Tag Archives: 2005

Provision for Compulsory Licensing (CL) in India – some issues still need to be addressed.

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Patent law systems provide for a provision for granting of compulsory licenses in a number of circumstances. Article 5A(2) of The Paris Convention, 1883 indicates that each contracting State may take legislative measures for the grant of compulsory licenses and reads as follows:“Each country of the Union shall have the right to take legislative measures providing for the grant of compulsory licenses to prevent the abuses which might result from the exercise of the exclusive rights conferred by the patent, for example, failure to work.”TRIPS agreement also contains important public health safeguards provisions to allow countries to override TRIPS requirements by engaging in compulsory licensing under certain situations and circumstances. Globally all patent systems comply with the requirements of TRIPS.

Doha declaration:

Doha Declaration gives WTO member-countries the right to grant compulsory licences (CL) and the right to decide on the reasons upon which such licences are to be granted. The declaration also states that the TRIPS Agreement should be interpreted and implemented by the member-countries in a manner to protect public health and to promote access to medicines for all.

“Safeguards provision” in India:

The Indian Patent Act 2005 bestows enough power to the Controller General of Patents, Trademarks and Designs of India to issue compulsory licenses (CL) under following different sections of the Act:

1. Section 84:

This section prevents the abuse of patent as a monopoly and states that at any time after the expiration of three years from the date of grant of a patent, any interested person may make an application to the Indian Patent Office (IPO) for grant of compulsory licence on any of the following grounds:

(a) That the reasonable requirements of the public with respect to the patented invention have not been satisfied, or

(b) That the patented invention is not available to the public at a reasonably affordable price, or

(c) That the patented invention is not worked in the territory of India

Section 6 of section 84 states that in considering the application filed under this section, the controller shall take into account the following:

(i) The nature of the invention, the time which has elapsed since the sealing of the patent and the measures already taken by the patent or licensee to make full use of the invention;

(ii) The ability of the applicant to work the invention to the public advantage;

(iii) The capacity of the applicant to undertake the risk in providing capital and working the invention, if the application is granted;

(iv) Whether the applicant has made efforts to obtain a license from the patentee on reasonable terms and conditions and such efforts have not been successful within a reasonable period as the Controller may deem fit:

Provided that this clause shall not be applicable in case of national emergencies or other circumstances of extreme urgency or in case of public non-commercial use or on establishment of a ground of anti-competitive practices adopted by the patentee.

Terms and conditions of CL will be determined by the Controller under section 90.

2. Sections 92 (1) and 92 (3):

These sections enable the Central Government to deal with circumstances of national emergency or circumstance of extreme urgency or in case of public non-commercial use by issuing CL.

3. Section 92 A:

This part enables grant of CL for export of patented pharmaceutical products in certain exceptional circumstances to any country having insufficient or no manufacturing capacity for the concerned product to address public health problems.

Some loose knots:

Some believe that there are still some loose knots in the CL provisions in India, which need to be tightened, immediately.

Granting CL for a Biopharmaceutical product could be an issue:

It will not be very easy to grant CL for a biopharmaceutical product as the conditions in which biopharmaceuticals are produced largely define the final product and its manufacturing process defines the product quality. Any alteration to the manufacturing process may result in a completely different product.

Therefore following are the main issues, which need to be urgently addressed:

• Small changes in the manufacture of biopharmaceutical and biosimilar medicinal products can dramatically affect the safety and efficacy of the therapeutic molecule.

• The very nature of a biologic means that it is practically impossible for two different manufacturers to manufacture two identical biopharmaceuticals if identical host expression systems, processes and equivalent technologies are not used. This has to be demonstrated in an extensive comparability program. Therefore a generic biopharmaceutical cannot possibly exist.

• Substitution issues:

By contrasts with the situation applicable for generic chemical entities, biosimilar medicines can be “similar” but not “identical” to the innovator reference products. The “similar, but not identical” nature of biosimilar medicines means that substitution of the innovator product with a biosimilar product could have clinical consequences as patients could respond differently to the two products. To guarantee the efficacy and safety of biosimilar products, these products should only be approved following the submission of appropriate data generated with the biosimilar drug.

• Currently there are no published clear Indian guidelines for the approval of biosimilar drugs which will ensure the approval of efficacious and safe biosimilar drugs.

