Tag Archives: 2011

Escalating Antibiotic Resistance, And Thwarting Ban Of Irrational FDCs

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September 2016 ‘Fact Sheet’ of the World Health Organization (W.H.O) raised a red flag on fast increasing incidence of Antimicrobial Resistance (AMR). It poses a serious threat to global public health, more than ever before. Consequently, effective prevention and treatment of an ever-increasing and complex range of infections caused by bacteria, parasites, viruses and fungi are becoming more and more challenging.

In this situation, various medical procedures, such as, organ transplantation, cancer chemotherapy, diabetes management and major surgery like, caesarean sections or hip replacements, invite much avoidable a very high element of risk.

Further, a July 2014 paper titled ‘Antibiotic resistance needs global solutions’, published in ‘The Lancet’ reports increase of incidences of drug-resistant bacteria at an alarming rate. In fact, antibiotic resistance is one of the most serious threats in the history of medicine, and new antibiotics and alternative strategies should be sought as soon as possible to tackle this complex problem.

Another more recent paper titled ‘Fixed-dose combination antibiotics in India: global perspectives’, published in ‘The Lancet’ on August, 2016 finds that nowhere in the world this problem is as stark as in India. It emphasizes that the crude infectious disease mortality rate in India today is 416.75 per 100,000 persons, which is twice the rate prevailing in the United States. Misuse, or rather abuse, of Antibiotics is a major driver of resistance. In 2010, India was the world’s largest consumer of antibiotics for human health, the paper says.

Thus, this critical issue calls for urgent action across all government sectors and the society, in general, as W.H.O cautions.

The Devil is also in irrational antimicrobial FDCs:

The reasons for the fast spread of antimicrobial resistance are many, and each one is well documented. One such factor is the use of irrational antimicrobial FDCs. Some of these have already been banned by the Union Government of India, though continue to be manufactured, promoted, prescribed, sold and consumed by the innocent patients unknowingly.

In this article, I shall focus on the banned FDCs of such kind, highlighting how the consequential serious threat to public health and safety is repeatedly getting lost in the cacophony of protracted court room arguments against these bans.

Irrational FDCs and antimicrobial resistance:

That ‘irrational’ FDCs of antibiotics very often hasten the spread of antimicrobial resistance, is now a well-documented fact.

The ‘National Policy for Containment of Antimicrobial Resistance in India 2011’ clearly recognizes that: “Antimicrobial resistance in pathogens causing important communicable diseases has become a matter of great public health concern globally including our country. Resistance has emerged even to newer, more potent antimicrobial agents like carbapenems.” The Policy also recommends removal of irrational antibiotic FDCs from the hospital drug list.

‘The Lancet’ article of August, 2016, as mentioned above, also reiterates, while citing examples, that “Studies of several antibiotic combinations, such as meropenem and sulbactam, have reported no additional advantage over their individual constituents, and have been reported to cause toxic reactions and promote resistance. Despite repeated investigations into the shortcomings of some FDCs, such drugs are still being manufactured and promoted on the Indian drug market.”

Why does it matter so much?

Corrective regulatory measures to contain the spread of antibiotic resistance are absolutely necessary in India, for the sake of the patients. According to a paper titled ‘Antibiotic Resistance in India: Drivers and Opportunities for Action’, published in the PLOS Medicine on March 2, 2016: “Out of around 118 antibiotic FDCs available in the Indian market, 80 (68 percent) are not registered with the Central Drugs Standard Control Organization (CDSCO). Moreover, 63 (19 percent) of around 330 banned FDCs are antibiotics.”

The global relevance:

Such regulatory bans of antimicrobials FDCs in India are important from a global perspective too, as ‘The Lancet’ article of August 2016 observes.

The article recapitulates that the ‘New Delhi metallo-β-lactamase’ – an enzyme that causes bacteria to be resistant to antibiotics, was first reported in India in 2008 and is now found worldwide. The growth of worldwide trade and travel has allowed resistant microorganisms to spread rapidly to distant countries and continents. In addition, some of these banned FDCs in India are reported to be exported to African and Asian countries too.

That said, each country will also need to play a significant role to curtail the abuse or misuse of antibiotics, locally. I find a glimpse of that in England, besides a few other countries.

A research paper of Antibiotic Research UK and EXASOL dated November 12, 2015, concluded that overall antibiotic prescriptions are coming down across England. However, the same paper also articulated that in the deprived areas of the country, such as Clacton-on-Sea, antibiotic prescribing rates are almost twice the national average.

Some big MNCs are no different:

In the Government’s ban list of irrational FDCs even some top brands of pharma MNCs feature, including antibiotic FDC of antibiotics. For example, on Mar 14, 2016, Reuters reported that one of the largest pharma MNCs operating in India – Abbott Laboratories, was selling a FDC of two powerful antibiotics Cefixime and Azithromycin, without approval of the DCGI. This could possibly be a legacy factor, arising out of its acquisition of a good number of branded generic drugs, together with their management, from a domestic pharma company. Abbott, otherwise is well regarded by many as a distinguished global institution, practicing high standards of business ethics and values, across the world.

Be that as it may, this powerful antibiotic cocktail that poses huge health risk to patients has reportedly not received marketing approval in the major global pharma markets, such as, the United States, the United Kingdom, Germany, France or Japan.

The Reuters report also elaborates that the drug ‘had been promoted and administered as a treatment for a broad array of illnesses, including colds, fevers, urinary tract infections, drug-resistant typhoid and sexually transmitted diseases.’ It also found chemists who were selling the drug to prevent post-operative infection and for respiratory problems. After the ban, the company has reportedly stopped manufacturing and sales of this antibiotic FDC.

Irrational FDC ban – a significant corrective measure:

Keeping all this in perspective, the regulatory ban on irrational FDCs of antibiotics on March 10, 2016, along with products falling in several different therapy areas, was a significant regulatory measure, among many others, to contain the menace of AMR in India.

Unfortunately, quite a lot of these formulations are still in the market, actively promoted by their manufacturers and widely prescribed by the doctors, till date. This is mainly because, to protect the revenue and profit generated from these brands, concerned pharma companies have obtained an injunction from various high courts against the ban, which was notified by the Government, earlier.

Thwarting FDC ban – a key issue:

Looking back, 294 FDCs were banned by the DCGI in 2007. At that time also, the same important issue of patients’ health, safety and economic interest got caught in an intriguing legal quagmire. As a result, implementation of the Government’s decision to ban of these irrational FDCs got delayed, indefinitely.

Added to this, irrational antimicrobial FDCs featuring in the ban list of March 10, 2016, got trapped in exactly the same legal battle, yet again. Thus, repeated stalling of Government ban on irrational FDCs, including antibiotics, continue to remain a key health and safety issue in India.

The latest development:

In September 2016, the Union Government has reportedly moved the Supreme Court of India in defense of its March 2016 ban on irrational FDCs.

In its petition, the Union Government has reportedly urged that all cases against the orders related to ban of ‘irrational’ FDCs, now being heard in various High Courts across the country, be transferred to the apex court and heard as a single case. The move is expected to cut any ambiguity that could arise from differing verdicts between high courts.

In case of a verdict favoring the ban of all the notified irrational FDCs, scores of patients will be benefited by not just falling victims to possible health menace arising out of such unjustifiable drugs, as the Government argues, but also due to expected containment of rapid spread of deadly antimicrobial resistance in the country.

Conclusion:

With the ban of irrational FDCs, the Union Ministry of Health has taken one of the much-needed steps to restrict antibiotic resistance in India, besides addressing other health and financial menace caused by such drugs.

The support of the Apex court of India to urgently resolve this legal jig-saw-puzzle, would also help control, though not in a holistic way, the scary antibiotic resistance challenge in India. In that process India would possibly be able to contribute its little bit towards the antibiotic resistance challenge, across the world, if we consider the ‘New Delhi metallo-β-lactamase’ case as a glaring example in this area.

It is, therefore, widely expected that for the greater public interest, the honorable Supreme Court may view this important health and safety issue accordingly, while pronouncing its final verdict. If and when it happens, hopefully soon, the prevailing industry practice in the country to make profits with dubious drug cocktails sans any robust medical rationale, basically at the cost of patients, can’t possibly be thwarted any longer, and will be effectively implemented on the ground.

By: Tapan J. 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.

Is Drug Price Control The Key Growth Barrier For Indian Pharma Industry?

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The corollary of the above headline could well be: “Are drug price hikes the key growth driver for the Indian Pharmaceutical Market (IPM)?”

Whenever the first question, as appears in the headline of this article: “Is drug price control a key barrier to growth of the IPM?”, is asked to the pharma players, irrespective of whether they are domestic companies or multinationals (MNCs), the answer in unison would quite expectedly be a full-throated ‘yes’. Various articles published in the media, including some editorials too, also seem to be on the same page, with this specific view. 

Likewise, if the corollary of the above question: “Are drug price hikes the key growth driver for the IPM?”, is put before this same target audience, most of them, if not all, would expectedly reply that ‘in the drug price control regime, this question does not arise at all, as IPM has been primarily a volume driven growth story.’ This answer gives a feel that the the entire or a major part of the IPM is under Government ‘price control’, which in fact is far from reality

Recently, a pharma industry association sponsored ‘Research Study’, conducted by an international market research organization also became quite vocal with similar conclusion on drug price control in India. This study, released on July 2015, categorically highlights ‘price control is neither an effective nor sustainable strategy for improving access to medicines for Indian patients’. The report also underscores: “The consumption of price-controlled drugs in rural areas has decreased by 7 percent over the past two years, while that of non-price controlled products has risen by 5 percent.”

I argued on the fragility of the above report in this Blog on September 7, 2015, in an article titled, “Drug Price Control in India: A Fresh Advocacy With Blunt Edges”.

Nonetheless, in this article, going beyond the above study, I shall try to put across my own perspective on both the questions raised above, primarily based on the last 12 months retail data of well-respected AIOCD Pharmasofttech AWACS Pvt. Ltd. 

Pharma product categories from ‘Price Control’ perspective:

To put this discussion in right perspective, following AIOCD-AWACS’ monthly pharma retail audit reports, I shall divide the pharma products in India into three broad categories, as follows:

  • Products included under Drug Price Control Order  2013 (DPCO 2013), which are featuring in the National List of Essential Medicines 2011 (NLEM 2011) 
  • Products not featuring in NLEM 2011, but included in Price Control under Para 19 of DPCO 2013
  • Products outside the ambit of any drug price control and can be priced by the respective drug manufacturers, whatever they deem appropriate

The span of price controlled medicines would currently be around 18 percent of the IPM. Consequently, the drugs falling under free-pricing category would be the balance 82 percent of the total market. Hence, the maximum chunk of the IPM constitutes of those drugs for which there is virtually no price control existing in India.

