India’s medical device price regulator has issued a direction to importers and manufacturers of 24 categories of medical device to submit price-related information, including the price at which they sell medical devices to distributors and hospitals in India, by March 10, 2021.
Background
In India, medical devices are regulated not just for quality, but also for price. The Drug (Price Control) Order 2013 (“DPCO”) regulates prices of all medical devices that are marketed in India. Some medical devices such as coronary stents, drug eluting stents, condoms and intra-uterine devices that are listed in the schedule of DPCO have their ceiling price fixed by the National Pharmaceutical Pricing Authority (“NPPA”), while all other medical devices (i.e. the non-scheduled medical devices) have to abide by a restriction whereby their maximum retail price cannot increase by more than 10 per cent in any given 12-month period.
Direction
In order to ensure that medical device manufacturers and importers are complying with the requirements of DPCO, the NPPA has been given powers under DPCO to issue directions to manufacturers and importers to submit price related information. It is in furtherance of this power that NPPA has directed that the following information be submitted to it:
- Medical device category as per risk classification published by DCGI
- Product name or specifications
- Brand name or description
- Date of launch in India
- Minimal unit of sale/retail pack size
- Price per unit to distributor / stockist
- Price per unit to hospital
- Price per unit to retailer
- Applicable GST percentage
- Moving Annual Turnover
- Maximum retail price for unit as on January 1 of the years 2018, 2019, 2020 and 2021 (for a few categories, only the MRP as on January 1, 2021 needs to be submitted)
A copy of the said direction is available at this link.
24 Categories of Medical Devices covered by the Direction
| Disposable Hypodermic Syringes | Disposable Hypodermic Needles | Disposable Perfusion Sets | IVD devices of HIV, HBsAg and HCV |
| Catheters | Intra Ocular Lenses | I.V. Cannulae | Bone Cements |
| Heart Valves | Scalp Vein Set | Orthopedic Implants | Internal Prosthetic Replacements |
| Ablation Devices | Organ Preservative Solution | Blood Grouping Sera | Ligatures, Sutures and Staplers |
| Tubal Rings | Surgical Dressings | Umbilical tapes | Blood/Blood Component Bags |
| Nebulizer | Blood Pressure Monitoring Device | Digital Thermometer | Glucometer |
Challenges with submitting price for retailer
There may be certain fields for which information has been requested by NPPA, but the information may not be available with the importers or manufacturers. For example, the details of price to retailer sought by NPPA may not be available since importers and manufactures typically sell to a distributor or hospital, and not directly to a retailer. In such cases where the information is not available due to the nature of the manufacturer’s or importer’s business model, the importer or manufacturer may simply submit to NPPA that the information is not available with them. The importer or manufacturer is not expected to retrieve this information from its supply chain and submit to NPPA. Being in possession of such information may in fact result in breach of anti-trust laws, as an attempt to undertake resale price maintenance.
Sale of imported medical devices marketed by marketer
Some importers import and sell directly to a marketer in India. In that case, it is the marketer who is supposed to provide this information as price related information is not available with the importer. However, the importer should ideally endorse and countersign the information submitted by marketer because the primary obligation to submit this information is with the importer. Alternatively, the importer may submit whatever information that it has and give a written undertaking along with the submission that the remainder of the information will be submitted by the marketer because the remaining information is unavailable with the importer.
Requirement of license
The direction also contains a note which states that manufacturers and importers must attach a copy of the licence obtained from the DCGI for each medical device. It may be difficult to furnish the manufacturing licence for Class A and Class B medical devices (such as Glucometer). The said licence is actually issued by State Licencing Authority of the state where the medical device is manufactured. In order to comply with the requirement of the direction, a copy of the licence issued by State Licencing Authority should be annexed in place of copy of license from DCGI.
Format for submission
All the above information has to be certified by a qualified chartered accountant or cost accountant in a physical format, and the same information is also required to be sent in form of an Excel Sheet to the NPPA at the following email ID medicaldevices-nppa@gov.in
What should manufacturers and importers of medical device take this direction very seriously?
Any non-compliance with the direction of NPPA to submit price information may result in criminal prosecution under provisions of Essential Commodities Act of 1955.
The information will also be used to ascertain whether any manufacturer, importer or marketer has fixed the MRP of the medical device in excess of ceiling price or has increased the MRP over the permissible 10 per cent limit in a 12-month period. In both these cases, the NPPA has the power to recover the excess price paid by the end-consumer from the importer or manufacturer, and to levy a penalty for overcharging in certain cases.
That apart, the information will most likely be used by NPPA to track or validate the market share of various medical devices and medical device manufacturers in terms of moving annual turnover (MAT) of said medical device under the submitted medical device category. If, at any time in future, a medical device is inserted in the schedule of DPCO on the grounds of essentiality to the Indian population, then the market share in terms of MAT will become an important consideration before NPPA in fixing the ceiling price that medical device.
Therefore, manufacturers and importers of the 24 categories of medical devices listed above must take this exercise seriously and submit the requisite data to the NPPA in prescribed form within timelines, both in physical and electronic format.