Some apprehensions on CL in India need to be addressed:

Some apprehensions have been expressed on possible misuse of CL and representations made to the government to address the following issues urgently. Tarceva and Stutent cases involving Nepal will probably justify such apprehensions:

o As the entire concept is based on “Working of Patents” in India, the term “Working of Patents” needs to be defined explicitly.

o Issuance of CL to be restricted to national emergency, extreme urgency and public non-commercial use

o Provisions in (Sec. 84 [7]) needs to be suitably amended that provide grounds for triggering CL by competitors for commercial benefits.

o Safeguards enshrined in the Aug 30 decision (Motta-Menon text) is to be provided for exports under Section 92A of the Indian Patents Act 2005, corresponding to Para 6 of the declaration on the TRIPS Agreement

Is paying royalty to patent holder an acceptable solution to this issue?

Many feel that this question totally ignores the right of an innovator to protect his/her innovation, which is the outcome of a painstaking, long, costly and risky R&D process. Such protection is granted to an innovator against disclosure of the data generated for the innovation to the patent office for public knowledge at large through grant of a patent for a specific time period. During this period the innovator is the exclusive owner of the innovation. The provision of CL can be invoked during this period, as stated above, for some very specific and extra-ordinary situation.

Such extra-ordinary situation, as and when will arise be addressed by the government based purely on the merits of the cases. Carte blanche permission by any authority allowing use of an innovator’s product during its patent life against a royalty payment, without innovators wish, is believed to be against the letter and spirit of Indian Patents Act 2005.

Conclusion:

In Indian Patents Act 2005, the provisions of CL should maintain a fine balance between the critical need of innovation by the pharmaceutical companies and its reach to the users to meet their unmet needs. For a country like India, CL is probably the most appropriate safeguard against potential abuse of monopoly by the patentees in case of national emergencies and to address critical public health issues.

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

A brief history of the Indian Patent System from Indian Pharmaceutical Industry perspective, the concerns and opportunities.

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Although a comprehensive Act on Patents and Designs allowing product patents of drugs came into force in India in 1911, the first Patents Act of India was enacted in 1856.This Act gave a head start to the global pharmaceutical companies in this business primarily through imports into India. As a result, in no time the global pharmaceutical companies curved out a sizeable chunk of the Indian pharmaceutical market capturing over 80% of the total domestic consumption of drugs and pharmaceuticals.It has been reported that in 1959 an American Senate Committee headed by Senator Kefauver wrote in its report:

“…in drugs, generally, India ranks amongst the highest priced nations of the world”.

In 1970 the Indian Patents Act was amended abolishing the product patent system, based on ‘Ayyangar Committee report, 1959’, which examined the factors influencing the high prices of the drugs and pharmaceuticals in India and concluded:

“.. high prices resulted from the monopoly control foreign based pharmaceutical companies exercised over the production of drugs.”

The Indian Patent Act of 1970 was, once again, amended under the TRIPS agreement and the Indian Patents Act, 2005 came into force effective January 1, 2005 , re-introducing product patents for the drugs and pharmaceuticals, as a part of the globalization process of the country including the pharmaceutical industry of India.

This is perhaps the testimony of India’s realization that research and development is the bed rock for the progress of pharmaceutical industry in any country in the long run, as this industry, unlike many other industries, relies quite heavily on product patents.

Indian Pharmaceutical Industry to build on its acquired strength:

Reverse engineering with high calibre skills in process chemistry emerged as one of the key strengths of the domestic Indian pharmaceutical industry since 1970. The industry has to build on this strength and move towards ‘incremental innovation model’ of R&D, which is less expensive and more cost effective starting with a known substance, to meet the unmet needs of the patients.

The product patent regime has given a boost to pharmaceutical R&D in India:

Many medium to large Indian pharmaceutical companies, like Ranbaxy, Dr Reddy’s Lab (DRL) and Glenmark etc. have already started shifting their focus on R&D. The large number of patent applications filed by these companies to the Indian patent offices will vindicate this point. As a result of the new focus, one observes business initiatives like, spinning off the R&D units into a separate company and many R&D driven mergers and acquisitions by these domestic Indian companies.

R&D investments are also being made in traditional chemistry based screening. Moreover, companies like Biocon, Panacea Biotech, and Bharat Biotech etc. have engaged themselves in the space of biotechnology research.

