l) 2) Enquiry repert on pricing- of stents FDA Maharashtra state had received a complaint on Alleged malpractices by the multinational and its subsidiary companies /Agents in. india selling cardio vascular and other peripherals to Hospitals. Quid pro quo kick backs and over pricing, looting the gullible and alleged cash/kind bene?ts to the hospitals and interventionists in practice from Society for Awareness of Civil Rights a NGO based in Mumbai vide letter dated . 26.3,2014 The enquiry was performed at three levels l) Enquiry at M/s India Medtronic Pvt. Ltd, at its depot - Kasheli Tal Bhiwandi which is a selling premises of this firm and company?s registered office situated at ?Solitaire corporate park ,b_ldg no'.12 ?oor Andheri Ghatkopar link road ?Andheri Mumbai 93. India Medtronic Pvt. Ltd. a subsidiary company of Medtronic USA is in the business ofstents. The Clientele of company are Government Hospitals, military establishment Hospitals Private nursing homes, super speciality and speciality Hospitals The company supplies and does sales of following type of cardiac and peripheral type of stents. i) Endeavour sprint stent ERSP) ii) Endeavour resolute stent ERES) Integrity stent INT. 222 huegri?q 3262212" 1 . 55 31112.2 1.5655151523152152 22.2255 2.32.5222: ?522 222-3212. 3322523225 2' 52.55255?) 2?2 2?2! ?2?2 2:25 2.2. 52212-35? wee-"122? 2_2i '25 53.523.52.225 Biamcdicals Mumw 5 '3 Panacea .Pune 255} $5525g211?. haz?machem 5.2221 . \5112?2?25?2 {302115503 Enterprises 5213222552. .2222 ?-"222221 2.25 - 5 . 2'12 3115\2'01 deuccs Punc 3? 222?2?;12? was 222-2250112262?: 522:?2?22?212?? in the 53025517222. 55052351215 . Hospital . 555} "2252' 155Hospital. ?225221555222 ?3 55053.2 5:11:51j.? heart 5155253312: 5233;355:255 5321112550 5512225 1?2?52? . and 53.222223222523?2?. 522255212212? P222. 5.22572: ?2:551 (.5 22.12.2155 supe? spa-:5. 322591242 222112232252 -55 Grant 5.523231523215 ioundaiiarg's' 5232252? 52.22 5 2?152?512: 5222522552225. P212523 . 725.5225 Wadi-5'2 institute 2.2622: race: 222:2 2.- Pane252-5222.. ?2?222. 122012: 5.22. 2? 225.2"22? 1-2 2l22? 1- .-.5 a ,2 n_ 22.222291; 2252.22.22 2.. 55322122222-2222: 25 - 1- -. 2t}; 22.22 2:32.222 15.2.: 52222.2?. 2' .. 1 9322233 .222226x2122: 2.5.2 1 2.1022311 222222 2?25 5152:5222 22' 2 .--5553? 2.12.2292? 5-5- ?jixfn'! 2.5222235 17?? . 3] The summery of the ?ndings is as follows - Sr. Enquiry Findings No. pertaining to the following Points was performed. 1 Whether the No. pricing to the During the study it was observed that MRP oi? patients is done the stent has been always exaggerated price. as per MRP which is 336.42 to 1282.79 of the actual stated on its label price i.e import cost to the company. However, it was observed that charges levied by hospitals to the patient were always along with pro?t margin. in the range 7.42 to 25.38 of its purchase cost from the distributor. 1 What is the The import price of stent is same as. printed P011 0 on import invOice of stent. No import duty . the stent . . /taxes are levied since there is an exemption given by Government on customs duty for stents. Ref. Annexure ill) Is the MRP of During the study it was observed that RP of 3 stent? to 250 the stent has been always exaggerated price. of the price which is 336 to 1282.78 of the actual cost to the price i. e. import cost to the company. company. MRP is stated on the unit pack of the stent which is declared on the label itself. {What is The average profit margin earned by the 4 company?s pro?t com 3anv with res sect l? margin with I 15 pilLe to reSpect to its sale distributor is 120.56% (which . is in the price to the . . . . 23/. distributor range of 48 13/0 to )8 7 IiSr. Enquiry TFindings 1 No. pertaining to the following Points was performed . What is pro?t margin of the 1 distributor with 1 respect to its sale 1 hospital is 132.1 ?eh i. which is. in the range 1 . Emmi. to the i or 60 0.4, to 371 at. .1 1 nospital 1 1 1 1 6 5 What is pro?t The pro?t margin earned by Hospitals with 1 margin of the 1- 1 Hospital with 1 respect to its sale patient is in the range of 7.42% to 25.38 1 price charged to the patient The average 1101le marvin earned by the - distributor with respect to its sale price to the . . respect to its sale prlce for the stent to the1 please see footnote. I Does the Not found so. 1 7 1 distributor takes Enquiry revealed that distributors are earning 1 icare, so that 1 handsome pro?t in the business of stents. i there will be 1 however, during the study no evidence found 1 1suf?cient margin 1 on record where distributor is involved inI '1 for -- the person i gratification to doctors or any person in the 1 i 1. involved in the administration of hospital by the way oil 1 i purchase of stents . unauthorized deal, 1. 