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Govt negotiates reasonable procurement prices for expensive medical devices

New Delhi: In a bid to make healthcare delivery more cost effective under Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana (AB-PMJAY), government is negotiating lower procurement prices of medical devices and implants with the industry through Government e Marketplace (GeM).

The government is in conversation with the industry to ease out prices so that PMJAY scheme can prove to be cost effective for the government and more beneficial for the patients.

“We want to do collective purchasing and negotiate prices of some expensive devices and implants. PMJAY will negotiate reasonable prices for select implants and devices while assuring large volumes for packages that use them. We will offer these prices to our hospitals so that they can bring down costs,” said Indu Bhushan, the Chief Executive Officer (CEO) of AB–PMJAY and NHA.

AB-PMJAY is the flagship scheme of Narendra Modi government, also dubbed as Modicare, and is detailed as the world’s largest fully government-financed health insurance scheme. The scheme provides a cover of up to 5 lakhs per family per year for secondary and tertiary care hospitalization, to over 10.74 crore vulnerable entitled families (approximately 50 crore beneficiaries). PMJAY provides cashless and paperless access to services for the beneficiary at the point of service.

Currently, the public hospitals are authorized to use GeM. Indian medical devices manufacturers and their re-sellers are listed on GeM and they offer discounted products based on the defined payment terms, directly or through their authorized dealer network. The industry has been arguing that even private hospitals empanelled under PM-JAY may be authorized to procure under GeM, as a subcontracted facility of the government.

“Under PMJAY, the public healthcare is subcontracting service from private healthcare which is usually unwilling to buy on public healthcare defined L1 lowest price system as they additionally factor in quality, performance and service. The public healthcare system needs to move from lowest price basis to sustainable supply chain basis as without cash flow support and remunerative pricing the supply chain would be unable to sustain,” said Rajiv Nath, Forum Coordinator- AiMeD – Association of Indian Medical Device Industry.

“As NHA is an autonomous body, it can define its own system for healthcare where quality, consistency of quality, service, performance and ready stock availability are critical needs. It should penalize suppliers with a poor track record of service and delivery and reward those with proven services as well as provide small offtake, trial order opportunities, to new entrants and startups,” he said.

The industry, however, is looking forward for a centralised purchasing and said that the manufacturers will treat PMJAY as most preferred buyer and offer their deepest discount rates, as they would for a single large national tender in public healthcare, even though the individual procurement order will be relatively miniscule.

The industry representatives have proposed that manufacturers will be willing to offer these empanelled hospitals the opportunity to procure their devices at the discounted rates, below MRP, even for those patients being treated on same premises who are not being treated under PM-JAY package but some other healthcare plan or on patients own costs.

“The impact on the industry would be, that the prices of procurement of the medical devices for the scheme would go down but number of procedures and hence device requirements will dramatically go up because Ayushman Bharat has the potential to increase the overall consumption of device by covering many more people that did not have health care access before,” said Nikhilesh Tiwari, Founder and Director, ColMed, an e-commerce company dealing in implants and medical devices.

“Hence, in the long run, it will benefit the overall Industry. These new advances will also continue make a significant contribution towards better industry sustainability enabling the production of affordable medical devices, faster and more efficiently, with less wastage, and real-time performance monitoring of production equipment,” he said.

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