Device lobby AdvaMed wants US to stop import benefits to Indian firms

AdvaMed's demand is in response to NPPA move to cap device prices

Multinational medical device lobby AdvaMed has asked the United States Trade Representative (USTR) to do away with import duty benefits given to Indian companies. This demand comes as a response to India’s move to cap prices of cardiac stents and then orthopaedic knee implants, mostly dominated by multinational companies (MNCs). The National Pharmaceutical Pricing Authority (NPPA) slashed the price of coronary stent by 80 per cent and orthopaedic knee implants by 50 per cent.

Reacting to AdvaMed’s demand, the Indian manufacturers’ lobby raised its concern. Such a step would make it more difficult for Indian manufacturers to do business in the US, the Association of Indian Medical Device Industry (AIMED) said. The norms are already so stringent for importers, that removing trade benefits will only harm Indian manufacturers selling devices in the US, the association pointed out.

Rajiv Nath, forum coordinator of the AIMED, asked, “Should India bow to such threats…?” Indian manufacturers are already debarred from selling to the public health system and defence in the US.

Despite numerous representations by MNCs to the Indian government, prices of coronary stents and orthopaedic implants haven’t been revised. The government would monitor the situation for a few more months, an official said. “Once we complete a year or so, we will conduct a study on the actual impact of pricing on the industry,” said a senior official from the Department of Pharmaceuticals.

The lobby group of multinational device makers argued it’s not left with any option other than limiting opportunities for Indian manufacturers in the US.  In a statement, AdvaMed stated, “Failure to implement a mutually acceptable alternative could deter global organizations from making their latest products available to India’s health care providers and patients, make Indian innovators less competitive in global markets, negatively impact future investment in India, and ultimately harm patients.” It added that a stable and predictable market environment was key to driving investments in R&D, manufacturing, and other services to grow the medical technology industry in India.

A senior official from Johnson & Johnson, a leading player in the orthopaedic knee implant, said the sentiment at the company headquarters was not good with respect to India. Although there hasn’t been any pull out by the company, it is evaluating options.

Medical Technology Association India (MTAI), another lobby group that represents MNCs, said international majors were worried on policies other than price control too. One such policy is the government’s intention to make landed price and ex-factory price compulsory for packaging. India would be the first country asking for landed-cost, said the Director General of MTAI, Pavan Choudary.

Some analysts dismissed AdvaMed’s proposal as “laughable” with no international precedent since the generalized system of preferences (GSP) was formalised. India was the US’ ninth largest supplier of goods in 2016, as per USTR. Besides drugs, apparels, and engineering goods are among the main components exported by India to the US.

India had a trade surplus of $19.9 billion with the US in bilateral trade, in 2016-17. India exported $42.2 billion worth of goods to the US, while importing $22.30 billion.

 “There are price controls in other major markets as well. Those wishing to change the existing norms should talk to the NPPA rather than foreign governments,” Udaya Bhaskar, director-general of Pharmexcil, said.

“A major trading partner like the US is bound not to take notice of such an unrealistic demand,” a senior functionary from the Federation of Indian Export Organisations said. The trade policy of the US is based on the principle of free trade which supports lowering or eliminating tariffs wherever possible, the official pointed out.

 TRADE MATTERS
 

· $22.30 billion:  Value of goods imported from the US
 

· $42.2 billion: Value of goods exported to the US
 

· $19.9 billion: India’s trade surplus with the US in 2016-17
 

· India is the 9th largest supplier of goods in 2016 to the US
 

· Pharmaceuticals, apparels, and engineering are the major goods exported to the US