Increasing opportunity to collaborate with the global companies:

Increasingly more and more Indian companies have started collaborating with the global companies in collaborative research and cost efficient process development to leverage their human capital and infrastructural facilities. The collaborative arrangement towards this direction between GSK and Ranbaxy provides a good example.

Contract research and manufacturing:

Some other domestic companies like Divi’s Lab, Suven Pharma, Dishman Pharma, Piramal Healthcare, Shasun Chemicals, Jubilant Organosys etc. are moving into the space of contract research and manufacturing services (CRAMS) establishing world class facilities and collaborating with the global players like, GSK, Pfizer, Merck, Eli Lilly, Bayer, Sanofi Aventis, Novartis etc.

Public-Private Partnership (PPP) in R&D:

Initiatives by the Indian companies in collaborative research with government research institutes like CSIR and NIPER have already commenced, though much lesser in number. Some companies like, Shasun have already derived benefits in the field of biotechnology out of such collaborative research under PPP. It is expected that more such projects will see the light of the day in not too distant future.

Some concerns in the new regime:

Some serious concerns are being raised as the country is in the process of settling down in the new paradigm. The key concern is about the affordability of patented products by those who are currently having access to other modern medicines.

To address such concerns related to public health issues in general, there are already provisions in the TRIPS agreement for price control of patented products.

At the same time, one finds, the government has exempted those patented products from price control, which are domestically produced with indigenous R&D. Many feel that these differential measures will not help improving affordability and access to such patented medicines by the common man.

Keeping prices of essential medicines under the lens of price regulator is more important:

Even over last sixty years of independence, the access to modern medicines in India is meager 35 percent. 65 percent of the nation’s population does not have any access even to off patent essential drugs. In a country like India where there is no adequate social security cover towards healthcare, it will be important to keep the prices of essential medicines for treating common diseases under the close vigil of the drug price regulator.

Will the prices of medicines spiral in the product patent regime of India?

While addressing this question one will need to keep in mind that around 98 percent of drugs, which are generic or branded generic, manufactured in India and costs cheaper than their equivalents available even in our neighbouring countries like Pakistan, Bangladesh and Sri Lanka, will continue to remain unaffected. Hence, it is very unlikely that prices of such medicines will go up significantly because of the new product patent regime in India.

Conclusion:

The key concerns raised in the new product patent regime are that it will further deteriorate the current poor access to modern medicines to a vast majority of the population.

It is undeniable that one of the key reasons for poor access to essential medicines in India is lack of buying power of a large number of both rural and urban poor. This problem gets compounded by the poor public health infrastructure, delivery system and financing system, despite sporadic initiatives taken by the government towards this direction.

To be successful in the new regime by improving access to modern medicines to those who do not have means to satisfy such basic needs, the country should take a rational and holistic approach in this matter. It is high time for all the stakeholders to ponder and flesh-out the real factors, which have been responsible for such a dismal rate of access to modern medicines to a huge 65 percent of the country’s population over decades, even when the product patent law was not in place in the country.

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion

Recent efforts to improve the functioning of the WIPO-administered Patent Cooperation Treaty (PCT) is a welcome step for the interest of India.

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As the third largest user among developing countries of the PCT system, India has a particular interest in ensuring that the PCT system supports its innovators and exporters in the most efficient manner possible.
What does PCT system do?

The PCT system allows reliance on international searches and examination in assessing patentability but it does not preclude national examination including decisions on patentability at a national level. In that regard, the Director-General Francis Gurry of WIPO made the following remarks at the opening of the WIPO Assembly on September 22, which clearly states that PCT reform is not a norm setting exercise and is voluntary:

“…I would like to make specific mention of one project, which I believe to be of great significance, the so-called Road Map for the improvement of the functioning of the Patent Cooperation Treaty (PCT), which will come up for consideration in the PCT Assembly during this meeting. This is not a norm-making exercise. The PCT makes it very clear (Article 27(5)) that nothing in it is to be construed as in any way limiting the freedom of each Contracting State to determine its own substantive conditions of patentability. Neither the PCT nor the Road Map in any way affects TRIPs flexibilities. The Road Map is about improving the functioning of a procedural treaty that links together the patent offices of the world. It is about finding ways to increase work-sharing, to decrease unnecessary inefficiencies, to improve the quality of the output of the international patent system and, thereby, to contribute to the management of the unsustainable backlog of 4.2 million unprocessed patent applications in the world. There are many initiatives occurring already in this regard: the Patent Prosecution Highway and work-sharing initiatives in ASEAN, in South America and between the Vancouver Group of Canada, United Kingdom and Australia. The PCT Road Map aims to bring all these initiatives ultimately under the multilateral umbrella of the PCT“.