1 i who is refereed i 1 as administrative 1 i, 1 head of the I 1 1 hospital or the 1 1 1 concerned 1 doctor 1 8 Whether the total 1 The study related to this aspect is not under turnover of the taken as its spectrum involves the whole i 1 1 1 group involved in countrythe sale of stents The sample study was done for 7 hospitals around Rs 630 1 Mumbai 1 Pune and Nashik __.Data i 1 crore .. Rs 1.5 obtained from 7 hospitals is small in 1 1 crore cash is comparison to total suoplv of group1turned over "as 1lt 18 not justi?able to comment on the total 1 1 kickbacks or turnover of the group based on the data l'avours to those 1 obtained "from this study. 1 i ?vV'tzerisaerS .f . li?f?hi?iry No. i pertaining to the following points was performed . i (ii?ll gs Whether the pro?t margin earned by distributors is in the range of 94 - 214 ?2 . Also the massive kickbacks about Rs 35000/- per stent is huge and this unaccounted wealth transfer is done at the cost of patients in the supply chain of stents massive pro?t is earned by the company lndia Medtronic and its distributors. Since collectively. importing company and distributors are earning pro?t in the range of 125.05% to 535.48 ?0 which is ultimately charged to the patient who are poor victims .. The prices of stents are not uniform and regulated since these medical devices are yet to be included in the National List of Essential Medicines under the Drugs Price Control Order 2013. 10 Profit margin of the distributor with respect to import cost Table in the annexure .. shows that profit margin of distributor with respect to its landing or import cost which is between 113.95 %t0284%. . A trend is observed that lower is the import higher is the pro?t margin. This may be possible since control over the prices of stent is not in the ambit of any Government authority. Members /institutions who are involved in the supply chain of stents are always taking care that price charged to the end user? patient is less than the MRP which is a exorbitant price. it What is discount in price of the stent given by the i stri butor to Hospital As such there is no basis for the discount on price of stent. i?lowever. in the study it was observed that out of 11 stents supplied. for 3 units discount was offered by the distributor to the hospital. Discount given to the hospital . by distributors for the sale of 3 units was in . the range of 15 to 20 Sr. Enquiry Findings No. pertaining to the following Points was performed . .. 12 Supply of stent 1n the enquiry it was revealed that. some stents by the company for zero price to are supplied by the company- for zero price. From the documents . it was found that - during distributors angioplasty or surgery if the stent is opened I'hospitals and not found suitable, such handled fdamaged stents are being sent back by the hospital to the distributor and distributor in turn sent it back to the India Medtronic Pvt. depot at kasheli . Bhiwandi. Company maintains account of such Lin?intact stents . Replacement of such stent is done to the distributor at zero price. Finally these un-intact stents are sent for destruction to M/s SMS watergrace BMW Pvt. Ltd. Situated?at STO-DJB complex Nilothi, New Delhi. This company issue a cei?ti?cate for physical - destruction of such stents . 