Med-tech industry watching battle over stent prices in India

Fast-developing nations like India are supposed to represent the future for the medical device industry. Medtronic CEO Omar Ishrak often declares that emerging markets represent the largest long-term opportunity in all of med-tech.

But in a surprising development, some of the world's largest medical device companies including Minnesota-run Medtronic are trying to pull their most advanced coronary heart stents out of India, in response to dramatic price caps. So far, India is forcing the companies to keep the devices on the market.

Now even med-tech companies that don't sell stents fear that their corner of India's fast-growing $5 billion market for medical technology could also be threatened by the same kind of price caps that shaved as much as 85 percent from the price of a cutting-edge $3,000 stent in the subcontinent. Other nations are also be watching closely.

"The decision ... sent shock waves through the stent industry," said Abby Pratt, a vice president of global strategy at the Washington-based industry trade group AdvaMed. "I know from working with all of our other members in India, they are equally concerned because of the severity of what happened with stents."

Government officials in India say they are working to protect cash-strapped patients from exploitation in a system that often requires the sick to pay cash, up front, for life-preserving devices that carry excessive markups. And they knew the move would be controversial.

"The existing coronary stent marketing channels will be shaken, and the 'old system' will be forced to restructure," India's National Pharmaceutical Pricing Authority wrote in February, according to its meeting minutes. Imposing tight price caps on stents will "increase the affordability of necessary cardiac interventions for those patients who so far could not opt for angioplasty because of exorbitant costs."

Angioplasty is a procedure that often includes placing a stent in a blocked artery near the heart. As many as 500,000 stents are placed in patients in India every year, but in a nation of 1.3 billion people with a high incidence of cardiovascular disease, the market is considered ripe for future growth.

Yet Medtronic, Boston Scientific Corp. and Abbott Laboratories have all filed official paperwork to withdraw their high-end stents from the country, in response to the sudden price controls. So far the Indian government has not allowed the stent withdrawals, though it has invited the companies to present data proving the devices perform well enough to create a higher-paying tier of stent.

The companies, which all have major operations in Minnesota, are being forced to sell their cutting-edge products at unsustainable prices, AdvaMed argues; in some cases, the maximum price of 29,600 Rupees (equivalent to $460 on Friday) doesn't cover the cost of manufacturing and shipping to India. The trade group said much of the price markup that the Indian authorities want to eliminate is imposed by Indian hospitals and distributors, not device companies. In the U.S., hospitals pay between $800 and $2,300 for the same stents, according to supply chain analysis firm MD Buyline.

Although Indian-style stent price controls aren't on the horizon in the U.S., developing nations will likely be watching India's experiment closely.

"India is clearly a geopolitical leader in South Asia as the world's largest democracy," said Dr. Brahmajee Nallamothu, a Michigan cardiologist who was co-author of a recent opinion article about the Indian stent market in the journal Circulation. "I think other countries will wait and watch a bit to see what happens within the Indian stent market before reacting too soon. That's why the threat of multinational firms pulling out is so critical."

Medtronic's Ishrak told stock analysts that the company has noted a trend of developing nations trying to paper over the differences in device performance as more of their citizens gain access to insurance coverage.

"As these markets go to universal coverage, there will be a tendency to kind of homogenize the products," Ishrak said on May 25 in response to an analyst question about growth prospects in emerging markets. "We will demonstrate additional value with these differentiated products. If there is no value, we shouldn't be ­getting more price."

That tension between price and clinical results lies at the core of the dispute between India and the stent makers.

India's health care pricing authority said it requested verifiable scientific results proving that the more costly stents were "superior" to the older versions. Although some data showed "incremental benefits" from the new devices, overall superiority was not established in the eyes of the Indian regulator. But in the U.S., some devices are allowed on the market after they are shown to be safe and "noninferior" to existing treatment.

Pratt confirmed that the difference between "noninferiority" and "superiority" was a major sticking point between the stent makers and the Indian regulators.

The first generation of stents were bare metal cages that propped open a vessel. Those are still used occasionally, but newer stents are coated with anti-inflammatory drugs that are slowly released, or "eluted."

In the past two years, Medtronic, Boston Scientific and Abbott have released next-generation "drug-eluting" stents. Medtronic said its Resolute Onyx, approved in the U.S. in late April, includes design features that make it easier for the doctor to use and more likely to create ­optimal healing. Boston Scientific's Synergy stent, approved in 2015, features a novel drug-coating technology that reduces risks from long-term exposure to polymers.

Abbott's Absorb GT1 stent, approved last year, is perhaps the most novel. It is composed of a naturally dissolving material that leaves no trace, similar to dissolving sutures. Although clinical testing found that the device produced "comparable" results to existing stents, the U.S. Food and Drug Administration announced observed increased rates of major adverse cardiac events among Absorb GT1 patients that is being further ­investigated.

The device companies have requested to remove all three stents from the Indian market, and several other higher-end models. The companies can't withdraw the stents from India for at least six months because the Indian government has placed coronary stents on its National List of Essential Medications. That placed it under a "Drug Price Control Order" that forces stent makers to maintain adequate supplies for six months.

Boston Scientific followed the suggestion of the Indian pharmaceutical authority and presented clinical data to justify a new pricing tier for its Synergy device. That written request was obtained by Reuters reporters in New Delhi, who reported that Boston Scientific told the authorities that the Synergy stent used to fetch the equivalent of $3,000 in India, but the company would accept an $1,160 price cap for a device that cost $758 to manufacture and import to India.

"We continue to engage in constructive dialogue with the local authorities on the availability of our drug-eluting stents. We are abiding by the regulated provisions and continue to provide stents to meet the needs of patients and physicians in India," the company said.

An Abbott spokeswoman noted that most of the company's stents fell below the price cap before it was imposed, and that the company's most widely used stents in India, the Xience line of stents, will remain on the Indian market. The higher price for the Absorb GT1 includes the cost of research, quality control, and special storage and shipping requirements; Abbott is considering the right time to refile its request to withdraw the Absorb GT1.

The Indian officials show no signs of backing down.

National Pharmaceutical Pricing Authority (NPPA) Chairman Bhupendra Singh said in an e-mail to the Star Tribune that his government has the legal right to stop what it sees as "exorbitant" prices by limiting markups on coronary stents. "The increased affordability will expand the market of stents, and ultimately help industry and people," he wrote.

Singh's e-mail said, "there is no conflict between NPPA and stent companies." But the authority's Twitter page is plastered with a banner of right-wing populist Prime Minister Narendra Modi's face beside a boast about reducing the price of cardiac stents by 85 percent.

The NPPA announced in February that it would update its systems to monitor the prices of stents and other devices, and that it would "take strict action" in cases where device prices are rising too quickly: "If a similar exploitative system prevails in the case of other devices, (the NPPA) will not shy away from bringing those devices under price control, exercising it jurisdiction ... in public interest."