PCT is not a substantive treaty:

The PCT is not a substantive treaty and it will not become one. By mixing up the different work streams of WIPO–some of which are substantive and some of which, like the PCT, are technical and administrative, some vested interests seek to create confusion. It is difficult to understand why such people would want to defeat a project that will permit Indian high-tech companies to leverage India’s strong educational and legal infrastructure to compete effectively in the global economy of the twenty-first century.

PCT has important ramifications:

The proposed changes in the PCT have indeed important ramifications for countries like India, as they represent the greater opportunities that the PCT changes will provide Indian commercial interests through an improved international patent search and examination process.

In many technological sectors, including pharmaceuticals, Indian innovators are finding that, indeed, strong intellectual property protection both in India and abroad is critical to the success of their business models. As a result they are becoming users of the PCT system. Opposition to the current WIPO efforts to improve the PCT system, I reckon, would deny Indian innovators these opportunities.

Indian innovators have a stake in WIPO PCT reform:

Indian innovators also have an important stake in “WIPO PCT Reform”. It is, therefore, very much in the interest of the Government of India that such reform succeeds now that it has reached elite status in the international intellectual property regime.

Just last year, the Indian Patent Office (IPO) became one of only fifteen national patent offices to be recognized as an International Searching Authority (ISA) and International Preliminary Examining Authority (IPEA) by WIPO. As an ISA, the Indian Patent Office now approves or establishes the title and conducts international searches. Scepticism of a group of vested interests on this much desirable “WIPO PCT Reform” could set back the international recognition that India has deservedly gained from being the only English speaking country in the Asian region to be recognized as an ISA and IPEA.

Conclusion:

I would, therefore, expect our Government to continue its support for efforts such as “WIPO PCT Reform” that seek to facilitate India’s further integration into the international economy while at the same time protecting Indian national interests.

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

The relevance of the Indian version of the Bayh-Dole Act – the country needs all stakeholders’ open debate on the proposed bill.

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The Bayh-Dole Act is an American legislation, which was originally sponsored by two US senators named Birch Bayh and Bob Dole. This Act deals with Intellectual Property (IP) arising out of US government funding. Bayh-Dole Act is also known as University and Small Business Patent Procedure Act. In December 12, 1980 this was enacted into a law by the US Congress.
What it does:
Under this Act, IP rights over government funded inventions for further development, license to other parties or direct commercialization are transferred to the universities and small businesses operating with government contracts. The government though retains its right to license the invention to any third party without any consent from the IP right owner or the licensee, if it feels that on a reasonable basis the public is being denied of the benefits of the invention.

The Indian version of the Bayh-Dole Act:

The Utilization of the Public Funded Intellectual Property Bill 2008, which has been formulated in line with the US Bayh-Dole Act, has already been approved by the Union Cabinet of India. This bill ensures both utilization and protection of the IP arising out of government funded research initiatives. Currently government funded academic institutions and research institutes cannot commercialize the inventions.

The proposed bill will not only allow them to patent such inventions but will also reward the inventors and the institutes with a share of its commercialization proceeds as per specific guidelines.
The bill has attracted a mixed response from the stake holders.

The relevance of Bayh-Dole Act in India:

Relevance of Indian version of the Bayh-Doll Bill in the post product patent regime in India is
significant. The core concept of the bill encourages innovation and ensures protection of patents and other forms of IP rights of the government funded R&D outcomes, where the owner of the intellectual property will be the government grant receipients or the government.

This bill is expected to offer to various research institutions, universities, small businesses and non-profit organizations, the IP rights on their inventions, resulted from the government funding. Overall environment towards innovation within the country is expected to get a boost in that process.

Is the ownership and protection of R&D a real remedy to make government academic institutions and universities self sustainable?

This is certainly not the only remedy, but an important one. This process will have significant potential to effectively facilitate technology transfer from government funded research laboratories or universities to the user industry to make these establishments self-sustainable.

