturers sell to trade (price to trade) and the price to patients (maximum retail price), and TMR entails a cap on the profit .
The first point of sales is when GST is applied initially when goods enter the supply chain – in case of imported when they land into India on the CIF plus Custom Duty price and in Case of Indian manufacturers when they leave the factory on the discounted invoiced price on which GST is charged .
When it comes to trade margin rationalisation, importers of medical devices should also be included. Aren’t MNC importers traders too? How can we have importers having irrational 200% margin as was indicated in NPPA report analysing trade margins on catheters and guide wires which is used to finance doctors overseas trips/ sponsoring medical conferences/ unethical marketing practices, while the rest of supply chain have only 30% trade margin as defined on Price to Stockist as 1st point of sale.
Any move to exclude Importers/ overseas subsidiaries from being part of the trade margins cap / rationalisation will be giving a competitive advantage to imported products and forever putting their Indian competition at a competitive disadvantage, it will also encourage unethical marketing and consumers may not gain fully as would be the case if trade margins are capped over the import landed price.
In order to accord a level-playing field, the policy needs to equate an overseas manufacturer’s first point of sale at which their goods enter India (based on cost, insurance and freight) with the ex-factory price of the Indian manufacturers. Medical devices usually go through four to seven points of sale along the supply chain — from a distributor to a wholesaler to a retailer and a hospital — before they reach a consumer in a distant village. Each point in supply chain incurs various costs, such as freight, inventory carrying costs, rental, salaries, marketing and sales overheads and service and statutory expenses of compliance. Everyone in a supply chain has intermediate costs and value addition – so what value importers are doing and the question is what’s a rational margin for them?