13 Role of doctor In some of sale invoices particularly of in the supply distributors - M/s Bhalani Biomedicals Pvt.Ltd. chain forstents M/s Shrigun Pharmachem Pvt.Ltd . M/s Cosmos Enterprises name of the?doctor is stated as ?used by Dr. along with name of the hospital? On the other hand . on many invoices only name of hospital is written. No evidence found regarding any sort of grati?cation to the doctors or to any other member of hospital who are involved in the purchase of the stents. *Note 4 Data of purchase and use of stents submitted by Ruby hall c1inic( hospital Pune revealed that hospital has purchased Endeavor Resolute stent 0006818367 from?M/s Panacea Biomedicals. Pune vide invoice no. 140418 dt. 4.4.2014 for Rs 65000f?and used for patient on 3-4.2014. The cost to the patient of this Stent was stated as Rs. 81500 . In this case Ruby Hall clinic has earned pro?t margin of Rs 16500 f?which is 25.38 if) Conclusion l. Pro?t earned by distributor Mi?s Bhallani Biomedical Pvt. was found to be more than the profit margin earned by the importing company . However, from March 2013 onwards the above said distributor has stopped the business of deaiing with stents. In case of other distributor Panacea. Biomedicals . out of 2 stents supplied to liOSpitals, in one case profit earned by panacea Biomedicals was found tot-be more than the importing company and in other case it was vice versa. There is huge gap between import price of stent and MRP of stent which is an exorbitant price stated by the company. Sale price to the hOSpital for the same type of stent by the same distributor varies considerably: There is no uniformity in the sale price which ultimately affect patient who is the end user in this supply chain. Example Resolute integrity stent? distributor M/s Shrigun Supplies at a price Rs. 79750/-and Rs. 99750/? to Lilavali HOSpital within one month time span . In?ated MRP cf stents is being used as a tool, for giving false satisfaction to the patient for getting stent at a lesser price than MRP. In fact distributor and the company is earning a huge prolit Available information from the distributor? M/s Panacea Biomedicals. is as follimrs ?the company has not given us any price list. The company does not mention its MRP on its invoices nor price to hospital. The company advises us the price at which we need to sell to the hospital?. This implies that importing company is playing critical role in the supply chain by not declaring the prices of stents on its invoice but actually deciding the sale prices of stents . This leads to the possibility for negotiations of prices and it seems to be the cause for non uniformity in the prices of stents . In this trade Metrology is the only authority who can take action ifthere is a violation for the sale at a price higher than MRP . In this trade MRP is an exorbitant price and trend is silently observed as" the end user_,qets the stent at a price lesser than ME. . As such there is no signi?cance of MRP. The price of stent charged to the patient is at the rate including 7 to 25% pro?t margin earned by the hospitals ml S. N4 ??ij CASH- messimu i?I? 63) Hi . for- weft? 6/ Jerry: Mgnw?v'?tam09 . Proposed action Regulation on prices of stents at every level is required. There is an urgent need to bring statutory provisions so that there will be ?xed pro?t margin in the supply chain of stents based on its import/manufacturing cost to the company. Sector of cardiac stents is Vital to the healthcare segment since now a days 9 angioplasty and other cardiac surgeries are commonly performed for the patients of all age groups . 1: Taking into consideration the patients of class below poverty level and the mandate as per article 47 of the constitution of India - To work for betterment of healthcare of the citizens is the responsibility of Government The NPPA shall bring control over the prices of stents by declaring a fixed pro?t margin for manufacturing/importing companies for distributors and for hospitals. NPPA shall include all types of stents and other related medical devices in the ?National List of Essential Medicines.? under the Drugs Price Control Order since these are life saving drugs. .. I . Tabla. .Cor 13113611? Name 01 the stunt its batch 110. Resolute integrity 00061351 91 11105011123111 integrity 515th 13.140 6849304 ?Russian. ?esolui? iategri?iy stem: 6340. -1 1 5766380 11 11intide1d1 Saie 1 price-1- :disirib (If 1 im porter. In Rs. 201291 23 1 26.20% . i1207s 1 10014014 0 1m22177.23 48.1 3% 3110111115 0f11 1 Sale 1 1sale' Invoice 1 01' distribu 1(listribumr for to 1 to its supply to hospital 1 1 1 1 1 5111024569 01%: 11.13 1 Bombay 1' hospital 24000111 11'31101 032.121 1 9.9.201 4 1 Bombay 1 hospital 1 Mumb? I 3.6.Nm _20502 (if. 16.13.12 1 Lilavati Mumbai 0 1110013315?1 93350 1 23A.2015 1 1 Lilavati 1 Mumbai I 1 an . distr1ibut given 1earned patient. 