Path-breaking policy moves to boost medical devices sector

In a major policy initiative to boost the sagging morale of the medical devices industry in the country, the central government has recently come out with two path-breaking announcements. First, the central government announced the draft National Policy for Medical Devices which is primarily aimed at reducing the country's dependence on import of high-end medical devices. Close on the heels of the announcement of the National Policy for Medical Devices, the central government came out with another policy decision as it announced the draft Uniform Code for Medical Device Marketing Practices, which was aimed to curb the unethical marketing practice of bribing of doctors by the medical devices companies and marketers. Both these policy initiatives were long overdue for the fledgling medical devices sector in the country.

By bringing out the National Policy for Medical Devices, it is obvious that the government wanted to build an enabling ecosystem for medical device manufacturing and research within the country and create a robust regulatory and skilling framework to ensure the quality and safety of these life-saving products. In the policy, the government has noted that the medical devices sector in India suffers from a considerable cost of manufacturing disability vis-à-vis competing economies, inter alia, on account of lack of adequate infrastructure, domestic supply chain and logistics, high cost of finance, inadequate availability of power, limited design capabilities, low focus on research and development (R&D) and skill development, etc.

So, the draft policy is focused on systematically nurturing and developing the medical devices sector to realise its true potential. Unlike many other industries, the medical devices sector is an intrinsic sector and is highly capital and technology-intensive. It has long gestation periods and also requires constant training of healthcare workers to adapt to these new technologies. So, the government has explained several measures to promote medical devices manufacturing in India. In the new policy, the government is proposing to reduce India's dependence on import of high-end medical devices. Nearly 80 per cent of the medical devices currently sold in the country are imported, particularly high-end devices. Indian players in the space have so far typically focused on low-cost and low-tech products, like consumables and disposables, leading to a higher value share going to foreign companies. With the new policy, the government aims to reduce India's import dependence from 80 per cent to nearly 30 per cent in the next 10 years, and become one of the top five global manufacturing hubs for medical devices by 2047. Some of the other proposals in the policy include incentivising the export of medical devices and related technology projects through tax rebates and refunds, increasing government spending in 'high-risk' projects in the medical devices sector, and a single-window clearance system for licencing medical devices. The central government also released the Uniform Code for Medical Device Marketing Practices which will surely translate into more credible healthcare delivery as well as restrain the fly by night operators who pose a great risk for patients and the reputation of the medical device industry in the country. By bringing out the marketing code, the government wanted to remove or eliminate inductive mechanisms to distort the medical devices market in the country.

The marketing code has been drafted to ensure high ethical standards for the medical device industry much in the similar manner as has been done in the case of pharmaceutical industry by introducing the UCPMP in 2011. As the medical devices industry is growing exponentially in the country, it has become a big challenge for the regulators to ensure the ethical marketing of these devices. It is an undeniable fact that the medical devices marketing companies put artificially inflated high MRP with high trade margins to induce hospitals and retailers to push their products. Ideally, the MRP of these products should not be over four to five times of import landed price or ex-factory price (on which GST is charged initially).

But the fact remains that instead of four or five times, the prevailing MRP goes up to a whopping 20 times. Medical device industry is an important keystone in the healthcare delivery system and is inherently different from pharmaceuticals. By releasing a separate marketing code, the government has taken cognizance of the fact that a separate code is needed for medical devices sector which can accurately capture the ethical marketing practice requirements for the sector. The Central government's latest act of releasing a draft national policy and a uniform marketing code for medical devices industry shows that the government is focused on systemically nurturing and developing the sector to realise its true potential and to curb unethical practices to bring in more credible health delivery.