Industry stakeholders share their wish list for the healthcare industry from the forthcoming budget
‘We expect certain key resolutions from Union Budget 2017-18 for making medical devices affordable’
Last year’s budget saw various initiatives undertaken in the healthcare space including proposal to start a programme to provide dialysis services in district hospitals, increasing the supply of generic drugs under the government’s Jan Aushadhi programme, pushing for medical technology and so on. However, we expect certain key resolutions from Union Budget 2017-18 for making medical devices affordable which will lighten the burden on customers’ pocket. Further, higher tax exemption on health insurance/ PA premium to individual tax payers and also waiver of service tax on health insurance premium will certainly be welcome move, as these will make the policies more affordable for public at large.
– KG Krishnamoorthy Rao, MD and CEO, Future Generali India Insurance
‘The government should increase the health insurance penetration through incentives’
The budget should increase the limit of preventive health check exemption as the current limit of Rs 5000 is too little for a family. Looking at the burden of the increasing chronic disease incidence, the government should provide additional limits to the people suffering from chronic diseases and include the additional expenses on chronic disease management. This would also help the government to reduce the burden on the health care system due to chronic diseases complications. The government should provide additional deductions to the company’s spending money on the health and wellness of their employees. This would entail the goal of Healthy India. Preventive health check and wellness plans sold online by wellness companies should also be exempted from Service Tax/ GST. Currently, only diagnostic labs and hospitals are exempt from ST. The government should increase the health insurance penetration through incentives so that the goal of universal health coverage can be achieved. The current health insurance coverage is only 15 per cent which is extremely low.
– Rajesh Mundra, Founder & CEO, Truworth Wellness
‘The government needs to take aggressive steps to transform the country’s healthcare scenario’
Availability and affordability of healthcare in India across various states and demographics is one of the most important requirements. After so many years of independence and despite successfully placing ourselves on the global healthcare map, we are still lagging behind in addressing this issue. The government needs to take aggressive steps to transform the country’s healthcare scenario. A long-term plan should be chalked out focussing on the following:
Healthcare infrastructure development – Rural pharmacies and private hospitals in class II-IV towns should get 100 per cent tax exemption on profits earned. Also, to encourage healthcare infrastructure development, the hospitals in all locations should get a tax holiday of 10 years instead of the current five years.
Healthcare practitioners – Non-MBBS medical practitioners for rural areas – monies allocated for their continuous training and development and building infrastructure for efficient referral to larger centres with MBBS doctors.
For MBBS doctors, there should be separate monetary incentives to practice in rural areas. Tax benefits in terms of higher income slabs should be put for doctors who work at areas-in-need.
As per QuintilesIMS’ medical audit, more than 70 per cent specialists practice in metro cities. While Government has increased MD and MS seats in government colleges, most of these specialists have chosen not to move out of large cities. Monetary incentivisation for MBBS and MD and MS doctors is need of the hour.
At least three per cent of the GDP should be allocated on healthcare in the next two budgets. There should be emphasis on disease prevention community initiatives rather than tertiary care facilities reimbursements. We need a Rashtriya Rog Niwaran Yojna specifically targeted towards the urban poor. These should not only target acute illnesses among children but also target adults who have the risk of developing chronic diseases.
– Amit Mookim, General Manager, South Asia, QuintilesIMS
‘High custom duties should be rolled back’
The import duties on medical devices and equipment have already been increased almost across the board by 7.3 per cent in January 2016. Since most of the items affected were falling in the 11.6 per cent range which has gone to 18.9 per cent now, it means an effective duty increase of 62.7 per cent. For products where the ability to import substitute is still far away, the high custom duties should be rolled back.
Additionally, since the custom duty regime in the neighbouring countries (Nepal, Bangladesh, Sri Lanka, Bhutan, Pakistan and Maldives) is now much lower than in India, the differential in duties created is likely to lead to smuggling of many low-bulk-high-value devices. As a result, not only will the government lose revenues but also patients will be beset with products without adequate legal and service guarantees.
So what needs to be done to address these issues? There is an urgent need to do the micro analysis of the sub sectors to know the requirements. Wherever import substitution of an acceptable quality level is not on the anvil, a duty roll back to previous levels should be made. Where such substitution can happen, the duties can be kept at the levels where they are, since they have had a disproportionately high climb last year, and these can be then gradually increased after a couple of years provided the duty level does not go way beyond what is there in neighbouring countries and if quality deficient manufacture doesn’t find their way into the market. In the absence of any immediate remedy, we will clearly find mortality traps gaping at us.