1 In RS 0 . 201501 45150" Pro?t Percent earned by price 1 the cost 1 ospital . 1 0 Rs. t0 the . patient 1 1 with I I 1 gun-1 cost of stent. charged respect handing HRP stem 8.- its percentagei 1 with 1 :respeuitn the 1100(1ng cost 01' Stem. 1 i 1 I 1 110000 20379 020% 1 I 1 i 110000 439. 12311? 1 155000 1 1435.33111 I. 1 1 I [5466" 303.12 11 55600 1 1 667.a15500015 - 3361.12 a 1155000 1 ..520 33 ll Name of the Intent 3? its batch noResolute integrity istent II i5993102 Ill LIande (1 cost (impor I price 2+ IL import taxes i Nil 1n 5S?ie . price to the distrib utor with the inclusi (In ofS i 0A.. '3 VAT . In Rs. IRS. -3 i4 II 7.84 . i, I Shrigu i Ii 5 MuI?Pro?t 0f importer. in Rs. 1 09.57 details of sale invoice of A distributor '_to its supply I to hospital 3 em 3050 ldt.3A.2015 3 L?ava? Mumbai Il?Sale price of distribut distribu or . tor to i in Rs. the hospital i In Rs. Ternana?o??eII given Iby distribut or to the hospital. In Rs. I?iu?iib iin??ddBI i Pro?t- Price earned zi?cost by the t0 tiistrih patient. 0th in Rs. with respect to la ndiri cost "??riE?I . . Discount I given to 5 patientResolute I integrity atent H.940. I7203515 i-?ItesolIaite integrity stent 5814029 i 176931 ?49350 ISh?gu 5n 3 Mumh I ai 552500 5; Shrigu 5 Mumb ai 31 656.97 29645.66 1 29.71 170.9295; I 5 $014302 . Lilavaii Mumbai I I I 014827 2 dt 16.3.2015 L?ava? Mumtiai I 99750 i504oo 102A2 :25 .. 99750 !47250 190?% Mil H. il 4 107750 I i i 40/0 5 II. 1 167753 Pro?t - earned by the hnspital . In Rs. 5UOOI 7.42 -.0 ex IEFIJOO 8 05?? Penman?t price cost 5 charged to the patient with 5 respect to I landing cost of i I14I I 372.64 I608.99 471.315 5-914? stem .5165 I percentage with respect to I the landing cost of i I etent. i I I 1 155300 i i 553.23 i 4.: '1 20000 I 5 578.23 1I55000 ?73.20 i ?11 i integrity sr?EFCIhr-h?eof the intent its batch no. i 8 :Resolute etent ELMO. 6892656 l?Lantlt; l7 Sale (1 cost price (impor to the tpriee (iistrib utor im part with taxes the Nil in inclusi Rs. on MS VAT . In Rs. 2493 1 1 5 3990!) 095m 05 eniterp Mumb 9 lEndeavour sprint stent b.no. 2 {100601045 1 1 :Endevou-r?w 0 gsprint stent hmo. 006914532 rises 1 Profit of importer. In Rs. 5 details of sale invoice of distributor to its supply to hospital Sale price of distribu tor to the hospital In Rs. Profit to? distribut or . in Rs. 14918.85 59.72 001 01 0 dt. 17.5. 2014 Lilavati Mumbai 99750 Discoun given by distribut or to the hospital. In Rs. (1 Profit earned by the distrib utor with re5pect to landin cost of stent. in R31. 1 0 Price l'cost to patient. in Rs. . lscount given to patient. in Rs 239.58 1% 109750 1 l) r?u'ii'i? earned by the hospital . in Rs. 16006 10?% price cost charged to the patient with res pact to landing cost of stent. Percent 4 Stem its percentage with respect to the landing cost of stem. 4-39.33 8964. 35700_ Panac 26735. 2 ea pune 1 ?169113? 21 one Panac ea - pune "i 6615 91.22 298.72 140415 3.4.2014. N.M.Wadia Hospital pune 211.2014 N.M.Wadia Hospital pune. 1231236" 99000 "535036" 63300 23636 "finish 371?% nit 706'% 716.26 ?n 25000 .Tf?ibm. 74000 34.74 273.86 1282.79 i [115000 104 as sr?i Name of Lande Sale i ste'nt its (1 cost price 0 i batch no. (impur to the 1 price. (listrib utor import with i taxes the Nil 1n inclusi Rs. Profit details I) - Sale of sale invoice importer. of distribu 'ur. In Rs. distributor tor to in Rs. t0 its simply the to hospital hospital A - in Rs. Average Average Pro?t to iDiscoun price (if distrihut i tgivcn profit of importer 1205.64 110 =1 20.56% Average profit of distrilmt or 1 321 .09 i 10 132.11% by distribut or to the huspitair' In Rs. Price i Disic?o?i: n; I'cost I to patient. In Rs. - Fro?tit - the hospital . i in Rs. i i i average pru?t of hospital ?3.7'3 8 9.21 0/0 i carnal by i i Percent price cost charged to the patient with respect t0 landing cast of -- :stcm?. MRP of 8: its percentage with respect to the landing cost of stent. Fag; Average .. MRP of stent 7024.51 . i1 0: a 702.45% a? Table for the details of stents supplied at zero price .. . I. .. . I or i Name of Landed Sale Pro?t details of Sale Pro?t to Disco" Profit I Price Diseouht the stent cost price to of sale' Invoice I price of distribut nt . earned lcost given to earned by i price 0? its (import the importer of distribut or . given by the to patient. patient. I the cost I percentage hatch no. price tiistrihut distributor or to In Rs. by 2. Llistrihu In Rs. in Rs I ospitai . 