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The Indian government should not budge an inch on its policy of price cap on medical devices such as coronary stents and knee implants despite the US administration’s decision to revoke its Generalised System of Preferences (GSP) concessions, domestic industry representatives and patient rights groups say. US Trade Representative (USTR) Robert Lighthizer, in a statement on March 4, announced that the US intends to terminate designations of India and Turkey as beneficiary developing countries under the GSP programme “because they no longer comply with the statutory eligibility criteria.”
Under the GSP, Indian exports to the US enjoy lesser import duty compared to the tariffs imposed on other non- GSP exporters excluding the free trade agreement partners.
According to the USTR statement, India’s termination from GSP “follows its failure to provide the United States with assurances that it will provide equitable and reasonable access to its markets in numerous sectors.” By statute, the decision would not take effect until at least 60 days after the notifications to Congress and the government of India and will be enacted by a Presidential Proclamation. “India has implemented a wide array of trade barriers that create serious negative effects on United States commerce. Despite intensive engagement, India has failed to take the necessary steps to meet the GSP criterion,” the statement further reads.
The Central government slashed prices of medical devices such as knee implants and coronary stents by up to 75 per cent to make them more affordable. The US has been pressing India not to extend these price caps. Last year, following petitions filed by the US medical device manufacturers and dairy industry, the office of the USTR initiated an eligibility review of India citing concerns over compliance with the GSP market access criterion. Three US medical device majors -- Abbott, Boston Scientific and Medtronic -- had petitioned the US government through the industry association AdvaMed for withdrawing GSP benefits to India over the pricing policy on medical devices.
Domestic industry representatives argue that the government must take a firm stance on the GSP issue. “This sword has been kept hanging over India’s head for over two years to extract concessions from a market that allows mostly unregulated free access in medical devices at nil or near nil tariff of 7.5 per cent customs duty. About time India should decide to do what’s good for India and Indians as America decides what is good for America,” Rajiv Nath, Forum Coordinator of Association of Indian Medical Device Industry (AiMeD) told Pharmabiz.
According to patient advocacy groups, Washington has always used GSP to threaten developing countries to obtain concession for American companies. But the Indian government can stand firm as the gap between the WTO and GSP tariffs is narrowing quickly, they say.
“There is no evidence that the US-based MNCs are hurt by the price caps on stents. Let the (GSP) benefits go so that we are no longer beholden to the US,” said Malini Aisola, co-convenor of All India Drug Action Network, a consortium of non-profits in the health sector.
During recent trade deal negotiations, India is reported to have proposed to replace its price cap regime for coronary stents with a trade margin policy, a move criticised by many.
“The AiMeD has been specifically seeking trade margin caps on devices notified as drugs, but from first point of sale in supply chain, which, as per us, is when first sale takes place and GST applies for the first time. This will maintain parity between Indian and overseas manufacturers. For devices where there is excessive price disparity between Indian products with low price and imported devices with high price, there may be a need to consider price caps, eg. stents and IV cannulas. We urge the Prime Minister not to remove price caps on stents for at least two more years to ensure continued affordable access to Indian consumers and allow Indian manufacturers to further gain credibility that their lower price is not lower quality or less safer and less innovative as some lobbyists would like us to believe,” Nath stated.
“Any attempt to pacify the three powerful US MNCs who are using their deep pockets clout to lobby for a favourable policy to keep themselves out of trade margins and price controls needs to be reviewed with caution by the government, considering the impact it would have on affordable access or competitive growth of indigenous products. All stakeholders -- manufacturers, resellers, patient groups, Indian Medical Association and Association of Healthcare Providers should be consulted before announcing any policy reversal on stent price caps,” he added.
Statistics show that the GSP revocation is unlikely to have any serious impact on Indian experts. An analysis of the Centre for WTO Studies, a permanent repository of WTO negotiations-related knowledge and documentation, shows that in 2015, nearly 10,921 products from India enjoyed GSP concession. The average difference between the WTO and GSP tariffs is a little over 4 per cent. The tariff saving under GSP for exports from India is around US$ 184 million and the value of exports from India in 2012 under GSP was US$ 4.4 billion, only around 10 per cent of India’s exports to the US.
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