Self-sufficiency in manufacturing medical devices is critical to ensure affordable health care in India. But in this segment, India has not been able to replicate the success it achieved with pharmaceuticals. The Indian medical devices market is dominated by multinationals and the local demand is fulfilled substantially through imports especially in the case of high technology devices (about 80 percent), which constitutes about 68 percent of the total import of devices.

The declared objective of the draft Medical Devices Policy (Policy) is to reduce import dependency, especially on highly priced devices and make India a global hub for production and innovation. However, the Policy fails to outline comprehensive measures to achieve this stated objective and is often couched in broad language. So it fails to pinpoint factors that prevent the development of the Indian medical device industry. For instance, the situation analysis in the draft does not focus on the role of hospitals and doctors and foreign investment in achieving self-sufficiency.

Irrespective of the technological competence of indigenously made Chitra –TTK heart valves or Aravind Eye Hospital Intra Ocular Lenses -- these products failed to dominate the Indian market for reasons that need to be understood by policy makers.  Why is there a tendency to prescribe foreign, more expensive medical devices against a more affordable locally manufactured product? Does it have to do with a lack of scientific faith in the product, or is there corruption in the procurement system?  

Though the policy makes the promise of direct price control on selected medical devices – it is   conspicuously silent about the method of price control. Unless there is a cost-based price fixing formula, price control will fail on medical devices. The price control would also be ineffective unless the government curbs the practice of steep mark-ups that may take place at hospital or doctor levels. Further, hospital procurement or doctor prescriptions should be based on transparent and independent technical evaluation rather than unethical promotion practices.

A key recommendation of the draft is also the creation of a new authority called the National Medical Devices Authority (NMDA) with the mandate to facilitate the development of the medical device industry alongside with the standard setting and quality control.

But this would put the two roles of the NMDA in a conflict of interest with itself! Quality and standards enforcement should be clearly kept apart from an agency promoting the interests of the industry.

The draft does make a few proposals to curb the import of second-hand medical devices, besides proposing the restructuring of tax and duty structure to promote local manufacturing. However, alignment of trade policy alone is not enough.

There is complete silence on the impact of foreign direct investment (FDI) in manufacturing medical devices. FDI does not automatically result in self-sufficiency in the absence of strong performance requirements in compliance with WTO. The draft should be clear on the limitations of FDI in achieving self-sufficiency especially the dangers of brownfield investment.

Like it was learnt from the pharmaceutical segment, where the Government brought in caveats, albeit after a few large medicine makers sold out -- are similar measures required with medical devices too?

The medical device policy needs to unequivocally support domestic manufacturing and local innovation – as we have seen with pharmaceuticals in the past. There should be favourable treatment to encourage domestic entrepreneurs. But the moot question now is does the Government of India have the political will to make the appropriate changes and do what it did in the 1970s to develop the pharmaceutical industry?

The writer is with the National Working Group on Patents Laws (NWGPL), a no-profit organization working on intellectual property and development issues. The views expressed are personal.

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