According to the following table, since, at least the last one-year period, the common key growth driver for all category of drugs, irrespective of whether these are under ‘price control’ or ‘outside price control, is price increase in varying percentages: 

Value vs Volume Growth (October 2014 to September 2015):

Month DPCO Product      Gr% Non-DPCO Products Gr% Non-NLEM Para 19 Gr% IPM
2015 Value Volume Value Volume Value Volume Value Volume
September 2.8 1.2 10.9 1.1 11.5 9.0 9.9 1.4
August 3.3 (2.7) 14.5 2.4 15.2 13.7 13.0 1.6
July 5.1 (0.6) 14.2 4.1 11.8 9.9 12.9 3.3
June 5.6 (0.1) 16.2 6.2 14.6 11.7 14.8 5.0
May 5.3 (0.3) 12.1 3.4 7.2 4.3 11.0 2.6
April 11.1 5.3 18.4 9.6 11.9 9.6 17.2 8.7
March 17.6 9.5 21.7 13.0 15.6 13.2 20.9 12.2
Feb 13.9 7.6 20.0 10.1 14.4 9.9 18.9 9.6
Jan 6.9 1.8 14.0 3.7 NA NA 12.7 3.3
2014    
December 8.0 0.7 14.8 3.2 NA NA 13.6 2.7
November 3.1 (3.4) 12.6 0.3 NA NA 10.9 (0.4)
October (2.4) (5.7) 6.8 (1.7) NA NA 5.2 (2.6) 

Source: Monthly Retail Audit of AIOCD Pharmasofttech AWACS Pvt. Ltd 

Does ‘free drug-pricing’ help improving consumption?

I would not reckon so, though the pharma industry association sponsored above study virtually suggests that ‘free pricing’ of drugs would help improve medicine consumption in India, leading to high volume growth.

As stated earlier, the above report of IMS Health highlights, “The consumption of price-controlled drugs in rural areas has decreased by 7 percent over the past two years, while that of non-price controlled products has risen by 5 percent.”

On this finding, very humbly, I would raise a counter question. If only free pricing of drugs could help increasing volume growth through higher consumption, why would then the ‘price-controlled non-NLEM drugs under para 19’, as shown in the above table, have generally recorded higher volume growth than even those drugs, which are outside any ‘price control’? Or in other words, why is the consumption of these types of ‘price controlled’ drugs increasing so significantly, outstripping the same even for drugs with free pricing?

The right answers to these questions lie somewhere else, which I would touch upon now.

Are many NLEM 2011 drugs no longer in supply?

DPCO 2013 came into effect from from May 15, 2013. Much before that, NLEM 2011 was put in place with a promise that all the drugs featuring in that list would come under ‘price control’, as directed earlier by the Supreme Court of India.  Even at that time, it was widely reported by the media that most of the drugs featuring in the NLEM 2011 are either old or may not be in supply when DPCO 2013 would be made effective. The reports also explained its reasons. 

To give an example, a November 6, 2013 media report stated: “While the government is still in the process of fully implementing the new prices fixed for 348 essential medicines, it has realized that most of these are no longer in supply. This is because companies have already started manufacturing many of these drugs with either special delivery mechanism (an improved and fast acting version of the basic formulation) or in combination with other ingredients, circumventing price control.”

Just to give a feel of these changes, the current NLEM 2011 does not cover many Fixed-Dose Combinations (FDC) of drugs. This is important, as close to 60 percent of the total IPM constitutes of FDCs. Currently, FDCs of lots of drugs for tuberculosis, diabetes and hypertension and many other chronic and acute disease conditions, which are not featuring in the NLEM 201, are very frequently being prescribed in the country. Thus, the decision of keeping most of the popular FDCs outside the ambit of NLEM 2011 is rather strange.

Moreover, a 500 mg paracetamol tablet is under price control being in the NLEM 2011, but its 650 mg strength is not. There are many such examples.

These glaring loopholes in the NLEM 2011 pave the way for switching over to non-NLEM formulations of the same molecules, evading DPCO 2013. Many experts articulated, this process began just after the announcement of NLEM 2011 and a lot of ground was covered in this direction before DPCO 2013 was made effective.

Intense sales promotion and marketing of the same molecule/molecules in different Avatars, in a planned manner, have already started making NLEM 2011 much less effective than what was contemplated earlier. 

Some examples:

As I said before, there would be umpteen number of instances of pharmaceutical companies planning to dodge the DPCO 2013 well in advance, commencing immediately after NLEM 2011 was announced. Nevertheless, I would give the following two examples as was reported by media, quoting FDA, Maharashtra:

1. GlaxoSmithKline (GSK) Consumer Healthcare having launched its new ‘Crocin Advance’ 500 mg with a higher price of Rs 30 for a strip of 15 tablets, planned to gradually withdraw its conventional price controlled Crocin 500 mg brand costing around Rs 14 for a strip of 15 tablets to patients. GSK Consumer Healthcare claimed that Crocin Advance is a new drug and therefore should be outside price control.

According to IMS Health data, ‘Crocin Advance’ achieved the fifth largest brand status among top Paracetamol branded generics, clocking a sales turnover of Rs 10.3 Crore during the last 12 months from its launch ending in February 2014. The issue was reportedly resolved at a later date with assertive intervention of National Pharmaceutical Pricing Authority (NPPA).

2. Some pharmaceutical companies reportedly started selling the anti-lipid drug Atorvastatin in dosage forms of 20 mg and 40 mg, which are outside price control, instead of its price controlled 10 mg dosage form.

Why DPCO 2013 drugs showing low volume growth?

From the above examples, if I put two and two together, the reason for DPCO 2013 drugs showing low volume growth becomes much clearer.

Such alleged manipulations are grossly illegal, as specified in the DPCO 2013 itself. Thus, resorting to illegal acts of making similar drugs available to patients at a much higher price by tweaking formulations, should just not attract specified punitive measures, but may also be construed as acting against health interest of Indian patients…findings of the above ‘research report’, notwithstanding, even if it is accepted on its face value.

In my view, because of such alleged manipulations, and many NLEM 2011 drugs being either old or not in supply, we find in the above table that the volume growth of ‘Price Controlled NLEM drugs’ is much less than ‘Price Controlled non-NLEM Para 19’ drugs. Interestingly, even ‘Out of Price Control’ drugs show lesser volume growth than ‘Price Controlled non-NLEM Para 19 drugs’.

Government decides to revise NLEM 2011:

The wave of general concerns expressed on the relevance of NLEM 2011 reached the law makers of the country too. Questions were also asked in the Parliament on this subject.

Driven by the stark reality and the hard facts, the Union Government decided to revise NLEM 2011. 

For this purpose, a ‘Core Committee of Experts’ under the Chairmanship of Dr. V.M Katoch, Secretary, Department of Health Research & Director General, Indian Council of Medical Research (ICMR), was formed in May 2014.

The minutes of the first and second meetings of the ‘Core Committee of Experts’, held on June 24, 2014 and July 2, 2014, respectively, were also made public. 

On May 5, 2015, the Union Minister for Chemicals and Fertilizers Ananth Kumar said in a written reply to the ‘Lok Sabha’ that “The revised NLEM would form the basis of number of medicines which would come under price control.” This revision is taking place in the context of contemporary knowledge of use of therapeutic products, the Minister added.

Would pharma sector grow faster sans ‘price control’?

If ‘drug price control’ is abolished in India, would pharma companies grow at a much faster rate in volume with commensurate increase in consumption, than what they have recorded during ‘limited price control’ regime in the country? This, in my view, is a matter of conjecture and could be a subject of wide speculation. I am saying this primarily due to the fact that India has emerged as one of the fastest growing global pharmaceutical market during uninterrupted ‘drug price control regime’ spanning over the last 45 years.

Nevertheless, going by the retail audit data from the above table, it may not be necessarily so. The data shows that volume growth of ‘out of price control’ drugs is not the highest, by any measure. On the contrary, it is much less than ‘price controlled drugs under para 19 of DPCO 2013′, which are mainly prescribed for non-infectious chronic diseases on a large scale.

I am referring to AIOCD-AWACS data for just the last 12 months, because of space constraint, but have gone through the same for the entire DPCO 2015 period, till September’15. The reason for my zeroing in on DPCO 2015 is for the three simple reasons:

- The span of price control in this regime is the least, even lesser than DPCO 1995, which was 20 percent. 

- It is much more liberal in its methodology of ‘Ceiling Price (CP)’ calculation, over any other previous DPCOs

- It has also a provision, for the first time ever, of automatic price increases every year for price controlled drugs, based on WPI.

A safeguard for patients?

Medicines enjoy the legal status of ‘essential commodities’ in India. Thus, many believe that ‘drug price control’ is a ‘pricing safeguard’ for Indian patients, especially for essential medicines and ‘out of expenses’ for drugs being as high as over 60 percent.

In the prevailing health care environment of India, the situation otherwise could even be possibly nightmarish. The key reason for the same has been attributed to ‘market failure’ by the Government, for most of the pharmaceutical products, where competition does not work. I discussed this issue in my article titled, “Does ‘Free-Market Economy’ Work For Branded Generic Drugs In India?” of April 27, 2015, in this Blog.

In India, ‘drug price control’ has successfully passed the intense scrutiny of the Supreme Court, along with its endorsement and approval. Any attempt of its retraction by any Government, without facing a tough challenge before the Apex Court, seems near impossible.

Conclusion: 

The fundamental reasons for overall low volume growth, or in other words, price-increase driven value growth of the IPM, I reckon, lie somewhere else, which could be a subject matter of a different debate altogether.

As I said in the past, IPM grew at an impressive speed consistently for decades, despite ‘drug price control’, and grumbling of the industry for the same. This high growth came from volume increase, price increase and new product introductions, the volume growth being the highest.

Most of the top 10 Indian pharma players, came into existence and grew so fast during the ‘drug price control’ regime. The  home-grown promoter of the numero-uno of the IPM league table, is now the second richest person of India. These are all generic pharma companies.

Generally speaking, Indian pharma shares even today attract more investors consistently than any other sector for such a long time. Granted that these companies are drug exporters too, but they all gained their critical mass in partly ‘price controlled’ Indian market. The criticality of the need for consistent growth in the domestic market, by the way, still remains absolutely relevant to all the pharma players in India, even today, despite…whatever.