What are the main implications of the bill if enacted in its current form?

Although the fine prints of the bill are not yet clearly known, the bill in its current form raises more questions than answers. Some of the concerns with the bill in its current form are as follows:

- This law could effectively transfer the decision making process about
publications of the research papers from the researchers and academia to
the bureaucrats in the government establishments, making the R&D
environment quite stifling for the researchers and the initiative
counterproductive.

- Academia at times will be compelled to incur significant expenditures
towards different types of IPR related litigation, which could have been
otherwise productively spent by these institutions towards research
initiatives.

- The learning and research may get transformed into another kind of
businesses activity, as such a law could change the research focus on to
the issues, which will be of greater commercial interest to various
industries and will offer immediate financial benefits to the
institutions. As a result vital non-commercial research, which could be of
critical interest to the nation as such, may take a back seat.

Conclusion:

The country will therefore need an extensive public debate on this bill, which has not taken place, as yet. The loose knots of the bill need to be tightened and the concerns of the stakeholders need to be adequately addressed before its enactment into a law.

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

The Indian and Global Pharmaceutical Industry – A brief perspective to meet the challenge of change

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A. INDIAN PHARMACEUTICAL INDUSTRY PERSPECTIVE:
January 1, 2005 ushered in a paradigm shift in the Indian Pharmaceutical Industry with the new product patent regime. Future of the industry, thereafter, will never be the same again as what we have been witnessing since 1970.

Gradually India, which was synonymous to cheaper copycat generic versions of products patented in most of the developed and emerging pharmaceutical markets of the world, is expected to transit through a relatively ‘lull period’ for a shorter duration, before it starts helping to establish India as a force to reckon with, in the pharmaceutical research and development (R&D) space of the world. We have seen some glimpses of the era to come by through initial basic research initiatives of companies like, Ranbaxy, Dr. Reddy’s Laboratories (DRL), Piramal Life Science and Glenmark. All such companies are gradually transforming their R&D focus from reverse-engineering to developing new chemical/molecular entity (NCE/NME) or novel drug delivery systems (NDDS).

Opportunities during the paradigm shift:

The low cost base, large English speaking technical talent pool and development of world class R&D facilities of the country will play the role of catalysts in this fast changing process and throw open many new vistas of opportunities for the industry to cash on.

At the same time, generic companies will play even more important global role than ever before. Many of them will no longer remain a local branded generic or generic player, they will open their wings to fly down to the important global destinations. Some others will collaborate with multi-national pharmaceutical companies (MNCs) in their contract research and manufacturing services (CRAMS) initiatives. For others, the domestic pharmaceutical market will still remain big and lucrative enough to grow their business.

However, those companies, which will not be able to effectively combat the ‘challenge of rapid changes’ will either perish or be gobbled-up by the big fishes in the consolidation process of the local and global pharmaceutical industry.

Some perspectives:

Though the domestic Indian pharmaceutical industry caters to around 70% of the requirements of pharmaceuticals of the nation, is highly fragmented. The industry manufactures 8% of the global production being the fourth largest producer of pharmaceuticals in terms of volume and employs over half a million people, mostly by around 300 large to medium sized companies in their local and global operations. Although around 6000 companies are engaged in manufacturing, many of them are third party manufacturers. Small manufacturers, who do not conform to ‘Schedule M’ requirements of the Drugs & Cosmetics Act will face or have already started facing trying times.

In terms of value, at present, India with around U.S 7.8 billion turnover, shares just around 2% of the global market with 14th in ranking. McKinsey forecasts that by 2015 India will record a turnover of U.S$ 20 billion and will improve its rank in the global pharma league table to 10th.

Key markets of the domestic Indian companies:

Although India still remains one of the major markets of the domestic Indian pharmaceutical companies, many of them have already established their business in the US, Europe, Latin America, Russian Federation, Africa, Middle East, South East Asia and even in Japan and Australia.

Contribution of India business of different Indian pharmaceutical companies to their global business varies based on their respective business strategies, from 63% of Zydus Cadila to around 16% of DRL, in 2007-08.

US market followed by Europe, is the main revenue earner for most of the large Indian companies. For example Ranbaxy generated around 27% and 20% of their global turnover from the US and Europe, respectively in 2008.

However, for some other companies like Wockhardt, Europe is a more important market than USA. Wockhardt generated around 54% of their global turnover from Europe, in 2007.

