A racket of forcing manufacturers of medical devices to sell their products only to distributors and hospitals at low prices bypassing retail medical stores has become rampant. The practice of selling emergency medical devices by hospital managements at exhorbitant prices to patients is also flourishing of late.

As there is no transparency maintained over the actual cost of production and retail prices of even simple medical devices, the practice of hospitals selling these products directly to patients has however posed a big financial burden to the patients.

Over 80 medical devices under disposables category which fall under the respiratory emergency care segment are not available at retail drug stores as of today. Sources in the healthcare industry have revealed that the practice of selling these products to stockists and they in turn selling the products to hospitals at high prices and at high margin is prevalent for some time now. It has also been found that hospitals have been taking advantage of this situation as patients have no idea about neither the cost nor the use of such devices. Simple devices like oxygen mask, IV cannula and infusion therapy products are priced as high as 10 to 30 times more when it reaches the point of care.

A device like IV cannula is sold at a price of Rs.90 to 100 in major hospitals when the production cost is mere Rs.7 per piece. Same is the case with life saving essential devices which are used during surgery and post surgery to administer drugs in life threatening conditions and trauma cases.

Since the pharma industry is very much regulated, hospitals cannot make huge profits in devices like IV cannula, IV set, 3- way stop cock and extension line emergency care products sources said. The patient hospitalised for emergency care is forced to use these products and is deliberately made dependent only on hospital pharmacy for its healthcare needs.

Medical devices are notified as drugs under the Drugs & Cosmetics Act, 1940 but is not included under the DPCO. Therefore, the prices of medical devices cannot be monitored and controlled now. Studies conducted by Maharashtra Food and Drug Administration (FDA) has also revealed that manufacturers in connivance with importers, distributors and hospitals are fixing the MRP of medical devices arbitrarily which is then passed on to the gullible patients. Based on the study, the state regulator has therefore recommended to the Drug Controller General of India (DCGI) and National Pharmaceutical Pricing Authority (NPPA) to bring medical devices including drug eluting stents (DES) under the Drug Price Control Order (DPCO) 2013 to make it affordable to the patients.

Medical device is a Rs.20,000 crore plus market in India out of which disposables constitute Rs.7500 crore. Market in India is highly unregulated and unorganised. Besides this, 10 per cent standard duty and 12 per cent excise or countervailing duty on imports add to the cost which has posed a major burden on the manufacturers. There are 10 major international players and around 8 local players in the highly unorganised and unregulated market in the disposables segment. Quality has also taken a beating as manufacturers from outside India dump sub-standard products as there is no regulation in place. Products are often being labelled with a high price due to lack of any regulation in pricing as most of the medical devices have not been notified by the government.

A case in point being that drug eluting stent (DES) meant for cardiac disorder is notified but Cerebral shunt meant for neurological disorders is not notified. Endotracheal tube used in anaesthesia devices which falls under the catheter category is notified by the government while Laryngeal Mask Airway is not notified. All the anaesthesia intubation devices therefore need to be regulated and not only endotracheal tube. It has also been observed that notified medical device like endotracheal tube is imported and sold in the name of "tube" to evade local rules and import duty.

As per the current provisions of the D&C Act, fourteen categories of medical devices are regulated as “drugs”. Medical devices are very different from drugs and pharmaceuticals. Bracketing devices as drugs poses unique challenges to the manufacturers, importers and distributors in India.

These challenges are not limited to registration for manufacture and import with the Central Drugs Standard Control Organization (CDSCO) and extend to other related administrative and regulatory departments dealing with reimbursements, taxation, price control, provision of services, training of healthcare practitioners etc.

Experts suggest that the new Drugs and Cosmetics Amendment Bill 2013 which is yet to see the light of the day can bring right differentiation between drug and device. It is therefore recommended that categorization of medical devices should be done into different types viz. capital equipment, implantables or consumables, in-vitro diagnostics (IVDs) which will further facilitate the process of regulating them.