Growth oriented overall Indian pharma scenario remaining quite the same, ‘drug price control’ with a current span of just around 18 percent of the IPM, can’t possibly be a growth barrier. Otherwise, how does one explain the highest volume growth of ‘price controlled non-NLEM drugs’, which is even more than ‘out of price-control drugs’?

Be that as it may, in my view, implementation of public funded ‘Universal Health Care (UHC)’ by the Indian Government, in any form or calling it by any other name, can possibly replace DPCO. Similar measures have been adopted by all the member countries of the ‘Organization for Economic Co-operation and Development (OECD)’ in this area, though following different paths, but nevertheless to attain the same goal.

Lamentably enough, the incumbent Government too has not ‘walked the talk’ on its number of assurances related to this core issue of health care in India.

Still, the hope lingers!

By: Tapan J. 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.

 

Drug Price Control in India: A Fresh Advocacy With Blunt Edges

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It is no-brainer that the advocacy initiatives to influence the new Government doing away with the ‘Drug Price Control’ in India has re-started by flooring the gas pedal. A fresh invigorating effort, apparently a pretty expensive one, has been initiated in July 2015 with an interesting study conducted on the subject by an international market research organization, sponsored by a multi-national pharma trade association in India.

Having gone through the report, it appears to me, as if the whole purpose of the study was to rationalize an ‘advance’ conclusion in mind, weaving plethora of data around it for justification.

The report presents an abundance of selective data, apparently to rubbish the very concept of ‘Drug Price Control’ in India. In that process, it reinforced the existence of a deep seated malady in the overall sales and marketing strategic framework of most of the pharma players, rather than failure of ‘Drug Price Control’ in India, meant for the essential drugs.

In this article, I shall dwell on this issue adding my own perspective. Although my views are different, I totally respect the findings and suggestions made in this report.

Drug price control in India:

From 1970, Drug Price Control Orders (DPCO) are being issued in India under the Essential Commodities Act, without any break, so far. The key intent of the DPCO is to provide quality essential medicines at a reasonably affordable price to the consumer. The DPCO has been amended four times since then, the latest one being DPCO 2013.

Unlike the previous ones, the span of price control of DPCO 2013 is restricted to essential medicines, as featured in the National List of Essential Medicines 2011 (NLEM 2011). The methodology of price control has also now changed to ‘marked-based’ pricing from earlier ‘cost-based’ pricing.

However, for the first time in July 2013, the National Pharmaceutical Pricing Authority (NPPA) extended ‘Drug Price Control’ beyond the Schedule Drugs, when by a notification it announced price fixation of ‘anti-diabetic and cardiovascular drugs in respect of 108 non-scheduled formulation packs under Paragraph 19 of DPCO, 2013’,

Paragraph 19 of DPCO, 2013, authorizes the NPPA in extraordinary circumstances, if it considers it necessary to do so in public interest, to fix the ceiling price or retail price of any drug for such period as it deems fit.

Although the pharma industry initially had supported the switch from ‘cost based’ price control to ‘market based’ price control and only for NLEM 2011 drugs, it took a tougher stand after the above notification. Some trade association reverted to the same good old genre, yet again, trying to establish that ‘Drug Price Control’ does not help at all. The brand new market research report under discussion in this article, appears to be a step in that direction.

‘Market failure in pharma’ where competition does not work:

In its price notification dated July 10, 2014, as mentioned above, the NPPA justified its action by underscoring ‘market failure’ for those anti-diabetic and cardiovascular drugs, where competition does not work. NPPA considered ‘market failure’ as one of the ‘extraordinary circumstances’ and explained the situation as follows:

  • There exist huge inter-brand price differences in branded-generics, which is indicative of a severe market failure, as different brands of the same drug formulation, which are identical to each other in terms of active ingredient(s), strength, dosage, route of administration, quality, product characteristics, and intended use, vary disproportionately in terms of price
  • It is observed that, the different brands of the drug formulation may sometimes differ in terms of binders, fillers, dyes, preservatives, coating agents, and dissolution agents, but these differences are not significant in terms of therapeutic value.
  • In India the market failure for pharmaceuticals can be attributed to several factors, but the main reason is that the demand for medicines is largely prescription driven and the patient has very little choice in this regard.
  • Market failure alone may not constitute sufficient grounds for government intervention, but when such failure is considered in the context of the essential role of pharmaceuticals play in the area of public health, which is a social right, such intervention becomes necessary, especially when exploitative pricing makes medicines unaffordable and beyond the reach of most and also puts huge financial burden in terms of out-of-pocket expenditure on healthcare.

I discussed this subject in my bog post of April 27, 2015 titled, “Does ‘Free-Market Economy’ Work For Branded Generic Drugs In India?”

Are medicines cheapest in India, really?

It is quite often quoted that medicines are cheapest in India. In my view, it would be too simplistic, if we compare the prevailing Indian drug prices in Rupee, against prices of similar drugs in other countries, just by simple conversion of the foreign currencies, such as, US$ and Euro converted into Rupee. To make the comparison realistic and credible, Indian drug prices should be compared against the same in other countries only after applying the following two critical parameters:

  • Purchasing Power Parity and Per Capita Income
  • Quantum of per capita ‘Out of Pocket Expenditure’ on drugs

The Department of Pharmaceuticals (DoP) with the help of academia and other experts had earlier deliberated on this issue in one of its reports on patented drugs pricing. The report established that post application of the above two parameters, medicines in India are virtually as expensive as in the developed world, causing great inconvenience to majority of patients in the country.

Hence, common patients expectedly look for some kind of critical intervention by the Government, at least, on the prices of essential drugs in India.

A new study on drug price control:

Recently, I came across a ‘brand new’ research report that tries to justify the fresh stance allegedly taken by the pharma industry on the abolition of ‘Drug Price Control’ in India.

This new study of IMS Health released on July 2015, sponsored by a pharma MNC trade association in India, titled “Assessing the Impact of Price Control Measures on Access to Medicines in India”, categorically highlights ‘price control is neither an effective nor sustainable strategy for improving access to medicines for Indian patients’.

The key findings:

The following are the key findings of the report:

  • High income patient populations, rather than the low-income targets are the primary beneficiaries of the DPCO 2013.
  • The consumption of price-controlled drugs in rural areas has decreased by 7 percent over the past two years, while that of non-price controlled products has risen by 5 percent.
  • The DPCO 2013 has resulted in an increase in market concentration and a decrease in competitive intensity.
  • Price control has increased margin pressures for small and mid-sized companies, limiting both employment and investment opportunities in the sector.
  • Price controls negatively impact internal capability-building and expertise-building initiatives, discourage local talent and undermine the government’s ’Make in India’ initiative.

The suggestions made:

In my view, the report almost repeats the same old suggestions being made by the pharma industry over decades. However, while making recommendations, this new report selectively quotes, without clearly naming them, from the draft National Health Policy 2015 and ‘Jan Aushadhi’ initiative of the DoP. It also attempts to ride on the shoulder of Prime Minister Modi’s ‘Make in India’ campaign. The key recommendations of the study are, as follows:

  • Strengthen healthcare financing and extend universal health coverage across population segments with focus on providing cover for medicines
  • Invest in healthcare infrastructure and capability building
  • Promote joint and bulk procurement mechanisms, e.g. Tamil Nadu Medical Services Corporation
  • Levy a cess on the tobacco and liquor industries to fund the healthcare sector and subsidize essential medicines from taxes
  • Introduce mechanisms to ensure availability of generics at lower prices, to improve affordability for patients i.e. set up dedicated generic medicine stores.

An official of IMS Health was also quoted by the media that sounds to me almost like pontification:

“Price control has limited impact on improving patient access and, furthermore is not aligned with the requirements of a vibrant economy like India” and the “Government’s priority should be on strengthening India’s healthcare infrastructure and extending universal insurance coverage.”

The blunt edges in the report raise more questions than answers:

I wonder, whether another apparently expensive research, such as this, was at all necessary to reinvent the same old advocacy narratives on ‘Drug Price Control’ in India.

As I note, the report highlights, “The consumption of price-controlled drugs in rural areas has decreased by 7 percent over the past two years, while that of non-price controlled products has risen by 5 percent.” If this is true, one should try to fathom:

  • What does it really mean and what are its implications?
  • Can it happen, if it has happened, just because of ‘Drug Price Control’?

I am raising these two questions mainly because, price controlled drugs are prescription medicines. Thus, post DPCO 2013, when it happens to ‘prescription only medicines’, other critical questions that come at the top of mind are as follows:

  • Are the doctors now prescribing less of price controlled drugs? If so, why?
  • Price controlled drugs being essential drugs, are the doctors prescribing less of essential drugs? If so, why?
  • Do the doctors prefer prescribing expensive ‘non-schedule’ drugs to patients against their interest? if so, why?

Further, deliberately causing decline in consumption of these drugs, for margin or whatever may be the reasons, without intimating the NPPA as stipulated in the DPCO 2013, is a serious offense, attracting stringent penal action under the Essential Commodities Act.

Therefore, if the above finding of this study is correct and assuming that NPPA is not aware of such shortages or declining consumption of essential drugs in India, yet another critical question that needs to be answered:

  • By deliberately bringing down the consumption of essential medicines, are the concerned pharma players not taking the law in their own hands?

If yes, the Government would need to act forthwith. If not, the above finding of the report is just not correct.

The DoP, NPPA and other stakeholders would, therefore, need to ferret out, which one of the above two is correct.

Thus, I reckon, to wish away ‘Drug Price Control’ in India, the fresh advocacy initiative of the pharma trade association, keeping in the forefront a new study with blunt edges, raises more questions than answers. I have given just an example here, as above.

More marketing push on ‘free-pricing’ drugs is common:

It is not uncommon that the sales of ‘free-pricing’ drugs are usually more, as their margin is unlimited. Pharma players take increasing interest in those drugs and push them harder, almost totally controlling the ‘push-pull’ effect of drug marketing.

Globally, drug companies take increasing interest in such medicines. India is no exception. Here too ‘out of price control’ non-schedule drugs usually show higher growth, as the doctors are influenced to prescribe more of such drugs, though at the cost of consumer.

This practice may not be acceptable to many, but is a stark reality. This process is expected to continue, at least, till Uniform Code of Pharmaceutical Marketing Practices (UCPMP) is made mandatory with strict enforcement and strong punitive provisions for any violations.

Is the growth of price controlled drugs declining?

If the growth of price controlled medicines drastically comes down post DPCO 2013, that should get reflected on the declining overall sales and growth of those drugs. Similar pattern should also be visible in the growth of those types products marketed by most of the major pharma companies in India.

