“Do not threaten us; let’s talk instead.”
On 8 June, government think-tank Niti Aayog first shared its proposed new price control policy for medical devices with US-headquartered medical device manufacturers. This new approach seeks to change the price control policy from one that currently caps prices on medical devices such as knee implants and stents without any room for flexibility. The new policy aims to cap margins on 18 other devices mentioned in the Drug Price Control Order 2013, instead. It came with the request mentioned above.
The request did not come out of the blue—it was in response to the US’ simmering unhappiness over the existing price control policy. An unhappiness that threatened to turn into retaliatory action. Just over 10 days on from sharing the proposed new policy, the threat of US retaliation has materialised. On 19 June, the United States Trade Representative (USTR) held a public hearing in Washington DC, where it considered withdrawing trade benefits to India.
With this development, the timing of the Niti Aayog’s alternate price control policy has become curiouser. The discussion to change the price control policy has been doing the rounds for about a year, says a representative of an American industry body. But the government chose this month to share the proposed policy because the pressure from the US is mounting, he adds.
It all began in October, last year. The global medical device association AdvaMed, headquartered in Washington DC, filed a petition with the USTR. AdvaMed, which represents medtech majors such as Abbott, Boston Scientific Corporation, Medtronic and BD, asked the USTR to withdraw trade benefits that the US accords to Indian industries. This was followed by eight months of conversations, meetings and letters between the Indian Government, US President Donald Trump, industry bodies and the USTR. All of this culminated in the 19 June public hearing.
Now, all that is left is the USTR’s decision. This could take anywhere from three months to over a year, depending on how strongly the two countries stick to their guns. The Government of India, for its part, has suggested that it will drag the US to the World Trade Organisation because it has the right to make devices accessible to the poor. Battle lines drawn, the dispute threatens to turn into a trade war.
The new price control policy could defuse this ticking time bomb. It is the lifeline on which the future of the $5.2 billion Indian medical device sector—growing at 15.8% each year—rests, as over two-thirds of India’s medical devices are imported, and the majority of those are from the US.