Global market entry strategy:

Different Indian companies adopted different market entry and expansion strategies in their globalization process. However, these have been mostly driven mergers and acquisitions.

Is the Indian pharmaceutical industry facing a dire need for an image makeover?

Despite significant contribution of the Indian pharmaceutical industry to provide relatively cheaper generic medicines to address a wide array of ailments of a vast majority of the population, the image of the industry to its stakeholders or even to public at large, is far from satisfactory.

There are some key perceptual reasons for the same. Some of these are as follows:

1. Pharmaceutical industry is making exorbitant profits at the cost of the basic healthcare needs of the common man.

This perception gets further strengthened when, for example, the National Pharmaceutical Pricing Authority (NPPA) demands crores of rupees from many pharmaceutical companies for overcharging to the patients and notices are served even attaching their properties to recover these dues.

2. The quality of all medicines is not reliable.

This gets vindicated when, for example, the government for its ‘Jan Aushadhi’ program refuses to buy from certain groups of licensed pharmaceutical manufacturers, predominantly on product quality parameters.

3. Some questions, do the pharmaceutical manufacturers in India manufacture medicines following the highest quality norms?

To answer to this question some people argue; if so, why will Indian manufacturers need stringent manufacturing quality certification of the drug regulators of the developed markets to export medicines in the those countries? Why the manufacturing quality certification given to these exporters by the Indian drug regulator is not accepted in those countries?

Moreover, when medicines are imported into India, we accept the quality norms of the drug regulators of the developed countries.

4. Some sections of the media highlight the alleged malpractices by the Indian pharmaceutical companies to promote their mediciness to the medical profession. Such alleged high expenditure towards product promotion is considered by many as avoidable wasteful expenses, the benefit of which can easily be passed on to the patients.

Indian pharmaceutical industry is yet to develop a uniform code of marketing practices, which will be applicable to all the pharmaceutical companies across the board and implement the same effectively, to address such allegations.

Multinational Companies – friends or foes?

To partly salvage the situation, at the same time, one notices open attempts are being made to project the multinational drug companies as demons, the exploiters with a suspicious agenda of thwarting the growth of the domestic companies. In such a scenario, it is indeed perplexing, when one sees the names of the Indian companies at the top of the NPPA lists who allegedly overcharged maximum amount of money to the common man.

What the industry should do jointly:

Under such sad circumstances, the entire industry should come together, take a hard look on itself first and extend its helping hands in public private partnership (PPP) initiatives for the benefit of the civil society.

Such PPP may not necessarily be charitable. It could focus on developing a robust healthcare financing model with industry expertise, for implementation with the government involvement for all strata of society. Or, for example, the industry should come out with a plan, which the US Pharmaceutical trade association – PhRMA has recently proposed to the Obama administration voluntarily on their ‘Medicare’ program, for the senior citizens of America.

For image makeover the name of the game is actual ‘demonstration’ of the good intent and NOT ‘pontification’ of what others should do, highlighting the identified loopholes in the government machineries.

B. GLOBAL PHARMACEUTICAL INDUSTRY PERSPECTIVE:

In the midst of the global financial meltdown, beginning 2009, no one is still able to fathom what impact, if at all, will it leave on to the global pharmaceutical industry.

In the most populous country of the world – China, in April 2009, the government unfolded the blueprints of new healthcare reform measures, covering the entire nation.

Similarly, in the oldest democracy and the richest country of the world – United States of America, President Barak Obama administration expressed their resolve to address important healthcare related issues, as an integral part of the economic reform of the country.

In other developed markets of the world like Europe and Japan intense cost containment pressure is in turn creating significant pricing pressure on pharmaceuticals, triggering the demand of greater use of cheaper generic formulations.

Financial meltdown though eroded the market capitalization of most of the companies; the growth of the global pharmaceutical industry remained unabated till 2008, albeit at a slower pace though. Many markets of the world witnessed a faster generic switch, fuelling higher volume growth of the generic segment of the industry.

Some perspectives:

In 2008 the global pharmaceutical market size was of U.S$ 780 billion, which is expected to grow to U.S$ 937 billion in 2012 registering a 5 year CAGR of around 5.5%. Sales worth U.S$ 253 billion came from just 100 blockbuster drugs, contributing around one third of the global pharmaceutical market.