Let me now present the scenario of that space. The following analysis is based on the monthly retail audit data of AIOCD Pharmasofttech AWACS.

When I look at the growth of DPCO 2013 products based on NLEM 2011 and other price controlled drugs under ‘Para 19’ from January to July 2015 period in the following table, the scenario does not look as worrying just yet, as the above report has made it out to be.  

Product group-wise market growth (in Value):

Month (2015) DPCO products (%) DPCO  Para 19 Products (%) Non-DPCO Products (%) Total Market Growth (%)
July 5.1 11.8 14.2 12.9
June 5.6 14.6 16.2 14.8
May 5.3 7.2 12.1 11.0
April 11.1 11.9 18.4 17.2
March 1.6 15.6 21.7 20.9
February 13.9 14.4 20.0 18.9
January 6.9 NA 14.0 12.7

(Source: AIOCD Pharmasofttech AWACS )

Again, in the following table, when I look at the growth of DPCO 2013 products of some the very major pharma players in India, the conclusion still remains the same as above:

DPCO Products Growth (%) by major companies (Jan-July 2015):

Company July June May April March Feb Jan
Ranbaxy 20.5 31.9 29.5 17.3 27.6 20.7 53.7
Pfizer 13.0 17.4 5.7 16.7 25.6 21.1 18.6
Abbott 7.2 11.7 18.5 13.5 15.5 18.3 21.2
GSK -2.1 - 1.8 -1.2 12.2 12.2 NA NA

(Source: AIOCD Pharmasofttech AWACS )

The blunt edges fail to cut ice:

Quite expectedly, even a month after its release in July 2015, the blunt edges in the report seem to have cut no ice, especially at a very important place that matters most to the industry in this area. This observation gets vindicated by a credible media report.

On August 24, 2015 in an interview to a national business daily, V K Subburaj, the Secretary of the Department of Pharmaceuticals commented, “Price control on drugs a shot in the arm for health care” and “the Government cannot do away with it.”

He argued, “A large section of the population is poor. Suddenly, your system is disturbed if you have to spend more on drugs. Drugs are an important component of health care expenditure.”

Accepting the fact that in India, big and small companies investing in research would need more money, Mr. Subburaj said, “In India, we can’t afford to remove controls as the burden of disease is high.”

Conclusion:

With all due respect to all concerned, the above report appears to me palpably commercial, sans any worthy academic value or intellectual input that could trigger thinking for a change in the Government policy. The report apparently lacks in the required cutting edge to achieve the intended goal. The blunt edges are glaring, suggesting on the contrary, that the real action actually lies with the industry. Let me hasten to add, if any one has a different view on the subject, I would respect that with all humility.

The drug price control in India has been continuing since 1970, without any gap. The retail audit data clearly indicates that the growth of the Indian pharma industry did not get stunted or stifled during the period for this particular reason, as postulated in the above report of IMS Health. On the contrary, despite price control of drugs with all its ‘ill-effects’, as highlighted in the study, the growth of the Indian pharma industry in the last 4 decades has been nothing less than spectacular. This would consequently mean, increasing consumption of drugs, leading to improving access to medicines in India, including its hinterland, though may still not be good enough. I discussed this subject in my blog post of December 13, 2013, titled “Access to Medicine: Losing Track in Cacophony”.

Coincidentally, at the commencement of drug price control regime in India, almost all, if not all, the players in the ‘Top 10’ pharma league table of the country, were multi-national drug companies. Today the situation has just reversed. Out of ‘Top 10’, about 7 are home grown drug companies. Many of these companies were born post 1970. Without M&As by the pharma MNCs, this number could have been even higher today.

When it comes to profitability, it is worth mentioning, the soft-spoken and well-respected owner of the so called ‘low margin’ generic pharma company – Sun Pharma, is the second-richest person of the country. He created his initial wealth from India, despite ostensible ‘growth stunting’ price control – as elaborated in the above report.

By the way, what is the span of drug price control in India really – just around 18 percent of the total domestic pharma market now? More than 80 percent of the local drug market continue to remain in the ‘free-pricing’ and ‘high-profit’ zone. In that case, is the essence of the report not chanting… ‘yeh dil maange more’?

By: Tapan J. 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.

India To Expand NLEM 2011: A Step In The Right Direction

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Responding to growing discontentment on the flawed National List of Essential Medicines 2011 (NLEM 2011) and equally vociferous demand for its urgent rectification, on May 5, 2015, in a written reply to the Lower House of Indian Parliament (Lok Sabha) the Union Minister for Chemicals and Fertilizers – Mr. Ananth Kumar made the following submission:

“The Ministry of Health and Family Welfare, has constituted a Core Committee of Experts to review and recommend the revision of National List of Essential Medicines (NLEM) 2011 in the context of contemporary knowledge of use of therapeutic products.”

According to earlier media reports, the Government had formed this Core Committee in May 2014 under Dr. V.M Katoch, Secretary, Department of Health Research (DHR) and Director General, Indian Council of Medical Research (ICMR). However to utter dismay of many, even in a full year’s time, the Committee has not been able to come out with any tangible recommendations in this area.

In his reply from the floor of the Parliament, the Union Minister added with a tinge of reassurance:

“The Core committee has already held wide consultations with stakeholders and is likely to come out with its recommendations on the revised NLEM soon… The revised NLEM would form the basis of number of medicines which would come under price control,”

This reply from the Minister was in response to a query from a lawmaker on what steps have been taken by the Government to expand the list of NLEM 2011 and provide them to the poor at affordable prices.

Mr. Ananth Kumar also reiterated, the National Pharmaceutical Pricing Authority (NPPA) has already fixed the ceiling prices in respect of 521 medicines till date, out of 628 NLEM formulations included in the first schedule of DPCO, 2013.

“The revised NLEM would bring more drugs under price control”, the Minister said.

NPPA’s earlier initiative was thwarted:

It is worth noting that in 2014, to include all drugs of mass consumption, in addition to essential and life saving medicines, NPPA initiated an exercise to expand the NLEM 2011.

At that time, quite rightly I reckon, the pharmaceutical industry vehemently protested against this regulatory overreach of NPPA and sought judicial intervention at least in two High Courts of India.

Moreover, as is well known today, NPPA’s attempt to regulate prices of medicines of mass consumption got thwarted, when the Union Government intervened and directed the price regulator to withdraw its related internal guidelines. Coincidentally this lightning action was taken just before Prime Minister Narendra Modi’s schedule visit to the United States in end 2014.

Be that as it may, the industry observers consider the last week’s announcement of the Union Minister, from the floor of the Parliament, to expand the span of NLEM 2011 as a step in the right direction for improving access to affordable essential medicines for all in India.

A brief backdrop for ‘Essential Medicines’:

The World Health Organization (W.H.O) has defined ‘Essential Medicines’ as those that ‘satisfy the priority healthcare needs of the population’. It has been propagating this concept since 1977, when W.H.O published the first Model List of Essential Drugs with 208 medicines. All these medicines together provided safe, effective treatment for the majority of communicable and non-communicable diseases, at that time.

Every two year this list is updated. The current Model List of Essential Medicines, prepared by the W.H.O Expert Committee in April 2013, is its 18th Edition.

According to W.H.O, such ‘Essential Medicines’ are selected with due regard to disease prevalence, evidence on efficacy and safety, and comparative cost-effectiveness. The Organization categorically states:

“Essential medicines are intended to be available within the context of functioning health systems at all times in adequate amounts, in the appropriate dosage forms, with assured quality, and at a price the individual and the community can afford.”

Many countries of the world, India included now, have the National List of Essential Medicines (NLEM) and some have provincial or state lists as well, such as, in Tamilnadu Rajasthan and Delhi.

Health being a state subject in India, NLEM usually relates closely to Standard Treatment Guidelines (STGs) for use within the State Government health facilities. Ironically, such measures are currently being taken by just a small number of State Governments in the country.

NLEM – A forward-looking ongoing concept:

According to W.H.O, the concept of ‘Essential Medicines’ is forward-looking and ongoing. This idea prompts the need to regularly update the selection of medicines in the NLEM, reflecting:

  • New therapeutic options
  • Changing therapeutic needs
  • The need to ensure drug quality
  • The need for continued development of better medicines
  • Medicines for emerging diseases
  • Medicines to meet changing resistance patterns

As a part of its ongoing exercise, on May 8, 2015, The World Health Organization (W.H.O) by a ‘News Release’ announced addition of several new treatments for cancer and hepatitis C to its list of ‘Essential Medicines’, which the agency believes should be made available at affordable prices.

All 5 new products for the treatment of Hepatitis C, including sofosbuvir and daclatasvir, were included in the List. These medicines cure more than 90 percent of those infected and cost from US$63,000 to US$94,500 in the United States, depending upon the drug and treatment regimen.

Considering, new breakthroughs made in cancer treatment in the last years, W.H.O also revised the full cancer segment of the Essential Medicines List this year: 52 products were reviewed and 30 treatments confirmed, with 16 new medicines added in the list, including Herceptin of Roche, and Gleevec of Novartis.

“When new effective medicines emerge to safely treat serious and widespread diseases, it is vital to ensure that everyone who needs them can obtain them,” said W.H.O Director-General, Dr Margaret Chan. “Placing them on the WHO Essential Medicines List is a first step in that direction.”

India would also require putting similar effective systems in place for a robust, ongoing and time-bound review process for its NLEM.

Immense health and economic impact of ‘Essential Medicines’:

Globally the health and economic impact of ‘Essential Medicines’ have been proved to be remarkable, especially in the developing countries, as such drugs are one of the most cost-effective elements in healthcare system of any time. That’s why the stakeholders bestow so much of importance on a well thought out and properly crafted list of essential medicines by the astute experts appointed by the Government.

According to W.H.O, while spending on pharmaceuticals represents less than one-fifth of total public and private health spending in most developed countries, it represents 15 to 30 percent of health spending in transitional economies and 25 to 66 percent in developing countries.

In developing countries, such as India, pharmaceuticals are the largest Out of Pocket (OoP) household health expenditure. “And the expense of serious family illness, including drugs, is a major cause of household impoverishment.”

Flawed NLEM could multiply access to medicines problems:

Despite well-documented global evidence regarding high potential of health and economic impact of ‘Essential Drugs’, if the NLEM does not include right kind of drugs and remains flawed, it could have significant adverse impact on the overall access to ‘Essential Medicines’ in India.

In addition, properly structured NLEM could help setting the right course in the procurement and supply of medicines in the public sector – national or state Government schemes that reimburse medicine costs, and also for domestic production of drugs in the country.