A process of incentivisation (including lowest possible tariffs on raw material and components), R&D, skill development, greater health expenditure or better insurance coverage, low regulatory costs, assurance of predictable policy, will benefit the cause of Make in India rather than custom duty increase. Through custom duty increases, which are almost all passed on to the patients, we will only tax the patients to subsidize manufacturing.
– Pavan Choudary, Director General, Medical Technology Association of India (MTaI)
‘There is an urgent need to bring down the fiscal rates to a single digit if not total exempting them’
The import duty rates on medical equipment used by hospitals for life saving treatments are very high and ranges from 24 to 26 per cent. There is an urgent need to bring down these fiscal rates to a single digit if not total exempting them.
The government must encourage to build more and more hospitals in the country. Services rendered to a hospital should be kept away from the ambit of service tax. Exemption on service tax on the inputs will reduce the cost to hospitals and consequently cost of medical services to patients. Moreover, VAT on medicines, implants and consumables used for patients in hospitals during the course of treatment should not be imposed as they are not sold separately.
In some parts of the country, the Service Tax Department is of the view that only services rendered by the doctors to a patient is exempted from service tax and not the services rendered by the hospital. A patient cannot get medical treatment only from doctors without the infrastructure provided by the hospitals. For instance, for conducting a surgery an operation theatre is needed by a surgeon to do the necessary surgery. Many hospitals face this threat of unjustified service tax demands, a clarification circular/ amendment needs to be issued at the earliest.
– Dr PM Bhujang, President, Association of Hospitals
‘Financial incentives like tax holidays should be extended to new manufacturing plants’
India should send a positive message to global investors that it is ‘open for business.’ The medical devices industry’s growth is associated with the economic growth that leads to quality and affordable healthcare, more investments in healthcare and emergence of new technologies and innovations. The business environment in India needs to be more investor friendly to bring in an adequate amount of investments and solicit robust growth in the manufacturing industry.
For ease of doing business, regulatory policies need to be in line with global regulatory practices so that there should be no hold back for medical devices companies to invest and operate in the country.
The government should have provisions in the Union Budget for incentivising overall manufacturing and investment, including lowest possible tariffs on raw material and components, research and development promotions, skill development, greater health expenditure, low regulatory costs, assurance of predictable policy. This will not only boost the Make in India initiative but also lead to rapid growth of exports and reduce the import dependence in the sector.
As domestic manufacturing of devices and equipment is still at a nascent stage, the government should make corrections in inverted duty structure and tariff reduction on raw materials and inputs to boost domestic manufacturing.
The government has identified the medical devices industry as a sunshine sector for the Make in India initiative. Financial incentives like tax holidays should be extended to new manufacturing plants.
The government should work with domestic and global stakeholders to identify positive incentives and policy measures that will attract investment and innovations. With a wholesome improvement in India’s business environment, the healthcare services can be made available at lower costs which will hugely benefit people across classes.
A certified body is required to carry out quality checks, manufacturing qualities, scientific trials and the validation of devices.
The industry is eagerly awaiting the finalisation and implementation of Medical Devices Rules 2016. The industry appreciates the government’s continued engagement during the drafting process with stakeholders and it is hoped that the emerging document shall live up to the essence of patient safety and ease of doing business for the medical devices sector.
Some key issues needs to be corrected in the New Medical Devices Rules 2016 includes:
- The requirement of both accelerated and real time stability data needs to be rationalised to avoid the practical constraints to implementation of this rule.
- Recall of medical devices shall be limited to only the concerned batches.
- Omission of R&D from Rule 31, as it may lead to complex interpretation issues
- CDSCO to be appointed as the registration authority for products with more than five-year shelf life if the firm submits adequate stability data to prove its claim
- Along with BIS standards need to consider equivalent international standards like ISO
- Batch release issue
- Waiver of provision of Fees for the application of License for additional medical device or different variants (Rule 34 (3) (II).
- Include all the provisions of GSR 690 for the local labelling requirements at the licensed warehouse.
The current medical devices industry is driven by innovation and new technologies. The advent of engineering innovations have led to the recent development of low cost products that are at par with existing products on quality. The government needs to recognise this and should embrace and promote an innovation-driven ecosystem. For this, the Union Budget should provide solutions to attract more R&D investments from global device manufacturers in partner with local innovators.
An industry favourable Goods and Service Tax (GST) is being expected from the government. If not, healthcare industry could suffer from increasing taxes and subsequently the patients will also suffer.
As a result of demonetisation and promotion of ‘Digital and Cashless India,’ new startups are expected in the medical technology industry. Initiatives like Skill India and Start-up India could further encourage new start-ups.
Key planned initiatives in policy framework and ecosystem support from government, will help the Indian medical devices industry to pick up the growth momentum, which is expected to become a $25-30 billion industry by 2025.
– Himanshu Baid, MD, Poly Medicure
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