USA with a retail revenue turnover of U.S$ 206 is the largest market of the world, though currently showing a sharp decline in its growth rate. The growth rate of the US is expected to drop further along with the patent expiry of other blockbuster drugs.

Just three countries of Europe, U.K, France and Germany contributed to 50% of pharmaceutical sales of entire Europe.

Doctors’ are no longer the sole decision maker to prescribe a medicinal product:

Just like in the US, one witnesses a change in the role of the medical professionals as a key decision maker to prescribe medicines for the patients in Europe, as well. More and more, payors like health insurance companies, NHS are assuming that role.

A shift from small molecule pharmaceuticals to large molecule biotech products:

As small molecule pharmaceuticals are coming under intense pricing pressure, the focus of new drug launches is shifting towards more expensive large molecule biotech drugs with much higher margins of profit increasing the treatment cost further.

The brighter side:

Growing middle class population with higher disposable income together with increase spending of the government towards healthcare, in most of these countries, are making the pharmaceutical industry grow at a much faster pace in the emerging markets like, Brazil, Venezuela, Russia, China, India, Turkey, Mexico and Korea. However, the revenue and profit earned by the global companies from the developed markets are still far more than the emerging markets of the world.

Access to healthcare still remains a global issue:

Despite so much of progress of the global pharmaceutical industry, access to healthcare still remains an issue, besides others, even in some of the developed markets of the world. The waiting period of a patient just to get an appointment of the doctor is increasing fast. Even in the US about 47 million of US citizens still are not covered by insurance, besides many more of them who remain underinsured.

Global pharmaceutical industry is still considered a part of the problem:

Despite meeting the unmet needs of the patients through intensive research and development initiatives and various global access programs for the needy and the downtrodden, the civil society all over the world, including in the developed countries, still believes that the pharmaceutical industry is a part of the global healthcare problems, though relatively more in the developing and the least developed economies of the world. These perceptions are mainly due to high costs of patented drugs, high research expenditure for low value added drugs and seemingly unethical marketing practices of the industry across the board with varying degree.

Conclusion:

The pharmaceutical industry, the ultimate savior in the battle against disease, is now passing through a critical phase both locally and globally and both in terms of its image and capacity to deliver newer medicines ensuring their affordable access, the reason of which may vary from country to country.

Be that as it may, the industry has been making significant contribution to the humanity to meet the ever increasing unmet needs of the patients. However, expectations of the stakeholders are also growing and justifiably so. There is no time for the industry, in general, to ponder much now or rest on the past laurels. It is about time to walk the never ending extra mile, for the global patients’ sake.

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

National Rural Health Mission (NRHM), a much hyped public healthcare initiative – has it delivered since its inception in 2005?

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National Rural Health Mission (NRHM), a very ambitious and noble initiative for the rural population of India was launched by the Government of India on April 12, 2005. The interim budget allocation of NRHM for the year 2009–10 has been increased to Rs. 12,070 crore. The primary purpose of NRHM, as announced by the Government, was to improve access to quality healthcare for the poor population of 18 states, to start with, of rural India.

Along with such a commendable initiative, the Government declared an increase in its spending towards public health from mere 0.9% to 2–3% of the GDP over a five year period. This decision was in line with the well articulated prime focus of the Government on public health and education.

During the launch of NRHM, the Health Minister of India announced that the nation would see the results of these efforts in three years time.

Three years are over now. Let us, therefore, have a look at the key achievement areas of this ambitious scheme for the budget year 2008-09, as announced by the Finance Minister recently in his interim budget speech for 2009–10.

The performance areas were highlighted as follows:

• 462,000 Associated Social Health Activists were trained
• 177,924 villages have sanitation committees functional
• 323 district hospitals have been taken for up gradation

Against such a soft performance parameters of the Government, let us see some hard facts, which are real indicators of performance of NRHM. A report on the recent study done by Chronic Care Foundation indicates that in India about 86% of highly populated rural districts still do not have provisions for basic diagnostic tests for chronic ailments.

The study also highlights that in rural areas, as a percentage of total expenses, out of pocket healthcare costs are more than the urban areas, with hospitalization expenses contributing the most to the total costs. In many rural areas the healthcare costs have been reported to be as high as around 80% of the total expenses. Such a high out of pocket expenses have mainly been attributed to the lack of facilities in these rural areas, requiring patients to travel to distant areas for medical treatment. It was also reported that even in rural areas due to inefficient and inadequate services at the Government healthcare units, there has been a very high dependence on more expensive private healthcare facilities.