A quick overview of NLEM in India:

There was no functional NLEM in India before 2002. According to a paper titled “Decisions on WHO’s essential medicines need more scrutiny”, published in the BMJ on July 31, 2014, in India the first National Essential Medical List (NEML) was prepared in 1996. However, this list was neither implemented for procuring drugs nor were STGs drawn up.

It all started in 2002, when the National Drug Policy of India, announced in that year, was subsequently challenged through a Public Interest Litigation (PIL) in the Karnataka High Court on the ground of being inflationary in nature. The Honorable Court by its order dated November 12, 2002 issued a stay on the implementation of that Policy.

This judgment was challenged by the Government in the Supreme Court, which vacated the stay vide its order dated March 10, 2003 and ordered as follows:

“We suspend the operation of the order to the extent it directs that the Policy dated February 15, 2002 shall not be implemented. However we direct that the petitioner shall consider and formulate appropriate criteria for ensuring essential and lifesaving drugs not to fall out of the price control and further directed to review drugs, which are essential and lifesaving in nature till 2nd May, 2003”.

As a result DPCO 1995 continued to remain operational, pending formulation of a new drug policy, based on NLEM based span of price control, as directed by the Honorable Supreme Court of India. Necessitated by this directive of the Apex Court of the country, the first NLEM of India came into effect in 2002.

In 2011, NLEM 2002 was subsequently reviewed and re-evaluated by a committee of 87 experts from various fields, and was replaced by the NLEM 2011 with 348 drugs.

In the recent years, following a series of protracted judicial and executive activities, the National Pharmaceutical Pricing Policy 2012 (NPPP 2012) came into effect on December 7, 2012. In the new policy the span of price control was changed to all drugs falling under the National List of Essential Medicines 2011 (NLEM 2011) and the price control methodology was modified from the cost-based to market based one. Accordingly the new Drug Price Control Order (DPCO 2013) was notified on May 15, 2013.

However, the matter is still subjudice, as NPPP 2012 would ultimately require passing the acid test of scrutiny by the Supreme Court of India, in the future days.

A recent study emphasizes need for urgent expansion of NLEM:

A March 2015 independent evaluation of DPCO 2013, which controls prices of essential medicines in India as featured in the NLEM 2011, brought to light some interesting facts. The Public Health Foundation of India (PHFI) and the Institute for Studies in Industrial Development released this report titled “Pharmaceutical Policies in India: Balancing Industrial and Public Health Interests” at a conference on pharmaceutical policies in India, held in New Delhi from 3 to 7 March, 2015.

This independent evaluation would most probably be submitted to the Supreme Court where PHFI is one of the petitioners in a case challenging the current NPPP 2012.

The study found that price regulations of NLEM 2011 are limited to just 17 percent of the total pharmaceutical market in India. This leaves 83 percent of the domestic pharma market free from price control, providing only marginal financial relief to patients for all essential medicines, in its true sense, as desired by the Supreme Court of India. Thus, one of the key recommendations of this study is to review the NLEM 2011, urgently.

“Clearly the interests of the pharmaceutical industry have received precedence over the interest of the patient population,” the report highlighted.

Anurag Bhargava, of the Himalayan Institute of Medical Sciences, was quoted in March 2014 BMJ Article titled, “Analysts in India call for urgent expansion of essential medicines list”, saying:

“This is a matter of concern given that the NLEM was not drafted as an instrument for price regulation. It is a representative rather than a comprehensive list of medicines utilized in actual practice. To serve as a reference for rational prescribing, the NLEM includes only a few model dosage forms, strengths, and combinations of drugs.”

NLEM 2011 fails to reflect public health priorities:

The report, with relevant details, brings to the fore that NLEM 2011 has failed to reflect India’s public health priorities. It underscores the following glaring deficiencies in NLEM 2011, which covers just:

  • 1 percent of drugs for anemia
  • 5 percent of respiratory drugs
  • 7 percent of antidepressants
  • 15 percent of drugs for diabetes
  • 18 percent of drugs for tuberculosis
  • 13 percent of anti-malarial drugs
  • 23 percent of cardiac drugs
  • 35 percent of antibiotics

Areas for revision in NLEM 2011:

A critical appraisal of NLEM 2011 was done in the above-mentioned 2014 BMJ paper and also by the NPPA separately.

Taking all these into consideration, some key areas of concerns related to NLEM 2011 floats at the top of mind. A few examples of important issues, which need immediate attention, are as follows (not necessarily in the same order):

  • Other key strengths and dosage forms of the same drugs covered under NLEM 2011
  • Analogues of scheduled formulations not covered
  • Close substitutes in the same therapeutic class not covered
  • Some essential drugs listed in the W.H.O model list and even in Delhi list are missing in the NLEM 2011
  • Several essential HIV and Cancer drugs are not included in NLEM 2011
  • Essential oral anti-diabetic medicines, like glimeperide and glicazide do not find place in NLEM 2011, especially when the list in the DSPRUD for Delhi includes anti-diabetic medicines such as glimepiride, sitagliptin, vildagliptin, saxagliptin
  • Commonly used anti-asthmatic medicines like almeterol and montelukast are missing in NLEM 2011
  • When W.H.O model List (EML) includes capreomycin, cycloserine, ethionamide, kanamycin and para-aminosalicylic acid for treatment of multi-drug resistant tuberculosis, these drugs are missing in NLEM 2011 list
  • Though a large number of Fixed Dose Combinations (FDCs) are prescribed to treat common ailments in India, especially in certain therapeutic groups such as respiratory, cardiovascular, anti-diabetic, dermatology, anti-malarial and anti TB/MDR TB, most of these are missing in NLEM 2011
  • While the W.H.O list mentions 21 vaccines, the NLEM 2011 mentions only nine vaccines
  • A separate list of lifesaving drugs based on existing lifesaving drugs list of government agencies like the CGHS needs to be worked out
  • Pediatric formulations need to be included in NLEM
  • Inclusion of some medical devices which are already covered under the definition of drugs under the Drugs and Cosmetics Act 1940
  • Essential and well-selected lifesaving patented drugs should also feature in the NLEM, just as what W.H.O has done this month by adding to its ‘Essential Medicines List’ all the five patented new curative treatments for hepatitis C, besides 16 new cancer drugs.

Thus, in its present form the NLEM 2011 needs a critical relook and revision, mainly in the light of the missing drugs and keeping in view of the requirements under various National Health Programs as well as the National Formulary of India 2010.

The BMJ paper also highlights, the Indian Academy of Pediatrics has come out with a list of ‘Essential Drugs’ for children in India. Such a list might be consulted for the Pediatric List of Essential Medicine within the NLEM. Provision should be made to review the NLEM at two yearly intervals, as is currently practiced by the W.H.O.

Civil Society steps in:

Accordingly, in August 2014, seven Civil Society Organizations in a letter to Minister Ananth Kumar with a copy to Prime Minister Narendra Modi, among others, wrote as follows:

“Limiting all price regulation only to a list of 348 medicines and specified dosages and strengths in the DPCO 2013 goes against the policy objective of making medicines affordable to the public. The National List of Essential Medicines, a list of 348 rational and cost-effective medicines, is not the basis for production, promotion and prescription in India. In reality the most frequently prescribed and consumed medicines are not listed in the NLEM.”

Healthcare: China on a fast track, India crawls through a slow lane: 

Interestingly, to help improve economic growth and boost domestic consumption, China has recently decided to floor the gas pedal on the fast lane of healthcare reform, while India chose to continue to crawl through its slow lane.

Interestingly, both the countries want to draw similar sets of trend lines for health and economic progress of their respective nations.

This has been vindicated by Reuters report of May 9, 2015, when it highlighted, China would increase its healthcare subsidies by 19 percent this year as part of efforts to deepen social reforms and strengthen safety nets.

The report also indicated, economists view this measure as crucial for China to improve the quality of its healthcare, if it wishes to remake its economy and boost domestic consumption. They say a stronger safety net will encourage Chinese to spend more and save less.

As opposed to the Chinese scenario, in India, the Union Budget 2015-16 came as a real dampener for the healthcare space in the country. This assumes greater significance, as the budget was planned by the reform oriented Modi Government.

Despite the dismal state of current public healthcare services, the annual budgetary allocation for healthcare has been kept at Rs. 33,152 Crore, just a tad more than Rs. 30,645 Crore of 2014-15, with no visible indication for any healthcare reform measure in the country, any time soon.

Conclusion:

‘Essential Medicines’ based drug price control, as was directed by the Honorable Supreme Court of India, is just not far sighted, but a potential game changer in the healthcare space of the country.

While looking at the bigger picture, this policy also promises a significant contribution in the overall economic progress of the nation.

To make this policy effective in the longer term, NLEM should be fair, impartial, far sighted, up to date, robust and beyond obvious any controversy, which includes its authors… just as the spirit behind the good old saying: “Caesar’s wife must be above suspicion.”

Unfortunately, NLEM 2011 is mired with many shortcomings for all the wrong reasons, as discussed above.

The incumbent Government would require striking a just and right balance between public health interest and expectations of the Pharma industry in this critical area. Taking the right policy decision in a transparent an effective manner, balancing the healthcare and economic interest of the country, would be critical.

That said, Pharma industry in India, I reckon, would also not be devastatingly impacted with the possible expansion of NLEM. This is mainly because, currently only 17 percent of the total pharmaceutical market in India comes under price control, based on the span of NLEM 2011 formulations. In any case, the balance 83 percent of the domestic pharma market still falls under the free-pricing zone.

Even when DPCO 1995 came into force, which continued till DPCO 2013 became effective, 20 percent of the total domestic pharmaceutical market was under price control.

Moreover, there was no provision for automatic annual price increases for price-controlled drugs under DPCO 1995. Whereas DPCO 2013 has a provision for annual price increases for all such essential drugs based on WPI. As a result, MRPs of all price controlled essential drugs have gone up effective April 1 of this year and would continue to happen so every year, as long as NPPP 2012 remains in force.

Under this complex mosaic and fast evolving backdrop, the announcement of the Union Minister for Chemicals and Fertilizers – Mr. Ananth Kumar on the floor of the Parliament last week is a laudable one.

To help improve access to affordable essential medicines for all in the country, the Minister has reiterated, “The expanded NLEM would bring more essential drugs under price control.”  This categorical affirmation by the Government in power, though belated, is a step in the right direction…for both better healthcare and also its consequential critical impact on the economic progress of India.

By: Tapan J. 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.

