India Begins Making a List of Essential Diagnostics Whose Prices Could Be Capped

As the World Health Organisation moves towards making a list of essential diagnostics, India hopes to take the lead on creating a national list

This year’s chapter on health in the economic survey was surprising- of all the things it could begin with and focus on, the survey chose to focus on the accessibility and affordability of medical diagnostics in India.

“Diagnostics are an important part of the health care system that provide the information needed by service providers to make informed decisions about healthcare provision related to treatment and management,” said the survey.

With data, the survey showed that the prices of diagnostics can vary widely and without rationale, across the country. For example, a lipid profile test can cost Rs 90 in some cities, rising to Rs 7,110 in others. An albumin test can be as cheap as Rs 20 in some cities or as expensive as Rs 1,810 in others.

“Limited affordability and access to quality medical services are among the major challenges contributing to delayed or inappropriate responses to disease control and patient management,” noted the survey.

Soon after that, the National Pharmaceutical Pricing Agency (NPPA) analysed bills from four major private hospitals. Their conclusions were startling- it turns out that diagnostics, at 15.56%, make up the second largest component on hospital bills.

Now the Indian government is moving towards making a list of essential diagnostics, quite like the National List of Essential Medicines (NLEM). Similar to the NLEM, the government is considering the possibility that the diagnostics on this list would also be subject to price-capping. However industry bodies are likely to push-back on the government on this.

India attempts to make a list of essential diagnostics, following from WHO

At a consultation hosted by the Indian Council for Medical Research (ICMR) this week, the government discussed the issue of essential diagnostics with various stakeholders including the World Health Organization (WHO), scientists, doctors and industry representatives.

In 1977, WHO had published a Model List of Essential Medicines. Four decades since, WHO too has come to the conclusion that the world needs a list of essential diagnostics. India published its first list of essential medicines in 1996. Now the government hopes that India too can take a leading role in the consultations at WHO in Geneva next month, on essential diagnostics.

Vinod Paul, member of the NITI Aayog said India needs to be “a little more aspirational” in thinking about making diagnostics accessible, “because we can afford to, because technology is available and because people’s expectations have risen. So we need to be aspirational, within the realm of cost effectivity.”

He said the list should not remain a “sterile document” but that players should take it forward, to promote rational use of diagnostics, just as is the case with drugs. “Don’t stop with just creating a list,” he said.

Others spoke about how an essential diagnostics list could improve patient care, help detect outbreaks, increase affordability of tests, reduce antibiotic abuse, improve regulation and quality of diagnostic tests, strengthen accreditation and quality of laboratories, improve the supply chain and inspire new research.

Over the next few months, the consultations will try to find answers to other issues such as defining the criteria for which diagnostics are essential, which government agency should develop the list (the list of essential drugs is developed by the health ministry but the functionality of the list is controlled by the department of pharmaceuticals), how it will be updated and operated, how states fit in to this, how the list of essential medicines and drugs can work in harmony, whether devices and diagnostics should be taken together and how the diagnostics list can be used for price control.

Will the essential diagnostics come under price control?

Following the NPPA’s valuable analysis in the public domain, which showed patients paying nearly 16% of their hospital charges on just diagnostics, the matter of price control over diagnostics will grow to be significant this year.

Several officials at the consultation spoke repeatedly about price regulation over diagnostics.

However, this may not go down very well with the industry, which has already been upset over the government regulating the prices of cardiac stents and knee implants.

“It’s a good idea for the government to make this list, but we recommend that the government calls it something else- such as a list of ‘priority diagnostics,’ but not ‘essential diagnostics,’” says Rajiv Nath, co-ordinator of Association of Indian Medical Device Industry (AIMED). “’Essential’ is a very serious word to use.”

The reasoning behind this is that the use of the word ‘essential,’ can invoke various precedents in Indian law on the right to life (Article 21 of the Indian constitution). As such, if the government deems something to be ‘essential’ to life, it could open litigation for various service or product providers.

So from the industry point of view, they might oppose the government on the nomenclature of the list.

“A list will help manufacturers like us, to know exactly where to focus our research and development time and resources. Moreover, a list will help us build an economy of scale where we can make profits by selling diagnostics in bulk to the government,” said Chandrashekhar Nair of Molbio Diagnostics.

Last year the government focused heavily on medical devices, capping the prices of cardiac stents and knee implants. The industry was unhappy but the prime minister has raised the issue several times, praising his own government for the step.

The cost of diagnostics cannot currently be regulated by bodies like the NPPA or the central government. Only individual states can take the initiative, if they adopt laws like the Clinical Establishments Act, 2010, which prescribes transparency in costing.

Under the government’s National Health Mission (NHM), the government does provide a limited set of free drugs and diagnostics to public health facilities. In the last budget, Rs 759 crore was approved for free diagnostic service initiative for all 29 states in India.