Nearly a decade after the Government of India first announced its intentions to regulate the domestic medical device industry and after many interim, patchwork guidelines, a comprehensive draft National Medical Device Policy (NMDP-2015) has been issued and made public for review by interested stakeholders. Medical devices form a $200 billion global industry, which develops and manufactures essential healthcare equipment ranging in complexity from simple devices like thermometers and stethoscopes to complex devices like pacemakers, ultrasound machines and surgical robots. India’s share of this global business is disproportionately small, about $4 billion, but growing at a rapid 15 percent rate. Compared to the Indian pharmaceutical sector, which is the third largest market in the world, the Indian medical device industry barely makes it into the list of the top ten global markets by size. Further, unlike the vibrant domestic pharma sector, over 75 percent of medical devices sold in India are imported.
Improving the Trade Imbalance
The NMDP-2015 aims to reduce this dependence on device imports, stating its objective as "strengthening the Make in India drive by reducing dependence on imports and setting up a strong base for medical devices, especially those with critical implications in terms of affordability and availability to patients". The draft policy, although low on implementation details, creates a broad institutional framework for medical device regulation in India. It proposes a new body, the National Medical Device Authority of India (NMDA), which is to serve as the central government agency for the medical device industry. If implemented as noted, this will be a welcome change from the current scenario in which medical devices are regulated as drugs, despite significant differences in the development and manufacturing of devices versus pharmaceuticals.
The draft policy outlines several financial and taxation benefits to incentivize domestic research, development, and manufacture of medical devices, including weighted tax deductions on approved expenditure on R&D, subsidized capital and grant funding for small-medium-enterprises (MSME), and zero duty on import of raw materials for manufacturing. Of these, the latter is the most critical change to the current taxation structure. Most medical devices manufactured in India use imported raw materials, and the current tax structure penalizes domestically-produced products by taxing them at an effective rate that is much higher than the duty paid on finished, imported medical goods.
In the US, Europe, and other developed markets, medical device regulation is primarily concerned with quality, safety, and effectiveness of medical products, leaving matters like taxation and trade promotion to other government bodies. Given the nascent nature of the Indian medical device industry, it is reasonable that the new NMDA is tasked with comprehensive promotion of the sector. However, there is a risk of creating unnecessary bureaucratic hurdles and confusion for the industry, since several other government bodies may have related or overlapping jurisdiction.
NMDP-2015 does address critical issues of safety and quality control of medical devices sold in India. Building on earlier, more detailed proposals for pre-market approval guidelines, the policy focuses on strengthening a Made-in-India marking specific to medical devices, which would be issued by the Bureau of Indian Standards (BIS) and conform entirely to the international standards for medical devices (ISO 13485). If implemented appropriately, this would mean conformation to the global harmonization guidelines, which classify and assess devices based on risk to the patient, and would bolster the value of a BIS-marking.
The draft policy proposes setting up medical device testing centers as public-private partnerships for testing, evaluation, and licensing of medical devices. The proposed structure is closer to the European CE-marking system, which utilizes private, third-party conformity assessment bodies, known as Notified Bodies, to assess manufacturing sites and/or devices against ISO quality standards. The U.S. FDA, staffed and funded by the U.S. government, employs a much more resource-intensive pre-market assessment of products, which includes safety and efficacy thresholds and is the global gold standard in medical device regulation. More information is needed on the specifics of implementing the proposed policy in India, and some concerns need to be addressed.
First, the risk-based classification of devices should be well defined and adhered to. Currently, a haphazard assortment of products are assessed by the Central Drug Standard Control Organization, including cardiac stents, bone cements, and intra-ocular lenses, while all other devices do not require registration prior to sale in India. Any meaningful regulation must define and assess all types of medical products, and should be robust enough to accommodate new inventions. Second, European CE-marking will continue to be widespread and trusted in India even after the new, national medical device BIS-marking is introduced. The new policy must set out clear and efficient rules to allow both domestic and imported devices to avail the international standards and be allowed on the Indian market. Finally, as with any regulatory proposal, there remain concerns about fair and broad enforcement of the rules.
NMDP-2015 has also proposed pricing controls on medical device sales in India, which has been the most controversial element of a policy proposal that is generally welcomed by the industry and other stakeholders. It proposes the creation of a new pricing division under the National Pharmaceutical Pricing Agency (NPPA), and the inclusion of medical devices as a separate item on the Essential Commodities List. This has the potential to set off similar disagreements between the government and industry groups, as we have seen in the pharma sector recently, and may even have implications for patent-protection of new technologies. In an attempt to ensure affordability for patients, the policy should not stifle burgeoning innovation in the domestic medical device industry. More details are needed before conclusions can be drawn.
Overall, the NMDP-2015 proposal to establish an independent medical device regulator in India is a long overdue step in the right direction. The details of policy execution must be fleshed out and, pending legislation, passed to effectively implement a regulatory regime that supports the domestic medical industry and protects the interests of the patient.
Ritu Kamal works at an early stage international medical technology startup. She was a CASI Research Associate from 2008-09. Twitter: @kamal_ritu
India in Transition (IiT) is published by the Center for the Advanced Study of India (CASI) of the University of Pennsylvania. All viewpoints, positions, and conclusions expressed in IiT are solely those of the author(s) and not specifically those of CASI. IiT articles are re-published in the op-ed pages of The Hindu: Business Line. This article can be read here.
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