Alarming Incidence of Cancer: Fragile Infrastructure: Escalating Drug Prices

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According to the ‘Fact-Sheet 2014′ of the World Health Organization (WHO), cancer cases would rise from 14 million in 2012 to 22 million within the next two decades. It is, therefore, no wonder that cancers figured among the leading causes of over 8.2 million deaths in 2012, worldwide.

A reflection of this scary scenario can also be visualized while analyzing the growth trend of various therapy segments of the global pharmaceutical market.

A recent report of ‘Evaluate Pharma (EP)’ has estimated that the worldwide sales of prescription drugs would reach US$ 1,017 bn by 2020 with a Compounded Annual Growth Rate (CAGR) of 5.1 percent between 2013 and 2020. Interestingly, oncology is set to record the highest sales growth among the major therapy categories with a CAGR of 11.2 percent during this period, accounting for US$ 153.4 bn of the global pharmaceutical sales.

The key growth driver is expected to be an exciting new class of cancer products targeting the programmed death-1 (PD-1) pathway with a collective value of US$ 14 bn in 2020, says the report.

Another recent report from the IMS Institute for Healthcare Informatics also highlights that global oncology spending touched US$ 91 billion in 2013 growing at 5 percent annually.

Consequently, Oncology would emerge as the biggest therapeutic class, more than twice of the anti-diabetic category, which features next to it.

Key global players:

Roche would continue to remain by far the largest player in the oncology market in 2020 with a 5 percent year-on-year growth between 2013 and 2020 with estimated total sales of over US$ 34bn in 2020 against US$ 25bn in 2013.

In 2020, besides Roche, other key players in the oncology segment would, in all probability, be Bristol-Myers Squibb, Celgene, Novartis, Pfizer, Johnson & Johnson, Astellas Pharma, AstraZeneca, Eli Lilly and Merck & Co, the EP report says.

Escalating costs of cancer drugs:

As IMS Health indicates, the overall cost for cancer treatments per month in the United States has now reached to US$10,000 from US$ 5,000 just a year ago. Thus, cancer drugs are fast becoming too expensive even in the developed markets, leave aside India.

The following table would help fathom how exorbitant are the costs per therapy of the common cancer drugs, though these are from the United States:

Generic                               Diagnosis

 Cost/ Dose (US$)

Cost of     Therapy/    28 days  (US$)

Cost per  Therapy      (US$)
brentuximab Hodgkins lymphoma

14,000

18,667

224,000
Pertuzumab Breast cancer

4,000

5,333

68,000
pegylated interferon Hepatitis C

700

2,800

36,400
Carfilzomib Multiple myeloma

1,658

9,948

129,324
ziv-aflibercept CRC

2,300

4,600

59,800
Omacetaxine CML

560

3,920

50,960
Regorafenib CRC

450

9,446

122,800
Bosutinib CML

278

7,814

101,580
Vemurafenib Melanoma

172

4,840

62,915
Abiraterone Prostate

192

5,391

70,080
Crizotinib NSCLC

498

27,951

363,367
Enzalutamide Prostate

248

6,972

90,637
ado-trastuzumab emtansine Breast – metastatic

8,500

8,115

105,500
Ponatinib Leukemia

319

8,941

116,233
Pomalidomide Multiple myeloma

500

10,500

135,500

(Source: ION Solutions)

Even US researchers concerned about high cancer drugs cost:

It is interesting to note, that in a review article published recently in ‘The Lancet Oncology’, the US researchers Prof. Thomas Smith and Dr. Ronan Kelly identified drug pricing as one area of high costs of cancer care. They are confident that this high cost can be reduced, just as it is possible for end-of-life care and medical imaging – the other two areas of high costs in cancer treatment.

Besides many other areas, the authors suggested that reducing the prices of new cancer drugs would immensely help containing cancer costs. Prof. Smith reportedly said, “There are drugs that cost tens of thousands of dollars with an unbalanced relationship between cost and benefit. We need to determine appropriate prices for drugs and inform patients about their costs of care.”

Cancer drug price becoming a key issue all over:

As the targeted therapies have significantly increased their share of global oncology sales, from 11 percent a decade ago to 46 percent last year, increasingly, both the Governments and the payers, almost all over the world, have started feeling quite uncomfortable with the rapidly ascending drug price trend.

In the top cancer markets of the world, such as, the United States and Europe, both the respective governments and also the private insurers have now started playing hardball with the cancer drugs manufacturers.

There are several instances in the developed markets, including the United States, where the stakeholders, such as, National Institute for Health and Care Excellence (NICE) of the United Kingdom and American Society of Clinical Oncology (ASCO) are expressing their concerns about manufacturers’ charging astronomical prices, even for small improvements in the survival time.

Following examples would give an idea of global sensitivity in this area:

  • After rejecting Roche’s breast cancer drug Kadcyla as too expensive, NICE reportedly articulated in its statement, “A breast cancer treatment that can cost more than US$151,000 per patient is not effective enough to justify the price the NHS is being asked to pay.”
  • In October 2012, three doctors at Memorial Sloan-Kettering Cancer Center announced in the New York Times that their hospital wouldn’t be using Zaltrap. These oncologists did not consider the drug worth its price. They questioned, why prescribe the far more expensive Zaltrap? Almost immediately thereafter, coming under intense stakeholder pressure, , Sanofi reportedly announced 50 percent off on Zaltrap price.
  • Similarly, ASCO in the United States has reportedly launched an initiative to rate cancer drugs not just on their efficacy and side effects, but prices as well.

India:

  • India has already demonstrated its initial concern on this critical issue by granting Compulsory License (CL) to the local player Natco to formulate the generic version of Bayer’s kidney cancer drug Nexavar and make it available to the patients at a fraction of the originator’s price. As rumors are doing the rounds, probably some more patented cancer drugs would come under Government scrutiny to achieve the same end goal.
  • I indicated in my earlier blog post that the National Pharmaceutical Pricing Authority (NPPA) of India by its notification dated July 10, 2014 has decided to bring, among others, some anticancer drugs too, not featuring in the National List of Essential Medicines 2011 (NLEM 2011), under price control.
  • Not too long ago, the Indian government reportedly contemplated to allow production of cheaper generic versions of breast cancer drug Herceptin in India. Roche – the originator of the drug ultimately surrendered its patent rights in 2013, apprehending that it would lose a legal contest in Indian courts, according to media reports. Biocon and Mylan thereafter came out with biosimilar version of Herceptin in the country with around 40 percent lesser price.

Hence, responsible pricing of cancer drugs would continue to remain a key pressure-point  in the days ahead.

Increasing R&D investments coming in oncology:

Considering lucrative business growth opportunities and financial returns from this segment, investments of global pharma players remain relatively high in oncology, accounting for more than 30 percent of all preclinical and phase I clinical product developments, with 21 New Molecular Entities (NMEs) being launched and reaching patients in the past two years alone, according to IMS Health.

However, it is also worth noting that newly launched treatments typically increase the overall incremental survival rate between two and six months.

Opportunities for anti-cancer biosimilars:

With gradual easing out of the regulatory pathways for biosimilar drugs in the developed markets, especially in the US, a new competitive dynamic is evolving in the high priced, over US$ 40 billion, biologics market related to cancer drugs. According to IMS Health, on a global basis, biosimilars are expected to generate US$ 6 to12 billion in oncology sales by 2020, increasing the level of competition but accounting for less than 5 percent of the total biologics market even at that time.

Alarming situation of cancer in India:

A major report, published in ‘The Lancet Oncology’ states that In India, around 1 million new cancer cases are diagnosed each year, which is estimated to reach 1.7 million in 2035.

The report also highlights, though deaths from cancer are currently 600,000 -700,000 annually, it is expected to increase to around 1.2 million during this period.

Such high incidence of cancer in India is attributed to both internal factors such as, poor immune conditions, genetic pre-disposition or hormonal and also external factors such as, industrialization, over growth of population, lifestyle and food habits.

The Lancet Oncology study showed that while incidence of cancer in the Indian population is only about a quarter of that in the United States or Europe, mortality rates among those diagnosed with the disease are much higher.

Experts do indicate that one of the main barriers of cancer care is its high treatment cost, that is out of reach for millions of Indians. They also believe that cancer treatment could be effective and cheaper, if detected early. Conversely, the treatment would be more expensive, often leading to bankruptcy, if detected late and would, at the same time, significantly reduce the chances of survival too.

The fact that cancer is being spotted too late in India and most patients lack access to treatment, would be quite evident from the data that less than even 30 percent of patients suffering from cancer survive for more than five years after diagnosis, while over two-thirds of cancer related deaths occur among people aged 30 to 69.

Unfortunately, according to the data of the Union Ministry of Health, 40 percent of over 300 cancer centers in India do not have adequate facilities for advanced cancer care. It is estimated that the country would need at least 600 additional cancer care centers by 2020 to meet this crying need.

Breast cancer is the most common type of cancer, accounting for over 1 in 5 of all deaths from cancer in women, while 40 percent of cancer cases in the country are attributable to tobacco.

Indian Market and key local players:

Cancer drug market in India was reported to be around Rs 2,000 Crore (US$ 335 million) in 2013 and according to a recent Frost & Sullivan report, is estimated to grow to Rs 3,881 Crore (US$ 650 million) by 2017 with a CAGR of 15.46 percent, throwing immense business growth opportunities to pharma players.

Dr.Reddy’s Laboratories (DRL) is one of the leading Indian players in oncology. DRL has already developed biosimilar version of Rituxan (Rituximab) of Roche, Filgastrim of Amgen and has also launched the first generic Darbepoetin Alfa and Peg-grafeel.

Other major Indian players in this field are Cipla, Lupin, Glenmark, Emcure, Biocon, Ipca, Natco, Intas, Reliance Life Science, Zydus Cadila and some more. These home grown companies are expected to take a leading role in the fast growing oncology segments of India, together with the major MNC players, as named above.

Analysis of detailed opportunities that would be available to these companies and consequent financial impacts could be a subject of separate discussion.

Conclusion:

Unlike many other developed and developing countries of the world, there is no system yet in place in India to negotiate prices of innovative patented drugs with the respective manufacturers, including those used for cancer. However, NPPA is now moving fast on reducing prices of cancer drugs. It has reportedly pulled up six pharma for not providing pricing data of cancer drugs sold by them.

Further, CL for all patented anti-cancer drugs may not be a sustainable measure for all time to come, either. One robust alternative, therefore, is the intense price negotiation for patented drugs in general, including anti-cancer drugs, as provided in the National Pharmaceutical Pricing Policy 2012 (NPPP 2012).