After almost four years from the inception of NRHM, if this is the state of affairs for rural public healthcare, the obvious questions which come to my mind are as follows:

• Where is the huge money allocated for NRHM going?
• Who is or are accountable for such a poor performance of this great scheme?

In my opinion, to make NRHM work satisfactorily the Government should outline, decide and announce the key success parameters for performance evaluation of the scheme. This is to be done disclosing the names and designations of the responsible senior Government officials who will be held accountable for the success or failure to deliver the deliverables. All these details should be uploaded on to the website of the Ministry of Health for public scrutiny, at least half yearly. With tax-payers money being utilised for this important and critical public health arena, no non-performance should escape attention and go unpunished.

Moreover, with the help of experts, the Government should decide, which elements of each identified success parameters the Government will be able to deliver better with its own internal resources and which are those areas where the Government should outsource.

Such an approach when worked out in great details will be able to ensure whether through NHRM the country is making progress to improve access to quality healthcare for a vast majority of its rural population. Otherwise this scheme may well be treated just as one of those which failed to deliver and vanished in the oblivion.

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

We need to encourage the new product patent regime

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Ushering in the Product Patent Regime in India heralds the dawn of a new era. The era that vindicates not only the need to encourage, protect and reward innovation for the rapid progress of our nation but also to compete effectively, in the knowledge economy with the best in the world to establish India as a leading country with a significant share of the global economy.However, it is quite unfortunate that the patents that protect today’s innovations and drive research and development to create tomorrow’s life-saving treatments are under criticism from some quarters.India chose to follow an alternative to Product Patent regime for many years. In 1970, the Government of India amended its IP laws with a clear objective in mind to reduce the prices of medicines to improve their access to the ailing population of the country.

As a result, some drugs were made cheaper. However, the moot question that we need to address now: was it a panacea? While looking back, it does not really appear so. On the contrary, the situation remained as gloomy thereafter, so far as the access of medicines is concerned. After almost 4 decades of continuation with the above policy, around 65% of Indian population still do not have access to cheaper off-patent medicines against comparative figures of 47% in Africa and 15% in China (Source: International Policy Network, November 2004).

Children still go without routine vaccinations, though the Government has made the primary vaccination programs free in our country, for all. Even in a situation like this, where affordability is no issue, only about 44% of infants (12 – 23 months) are fully vaccinated against six major childhood diseases – tuberculosis, diphtheria, pertussis, tetanus, polio and measles.

Moreover, as we know, despite distribution of cheaper generic HIV-AIDS drugs by the Government and others mostly free for years, only 5% of India’s AIDS patients were receiving any drugs by the end of 2006.

The above two important examples prove the point very clearly that, addressing the issue of price alone will not help our country to solve the issue of poor access of medicine to the ailing population of India. Only a sharp focus on rejuvenation of our fragile healthcare system, healthcare financing and rapid development of healthcare infrastructure of the country by the Government or through Public Private Partnership (PPP), will help address this pressing issue.

Indian Patent Act 2005 has paved the way for innovation and hi-tech research and development within the country. Contrary to adverse forecasts from some quarters, prices of medicines have not gone up.

However, while medicines play a relatively small role in rising overall health care spending including hospitalization, it is important to ensure that individuals with large healthcare expenses have affordable access to their medicines. Thus a good affordable insurance coverage (both Government and Private) available to all Indians belonging to various socio-economic strata, together with the above measures, will help address the key issues of both access and affordability of medicines for all, in a holistic way.

The attack on patents is not really a defense of patients or the poor. Such attacks help diverting attention from the core healthcare issues, as mentioned above, which are healthcare system, healthcare financing and healthcare infrastructure. Health of our nation will depend on how well these key issues are being addressed by the policy and decision makers. Our country cannot afford to ignore that Intellectual Property is one of the keys to prosperity of a great nation like India and it should be encouraged, protected and rewarded under a robust Patent Act of the country for inclusive growth.

By Tapan Ray

Disclaimer:Views/opinion expressed in this article are entirely my personal, written on my individual and personal capacity. I do not represent any other person or any organization for this opinion.