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Washington’s GSP revocation move over medical device price cap a hollow threat, say advocacy groups
Arun Sreenivasan, New Delhi | Friday, April 6, 2018, 08:00 Hrs  [IST]

As reports suggest that the US is weighing revocation of Generalised System of Preferences (GSP) concessions to pressurise India against the price ceiling on medical devices, healthcare advocacy groups and activists have called on the Union government to put public health first and adopt a tough stance on the issue. The withdrawal of preferential tariffs by Washington won’t cause serious damage to the economy, they say.

Under the GSP, Indian exports to the US enjoy lesser import duty compared to the tariffs imposed on other non-GSP exporters excluding the free trade agreement partners. Assistant US Trade Representative Mark Limscott will be in New Delhi next week to do the spadework for a Trade Policy Forum and Dialogue to be held by the end of the year. According to Industry observers, the US officials might raise the issue of price cap on medical devices at the meeting as the US industry has been prompting USTR to interfere in the issue.

The Indian government has slashed prices of medical devices such as knee implants and heart stents by up to 75 per cent to make them more affordable. The US has been pressing India not to extend price caps on medical devices and wanted the country to allow firms to withdraw products from the market if they don’t want to sell them here. In February, the NPPA allowed multi-national companies to discontinue production after giving a six-month notice.

“The multi-national companies are making an unnecessary fuss. There is no evidence that US-based MNCs are hurt by the price caps on stents. They continue to dominate the market as per the official observations of the National Pharmaceutical Pricing Authority (NPPA). The price regulator has made the assessment that there will be negligible negative impact of withdrawal of specific high-end models from the Indian market as there is adequate competition post-price fixation and supplies. So it has taken the stand to allow the withdrawals,” Malini Aisola, co-convener of All India Drug Action Network, told Pharmabiz.

“India has options to retaliate in case the US wants to suspend GSP. The government should put people's health before trade interests,” she added. “We won’t sit back and watch any attempt to remove the price cap on life-saving medical devices. The current price cap on coronary stents will remain in effect till February 2019. We will move the court against any step to revise or scrap the ceiling,” Birender Sangwan, a Delhi-based lawyer who filed the public interest litigation that led to the price capping, said.

“The US government and industry associations have always used GSP to threaten developing countries to obtain concession for its companies. But the government should not budge as the gap between the WTO and GSP tariffs is narrowing quickly. Washington’s plan, even if it materialises, is nothing but a paper tiger,” a representative of a non-profit health group said.

Statistics substantiate this claim. An analysis of the Centre for WTO Studies, a permanent repository of WTO negotiations-related knowledge and documentation, shows that in 2015, nearly 10,921 products from India enjoyed GSP concession. The average difference between the WTO and GSP tariffs is a little over 4 per cent. The tariff saving under GSP for exports from India is around $184 million and the value of exports from India in 2012 under GSP was $4.4 billion, only around 10 per cent of India’s exports to the US. “In short, a withdrawal of GSP could affect some sectors for a while, but won’t create any serious problem for us,” he pointed out.

According to the USTR and the Advanced Medical Technology Association (AdvaMed), the cap on maximum retail price denies non-discriminatory market access to the imported devices. Foreign manufactures are forced to sell innovative products at a loss, they say. But healthcare activists rebuff this charge. According to the data released by the NPPA, before price ceiling, the minimum and maximum landing price of imported drug-eluting stents was Rs.16,749 and Rs.40,820 respectively and the minimum and maximum MRP for the same was Rs.40,000 and Rs.1,98,000. “For obvious reasons, hospitals preferred imported products and justified the prices saying they are of superior quality. The result was the elimination of competition in the market. Foreign device manufacturers dominated and there was no level playing field. The price ceiling, in fact, created a level playing field and fair competition,” Sangwan opined.

AdvaMed is also upset over the government’s refusal to make a sub-category for advanced cardiac stents. But according to the NPPA, the backers of differential pricing have failed to prove the clinical superiority of their innovative stents compared with the older-generation drug-eluting stents.

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