This important issue has been under consideration of the Department of Pharmaceuticals (DoP) since 2007. The report produced by the committee formed for this specific purpose, after dilly-dallying for over five years, now hardly has any takers and gathering dusts.

I reckon, much discussed administrative inertia, insensitivity and abject lack of sense of urgency of the previous regime, have desisted the DoP from progressing much on this important subject, beyond of course customary lip services, as on date. Intense lobbying by vested interests from across the world, seems to have further helped pushing this envelope deep inside an inactive terrain.

The new Government would hopefully make the DoP break its deep slumber now to resolve this critical issue decisively, in a time bound manner, assigning clear accountability, without any further delay.

At the same time, shouldn’t both the Honorable Ministers of Health and Chemicals & Fertilizers, taking the State Governments on board, put their collective resources together to create the following, expeditiously:

- A robust national health infrastructure for cancer care

- A transparent mechanism to prevent escalating cancer drug prices and other treatment costs

Hope, the good days would come to the cancer patients of India, at least, sooner than never.

By: Tapan J. 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. 

Cheaper Drugs: Happy Patients: Angry Industry

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Recent price reductions of a number of cardiovascular and diabetes drugs falling outside the National List of Essential Medicines 2011 (NLEM 2011), have attracted fury of the pharma industry . By a notification dated July 10, 2014, the National Pharmaceutical Pricing Authority (NPPA) has invoked Para 19 of the DPCO 2013 for these price changes, the implications of which would indeed be far reaching.

NPPA has now decided to examine inter-brand price variation for single ingredient formulations in eight therapeutic groups, which, besides cardiovascular and diabetic drugs, would include, anti-cancer, HIV/AIDS, anti-TB, anti-malaria, anti-asthmatic and immunological (sera/vaccines). In these therapy areas, the Maximum Retail Price (MRP) of the brand(s) exceeding 25 per cent of the simple average price of all in the same molecular category having 1 percent or above market share, would be capped at the 25 per cent level.

Pharma industry, in general, feels that this ‘unwelcoming decision’ of the NPPA, which allegedly goes beyond the scope and spirit of DPCO 2013, would invite great uncertainty in its business environment.

On the other hand, many consider this price reduction as a ‘Good Omen’ for millions of patients suffering from related life-long ailments. They argue, the purpose of this ‘Bitter Pill” of the NPPA, is to send a clear message to the pharma industry to shape-up with responsible drug pricing.

The new Minister’s recent statement:

It may not be a bad idea to take into consideration the above notification of the NPPA in the light of what the new minister of Chemicals and Fertilizers – Mr. Ananth Kumar said on May 28, 2014. According to media report, the Minister expressed his intent as follows:

“… As far as branded medicines of multinational pharmaceutical companies are concerned, we will talk to all of them and try to bring down prices of essential drugs for poor by 25-40 per cent… The pharmaceutical industry is very important for the health of the country, he added…our main mission will be to ensure the availability of all necessary medicines at affordable prices, especially for poor across the country.”

It is, therefore, quite possible that the NPPA’s decision on price reduction of cardiovascular and diabetes drugs has the Minister’s concurrence.

Industry’s key concern:

This recent decision of the NPPA has reportedly angered the industry, as the Drug Price Control Order 2013 (DPCO 2013) clearly articulates two basic criteria for drug price control in India, as follows:

1. Span of price control:

This was re-defined (from DPCO 1995) on the ‘essentiality criteria’ of the drugs, which in turn is based on the National List of Essential Medicines 2011 (NLEM 2011)

2. Methodology of price control:

This was re-defined (from DPCO 1995) with a clear departure from ‘Cost-Based Price Control’ to the ‘Market-Based Price Control’.

The industry alleges violation of these criteria for the recently announced price reduction of a number of diabetic and cardiovascular drugs, as those do not fall under NLEM 2011.

Price variation is of no-use to patients for prescription drugs:

As the prices of non-scheduled formulations are not fixed by the NPPA, which can virtually be launched at any price to the market, there has been a huge variation of prices between the branded generics within the same chemical entity/entities. Following is a quick example:

Molecule Disease MRP of Lowest Price Brand MRP of Highest Price Brand
Telmisartan 10’s Hypertension Rs. 25 Rs. 385
Glimeperide 10’s Diabetes Rs. 40 Rs. 133 (Brand Leader)

From this chart, one may be able to fathom some basis in the NPPA’s argument that similar price variations in many branded-generics are of no-consequence for prescription drugs, as doctors decide the medicines that a patient would take. If doctors were influenced to prescribe high priced medicines, the patients would require paying more for those drugs, further increasing their Out of Pocket (OoP) expenses. It is also not uncommon that highest price brands are category-leaders too, as indicated in the table above.

Key lacunae in DPCO 2013:

  •  NLEM 2011 does not cover many combinations of TB drugs, a large number of important drugs for diabetes and hypertension, which I shall deliberate in just a bit.
  • Many other critical life saving medicines, such as, anti-cancer drugs, expensive antibiotics and products needed for organ transplantation have been left out of price control. In fact, the prices of a number of these drugs have reportedly gone up after the notification of DPCO 2013.
  • The government has now reportedly admitted in an affidavit filed before the Supreme Court that the market value and share of medicines covered by new DPCO 2013, as ‘Essential Drugs’, is a meager 18 per cent of the Indian Pharmaceutical Market (IPM).
  • As a result, DPCO 2013 based on NLEM 2011 undermines the entire objective of making essential drugs affordable to all.
  • All these lacunae in the current DPCO 2013 calls for a major revision of NLEM 2011. The Union Health Ministry has reportedly initiated steps to revise the list considering the existing market conditions and usage of drugs by the patients.

Invocation of a ‘Safeguard Provision’ in DPCO 2013:

Probably anticipating this scenario, a key safeguard provision was included in Para 19 of DPCO 2013, which reads as follows:

“Fixation of ceiling price of a drug under certain circumstances:

Notwithstanding anything contained in this order, the Government may, in case of extra-ordinary circumstances, if it considers necessary so to do in public interest, fix the ceiling price or retail price of any Drug for such period, as it may deem fit and where the ceiling price or retail price of the drug is already fixed and notified, the Government may allow an increase or decrease in the ceiling price or the retail price, as the case may be, irrespective of annual wholesale price index for that year.”

It now appears, NPPA could realize the key limitations of DPCO 2013, which was put in place rather hastily, in course of its implementation for over one year. Consequently, the patients’ long standing plight with high drug costs for many common life style diseases that are not featuring in NLEM 2011, prompted the the drug regulator in its above notification to bring 108 non-scheduled formulation packs of diabetic, cardiac and other drugs under Para 19 of DPCO 2013, catalyzing an outcry within the pharmaceutical industry in India. Out of these 108 formulation packs, 50 come under anti-diabetic and cardiovascular medicines.

Many important drugs are outside NLEM 2011:

Following is an example of the important cardiovascular and anti-diabetic drugs, which are not featuring in the NLEM 2011 and have now been brought under Para 19 of DPCO 2013:

Sitagliptin, Voglibose, Acarbose, Metformin hcl, Ambrisentan, Amlodipine, Atenolol, Atorvastatin, Bisoprolol, Bosentan,  Gliclazide, Glimepiride, Miglitol, Repaglinide, Pioglitazone, Carvedilol, Clopidogrel, Coumarin, Diltiazem, Dobutamine, Enalapril, Rosuvastatin, Simvastatin, Telmisartan, Terazosin, Torasemide, Trimetazidine and Valsartan, Enoxaparin, Eplerenone, Esatenolol, Fenofibrate, Heparin, Indapamide, Irbesartan, Isosorbide, Ivabradine, Labetalol, Levocarnitine, Lisinopril, Metolazone, Metoprolol, Nebivolol, Nicorandil, Nitroglycerin, Olmesartan, Prasugrel, Prazosin, Propranolol, Ramipril.

More reasons for industry outcry:

As reported in the media, the industry outcry reportedly highlights, besides what I have cited above, the following:

  • The price control order under Para 19 has been notified without any prior consultation with the industry.
  • The manner and method in which this unilateral decision has been taken is untenable.
  • The NPPA’s reasoning, about exploitative pricing by the industry as the reason for such a move, is incorrect given that every product category (in consideration) has approximately 30-70 brand options across price ranges for physicians and patients to choose from. The premise that products are not accessible due to affordability is misplaced. (The above table explains this point).
  • Disease environment was same when the government had cleared the policy and no “extraordinary circumstance” has emerged since then for the regulator to invoke Para 19 in public interest.
  • NPPA has exceeded its brief and gone into policy-making.

NPPA’s rationale for invoking Para 19 of DPCO 2013:

On the other hand, following reasons were cited by the NPPA for taking this decision:

  • The aim of DPCO 2013 is to ensure that essential drugs are available to all at affordable prices. The Supreme Court of India vide its Order dated November 12, 2002 in SLP no. 3668/2003 have directed the Government to ensure that essential and life saving drugs do not fall outside the ambit of price control, which has the force of law.
  • The Ministry of Chemicals and Fertilizers has delegated the powers in respect of specified paragraphs of the DPCO 2013, including paragraph 19, to be exercised by the NPPA on behalf of the Central Government in public interest.
  • There exist huge inter-brand price differences in branded-generics, which is indicative of a severe market failure as different brands of the same drug formulation identical to each other vary disproportionately in terms of price.
  • The different brands of the same drug formulation may sometimes differ in terms of binders, fillers, dyes, preservatives, coating agents, and dissolution agents, but these differences are not significant in terms of therapeutic value.
  • The main reason for market failure is that the demand for medicines is largely prescription driven and the patient has very little choice in this regard.
  • Market failure alone may not constitute sufficient grounds for Government intervention, but when such failure is considered in the context of the essential role that pharmaceuticals play in the area of public health, such intervention becomes necessary. This assumes greater significance, especially when exploitative pricing makes medicines unaffordable and beyond the reach of most, putting huge financial burden in terms of out-of-pocket expenditure on healthcare.
  • There is very high incidence of diabetes in the country, which affects around 61 million persons and the figure is expected to cross 100 million by 2030 as per the projection of the International Diabetes Federation; and it is estimated that every year nearly 1 million people in the country die due to diabetes and hypertension.
  • The drug regulator categorically mentions that In accordance with the guidelines issued by the NPPA, after approval of the ‘Competent Authority’, these price fixations of non-scheduled formulations under Para 19 of DPCO 2013 have been made.