2 charged I with I import or with in R5. to its supply. in ?15.5 to the I I taxes?? the to hospital I patient I ILapeLt I Nil In inelusio with I the Rs. .1 of5 landing VAT. . . landing I - . 1 to I cost cost of - tanning II, rent I I i I stent. i cost stentPro?t i Percent IMRP 01.] the distribu I tor I hospital. tor to iwith I In R3. the respect h?oSpitai to I respect Resolute 24152 0 car 000022 . integrity 45 Cosmos dt. 1.4. 201 I stent enterpri Liiavati i 8.140. 595 Mumbai 15.15% I I 34000 15:10:. 94000? 4651??; .. 641 49 Le. 6948090 Mumbai I *Note - Data of purchase and use of stems submitted by Ruby hail ciinic( hospitai Punc revealed that hospital has purchased Endeavor Resolute 51cm B. No 0006818367 from M/s Panacea Biomedicais Pune vide invoice no. 1.40418 (it. 4 4.. 20i4 for Rs 65000/-and used on patient on 3.4.20i4, the cost to the patient at this Stent was stated as Rs 8i i500 .In this case Rubyl lat ii clinic! as earned piotit mateiu oi its 16500 t- which 15 25. 35% $304111? 0438' (2 Note on Life Saving Medical Devices Anticancer drugs, Antibiotics Anticoagulant which are sold at exorbitant Prices 1. Food Drugs Administration. M.S. has carried out detailed study survey to ?nd pricing distribution trends of costly more widely I prescribed anticancer drugs, antibiotics anticoagulants. Medical devices which are noti?ed as Drugs under Drugs Cosmetics Act 1940 medical devices which are not noti?ed as Drugs under Drilgs .. Cosmetics Act 1940 were also included in the study. The study included - imported indigenously manufactured formulations/ Medical devices. 2. a The. pricing of the drugs/ devices by the hospitals to patient was ilstudied across 2-3 hospitals. Drugs devices of 2 or more manufacturers are considered for study. A drug/ device with speci?c lot number was traced from patient up to the manufacturer or importer. The sale and purchase documents at each stage of iriiporter, wholesaler and hospital in -Mumbai are collected. The pricing of the medical device at each stage? I importer, wholesaler, and hOSpital is studied. Importers which are {located We outside Maharashtra could not be contacted for collection of Import Documents. - . 3. The pricing trend observed is enclosed along with this Note. 4. It is observed that theyMaximum Retail Price of medical devices are exorbitant. This causes burden on the patients and they are left at the mercy of hospitals for the charges of the medical devices. The cost of surgery or implantation is additional to the cost of medical device. Generally the margin to is about whole chain in import and sale of medical devices (which are not yet noti?ed as Drugs) are engaged in purchase and sale of the medical devices at arbitrarily fixed maximum retail prices. It is also seen that the medical devices (which are not yet noti?ed as Drugs) importers conceal information regarding import price etc. Maximum Retail Price is arbitrarily fixed by importers/manufactures without having any regard to general principals of ?xing Maximum" Retail Price enumerated under para 7 of the theDrugs (Price Control) Order, 1995. This is done for the bene?t of the intermediaries in general and hospitals in particular. This is done with impunity. It is seen that, the margin and profits from the business of sale of these devices is ranging from 100% to 400%. Exporters, importers and carrying forwarding agents are mostly the agents of the manufacturing companies and Hospital are mostly the retailers. Thus the ,system ensures that the importers/manufacturer and hOSpital get highest share of pro?t. A separate letter is being sent to N.P.P.A. to ?x prices of Anticancer drugs, Antibiotics Anticoagulant included in the study. A separate will also being sent to N.P.P.A. to include Medical Devices in the de?nition. of Drugs under DPCO - 1995 in order to ?x monitor control its prices. Wu-