Based on the Trump administration’s new GSP country eligibility assessment process as well as GSP country eligibility petitions, the US Trade Representative has recently announced a review of the eligibility of India in the Generalised System of Preferences. GSP is a preferential treatment that the US government gives to its exporters from developing and developed countries. The benefits under the GSP include duty-free entry of certain goods like chemicals, gems, textiles, etc. The USTR's self-initiated eligibility review of India is apparently seen as a retaliatory measure against the Indian government's refusal to climb down from its earlier decision to put price cap on medical devices such as knee implants and cardiac stents. Ever since the Indian drug price regulator brought these essential devices under price control to put an end to the rampant overcharging and exploitation of mostly gullible patients by the hospitals, doctors and companies, the multinational medical devices manufacturers have been burning the proverbial midnight oil to revoke the price cap on medical devices. As the government refused to budge, these MNCs have been calling on Washington to use GSP as a bargaining tool. The US medical device companies such as Abbott, Boston Scientific and Medtronic through their industry association AdvaMed petitioned the US government asking for a review of India’s GSP benefits, given the Indian trade barriers affecting US exports in the medical devices sector. They petitioned that India has implemented a wide array of trade barriers that create serious negative effects on US commerce.
The issue dates back to February last year, when the Indian government decided to cap the prices of medical devices like cardiac stents and knee implants by up to 85 per cent to make them affordable to the poor patients. By this action, the Indian government wanted to break the unholy nexus between the hospitals, unscrupulous doctors and the marketing companies, who were hand in glove to exploit the hapless patients, a vast majority of whom were totally dependent on private healthcare facilities in the absence of an efficient public healthcare system in the country. The height of exploitation carried out by these forces in collaboration with the MNCs can be gauged from the fact that the markup in the case of these devices was between 650 to 1000 per cent. Apparently, the US medical devices companies, who were at the receiving end of the price control decision, have since been knocking at the door of the US administration to browbeat India not to extend price caps on medical devices. As the government stood steadfast on its decision, the MNCs threatened to withdraw their products from the Indian market citing the reason of financial unviability. But, when the regulators allowed the MNCs to discontinue production after giving a six-month notice, they demanded a sub-category for their new generation stents and a preferential pricing for them. But, that claim was also rejected by the government on the plea that these so-called new generation stents do not have adequate clinical evidence to support their claim of 'superiority'. Now, the USTR is using the GSP as a Damocles' sword to pressurise India not to extend price cap on medical devices which will come up for review in March next year. The government should uphold the country's sovereign right to protect peoples' health and should not buckle under US pressure. It should put people's health concerns before trade interests.