The right prescription

A separate set of rules is needed to address the special nuances of India's medical devices industry

It’s election season. Both major parties have dedicated a chapter on health in their manifesto. This is encouraging but poses several questions. How will our country, one which accounts for nearly one-fifth of the global disease burden, achieve “Health for All”? Is there any country that we can draw lessons from? Are there strategies to ensure equity and sustainability? Has the government been able to generate policies that bring the interests of the industrial and health sectors closer together, to collaborate for mutual benefit? 

The three key industrial pillars of the health care system are drugs, vaccines and medical devices. While India boasts of robust drugs and vaccine manufacturing sectors, medical devices are primarily import-dependent. In FY 2017-18, the export of drugs and vaccines touched $17.27 billion, while 80 per cent of medical devices were imported.

In the last decade alone imports of medical devices and diagnostics have more than doubled. Moreover, many of these devices are inappropriate, as they mostly cater to the needs and societal context of the developed countries. Some estimates claim that only about half of all medical equipment in developing countries is in use. 

The cost of medical devices to overall health care alone stands at about a mere four to five per cent. But, since medical devices are intrinsically linked to health care services, when both these costs are taken together, they could add up to 25 per cent of health care costs.

Furthermore, it is estimated that medical devices can amount to about 30-40 per cent of the cost of setting up a tertiary care hospital. In such a scenario, if one has to rely on imports, it could lead to an unsustainable fiscal burden on the country, especially in the context of Ayushman Bharat. 

Recent policies have provided an enabling ecosystem for the development and growth of the medical devices industry. In 2015, the government recognised medical devices as a key sector of the Make in India initiative. It allowed 100 per cent foreign direct investment (FDI) under the automatic route. As per government data, FDI in medical devices has grown by 25.4 per cent between 2012 and 2016.

The inverted customs duty structure whereby imports of raw material incurred higher import duty than finished products was corrected. The government has also funded the establishment of clusters such as the Andhra Pradesh MedTech to help create the much-needed infrastructure. The Kalam Institute of Health Technology, entirely funded by Department of Biotechnology, became India’s first institute dedicated to medical technology.  

In order to promote local industry, the National Health Policy 2017 envisages that domestically sourced components must account for 25-50 per cent of the cost of medical devices in order to qualify for public procurement tenders.

It has also institutionalised the Medical Technical Advisory Board under the Indian Council of Medical Research (ICMR) to ensure transparency in demand for goods and services associated with health care. This will assure efficient and equitable health care provision and create a market for health care products. 

Such strategies are not new. Brazil, for example employed a “Buy Brazil Strategy” to incentivise the growth of domestic technological capabilities, reflecting the demands of the Universal Health Programme that was launched in 1988. More importantly, it bought to the fore that demand constitutes the principal stimulus for innovation in developing countries.

In that sense, the implementation by the government of the Medical Devices Rules 2017 in January 2018 is a significant step forward. For the first time, regulations specifically pertaining to the manufacture and import of medical devices have been put in place. Regulations are like the GPS of the industry, as they ensure patient safety and ultimately determine the uptake and absorption of products in the health care system. 

Inadequacies still exist. It is vital to address them as we move forward. Rules for medical devices come under the Drugs & Cosmetics Act; as such, they are regulated as drugs. Here lies the problem; devices cannot be regulated as drugs, as they represent completely different technologies. There is a pressing need to adapt medical device rules to specifically address the nuances of the industry.

Lessons can be learned from the US Food and Drug Administration (FDA), which has different subsidiaries to regulate drugs, dietary supplements, biologics and medical devices. A similar approach would be useful. The 2015 Draft Drugs & Cosmetics Amendment Bill and the Draft Medical Device Policy have made provisions to address some of these gaps. 

Policies and their implementation must go hand in hand. These interventions must, therefore, be backed by adequate financial and human resources. We must keep in mind that the process of building industrial strengths and health system synergies is a long-term commitment. The complex 30-year trajectory of Brazil’s health-industrial collaboration aptly illustrates this point.  

The writer is a Visiting Fellow at Research and Information System for Developing Countries. These views are personal