Stent makers may sell directly to hospitals

New Delhi,Feb 2017 : With the drug price regulator capping the price of stents, many manufacturers are exploring options to supply their products directly to hospitals, bypassing distributors or retailers to save on margins.

The regulator has clearly stated that consumers cannot be charged anything over and above the ceiling price, which includes 8% margin for the complete trade supply chain, including distributors as well as hospitals' handl- ing charges.

"The 8% margin in many cases may not be enough. Sometimes stents have to be transported to a district hospital and distributors have to maintain inventory of different types of stents.

"The hospitals, too, have handling costs. Why would a hospital take all the pain of keeping a stent in right conditions if they do not recover cost," says a manufacturer, who has started supplying a range of products directly to the hospitals after the price control.

However, stent makers also point out that this may not be a feasible model because companies or hospitals are not equipped to handle the logistics involved in such an exercise.

"It is easier said than done. One can still think of implementing it in cities like Delhi and Mumbai but how will a company supply stents to a district hospital in remote corners if all of a sudden there is a demand. On the other hand, one cannot expect such hospitals to maintain inventory," said a senior executive of a stent manufacturing company, pointing towards the need to have a robust supply chain.

The National Pharmaceutical Pricing Authority (NPPA), however, maintains the 8% is adequate to take care of the entire supply chain. It has also directed companies and hospitals to make all kinds of stents available to patients at the prices fixed by it. Non-compliance of the order can attract severe penalty and even cancellation of licence, it said. Left with no choice, companies and hospitals are trying to keep up with the government order.

However, industry executives say if NPPA does not review the situation, many first generation stents with advanced delivery system may disappear from the market after the cooling off period of six months.