Constituents of the same Ministry with conflicting view points:

Though both NPPA and the Department of Pharmaceuticals (DoP) come under Mr. Ananth Kumar, the new Minister of Chemicals and Fertilizers, both these constituents seem to have conflicting views on this important issue.

The pharma industry reportedly has sought the DoP’s intervention in this matter. The DoP, in turn, is learnt to have requested for the opinion of the Ministry of Law on using ‘Para 19′ provision in favor of public interest by the NPPA, invoking the power assigned to the drug regulator.

Another route for the industry is to legally challenge the said notification of the NPPA. However, one should keep in mind that a PIL is still pending before the Supreme Court questioning the validity DPCO 2013.

The arguments for and against:

Taking all the above points into consideration, the following two important areas of debate have now emerged on this NPPA notification, both in favor and also against:

A. Nothing has materially changed since DPCO 2013 was put in place:

Industry sources highlight that he following two points, that triggered NPPA’s invoking Para 19, have been there for a long time, including the period when the National Pharmaceutical Pricing Policy 2012 (NPPP 2012) was formulated:

-       Huge price differences among various branded generics of the same molecule

-       Cardiovascular ailments and diabetes have assumed endemic proportion

The other group counters that, if mistakes were made while formulating the NPPP 2012 because of intense pressure from vested interests in the erstwhile regime, why corrective actions can’t be taken now?

B. NPPA has exceeded its brief:

Industry sources question, how could NPPA possibly issue such notification of price reduction for non-scheduled formulations, as it is not a policy maker?

Others counter with equal zest: Of course NPPA is not a policy maker, it is a drug price regulator… And as a price regulator, it has implemented Para 19 of DPCO 2013 in the right earnest with the requisite powers conferred on it.

The impact:

According to published data, after the latest price revisions of diabetic and cardiovascular drugs, around 21 per cent of the anti-diabetic drug market faces the ceiling price, while the total market of cardiovascular medicines under price control is now estimated at around 58 per cent, with an overall adverse impact of reportedly Rs 550 Crore on the Indian Pharmaceutical Market. Overall price reduction for these two categories would range between 5 and 35 per cent, the average being around 12 per cent.

MNCs seem to have been hit harder:

An additional bad news for the MNCs is that the scope of Para 19 has now gone beyond the generic space and included even patented product.

For the first time a patented product Sitagliptin has been brought under the purview of Drug price Control order. This decision could give an unprecedented handle to the NPPA to regulate prices of even patented drugs through invocation of Para 19 of DPCO 2013 in future.  Moreover, many high-priced branded generics of MNCs are brand leaders too. Thus, in a relative yardstick, invocation of Para 19 would hit the MNCs harder, creating an uncertainty in their business environment.

Conclusion:

Drug prices are cheapest in India in dollar terms, claims the pharma industry. Does this claim hold much water? May be not, because it should be realistically seen in terms of Purchasing Power Parity (PPP) and Per Capita Income in India. In that sense many would argue that drug prices in India, on the contrary, are not cheaper at all.

Moreover, it is important to take into cognizance the huge inter-brand price differences in branded-generics due to a flawed system, as patients have no role to play in choosing a drug (within the same molecule) that they would need to buy. It is the doctor who is the sole prescription decision maker, where price, per se, may not play a very significant role.

In a situation like this, despite the anger of the industry, many would ponder whether or not NPPA’s engagement and reasoning, on behalf of the Government, to bring some sense in the madness of drug pricing in India be just wished away?

Cheaper medicines in general and generic drugs in particular, would always make the patients and the payor happy, leaving the industry mostly angry.

Keenly observing the recent series of events and taking note of a number of highly credible viewpoints, besides a couple of seemingly spoon-fed, ill-informed and run-of-the mill type editorials, this is about time for the stakeholders to judge without any bias what is right for the country, its people and of course the business to work out a win-win solution, dousing the likes of ‘Fire in The Blood‘, once and for all.

By: Tapan J. 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. 

Is The New ‘Market Based Pricing’ Model Fundamentally Flawed?

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After a long wait of close to two decades, when the Drug Price Control Order 2013 (DPCO 2013) followed the National Pharmaceutical Pricing Policy 2012 (NPPP 2012) last year, it appeared that the new pharma price control regime is more acceptable to the industry than the previous, resulting in better over all implementation and compliance.

However, just within a year, the reality seems to be quite different. Not only the Ceiling Price (CP) calculation process of the National Pharmaceutical Pricing Authority (NPPA) based on DPCO 2013 appears to be fundamentally flawed, its misuse and abuse by some pharma players have also been the subject of great concern and consumer aghast.

The eternal ‘Cat and Mouse’ game continues:

Probably there would be many instances of pharmaceutical companies dodging the DPCO 2013. However, FDA, Maharashtra, has unearthed the following two instances, so far:

1. Favorable consumer expectations with well-hyped DPCO 2013 received a body blow for the first time, when the general public came to know through media reports, that too after almost a year, that GlaxoSmithKline (GSK) Consumer Healthcare having launched its new ‘Crocin Advance’ 500 mg with a higher price of Rs 30 for a strip of 15 tablets, has planned to gradually withdraw its conventional price controlled Crocin 500 mg brand costing around Rs 14 for a strip of 15 tablets to the patients . GSK Consumer Healthcare claims that Crocin Advance is a new drug and therefore should be outside price control.

According to IMS Health data, ‘Crocin Advance’ is currently the fifth largest brand among top Paracetamol branded generics, clocking a sales turnover of Rs 10.3 Crore during the last 12 months ending in February 2014.

2. The second instance of evading DPCO 2013 has also been reported by the media. In this case some other pharmaceutical companies have reportedly started selling the anti-lipid drug Atorvastatin in dosage forms of 20 mg and 40 mg, which are outside price control, instead of its price controlled 10 mg dosage form. Quoting the Maharashtra FDA, the report states: “Atorvastatin may face a similar kind of action from the state FDA as other overpriced brands of drugs as this drug has been overpriced five to 10 times more than the DPCO price. This kind of overcharging is a subject for investigation. Atorvastatin of 40 mg dosage is generally recommended for senior citizens.”

Tip of an Iceberg?

All these seem to be just the tip of an iceberg related to evasion of DPCO 2013 by some pharma black ships, raising costs of essential medicines for the patients. Ironically, what is happening now is an exact replica of the same old strategy that many pharma players got involved into to avoid price control under earlier DPCO 1995. Continuation of the same act of deceit with DPCO 2013 confirms that the ‘cat and mouse game’ to avoid price control is eternal in India, in the absence of any strong and exemplary deterrent.

Better late than never:

When Maharashtra FDA brought it to the notice of National Pharmaceutical Pricing Authority (NPPA), the later asked GSK to immediately reduce the market price of ‘Crocin Advance’, as there is no proven additional therapeutic efficacy for the product. The price regulator also sought confirmation of the action taken by the company in this regard. Additionally, GSK Consumer Healthcare now faces consequential punitive measures from the NPPA for price overcharging. This action on the part of NPPA, in all probability, would get lost in the quagmire of litigation, as usually happens in India.

Be that as it may, I expect NPPA taking similar action for Atorvastatin too and increasing its vigil for such scant respect on patient-centric laws and policies of the country.

A brief recapitulation:

Just to recapitulate, DPCO 2013 has been fundamentally different from its ‘predecessor’ DPCO 1995, mainly on the following two counts:

1. Methodology of Price Control:

This has changed from earlier ‘Cost Based Pricing (CBP)’ to ‘Market Based Pricing (MBP)’ based on simple average of all products having 1 percent or more market share.

2. Span of Price Control:

In DPCO 1995, all formulations of 74 bulk drugs, selected based on specified criteria, were under cost based price control, covering over 1700 formulations. Whereas, in DPCO 2013 all essential drugs as mentioned in the National List of Essential Medicines 2011 (NLEM 2011) come under price control applying the above new methodology of MBP. DPCO 2013 brings around 652 formulations of 348 drugs under 27 therapeutic segments of the NLEM 2011, under price control.

Significant benefits of DPCO 2013 to the industry:

DPCO 2013 offers following three key advantages to the industry, both in the short and longer term:

  • MBP methodology in DPCO 2013 is considered by the industry as more transparent and less ‘intrusive’ than CBP methodology.
  • Span of price control with DPCO 2013 came down to 18 percent of the total pharmaceutical market covering around 610 formulations, as against 20 percent in DPCO 1995 covering over 1700 formulations.
  • Opportunity for automatic annual price increase for controlled formulations based on WPI, which was not there in DPCO 1995, is now available to the industry. Thus, in keeping with the relevant provision of DPCO 2013, NPPA has recently allowed the drug companies to increase the Maximum Retail Price (MRP) of the price controlled medicines, contributing 18 percent of the total market, by 6.32 percent effective April 1, 2014, while prices of balance 82 percent of drugs, that are outside price control, can go up by 10 percent every year.

Check on essential drugs going out of market:

Interestingly, DPCO 2013 has tried to prevent any possibility of an essential drug going out of the market without the knowledge of NPPA by incorporating the following provision in the order:

“Any manufacturer of scheduled formulation, intending to discontinue any scheduled formulation from the market shall issue a public notice and also intimate the Government in Form-IV of schedule-II of this order in this regard at least six month prior to the intended date of discontinuation and the Government may, in public interest, direct the manufacturer of the scheduled formulation to continue with required level of production or import for a period not exceeding one year, from the intended date of such discontinuation within a period of sixty days of receipt of such intimation.”

However, it is still not clear, whether or not GSK Consumer Healthcare had followed this stipulated provision for price controlled conventional Crocin formulations. At least, I do not remember having come across any such public notice, as yet.

Key concerns expressed with DPCO 2013:

The MBP methodology seems to be unique to India as CBP is more common in countries that follow drug price control. Hence the following concerns were expressed with DPCO 2013.

  • Reduction in drug prices with market-based pricing methodology is significantly less than the cost based ones. Hence, consumers will be much less benefitted with the new system.
  • Earlier cost based pricing system was not more transparent only because a large section from the industry reportedly did not co-operate with the NPPA in providing cost details, as required by them.
  • Serious apprehensions have been expressed about the quality of outsourced market data lacking adequate confidence level across the board, which now forms the basis of CP calculations.
  • Additionally, outsourced data would provide details only of around 480 out of 652 NLEM formulations. How will the data for remaining products be obtained and with what level of accuracy?

It is, therefore, believed now by many that DPCO 2013 is more of an outcome of a successful lobbying efforts of the pharmaceutical industry in India, rather than a robust pricing policy supported by a flawless methodology for CP calculations.

DPCO 2013 faces challenge in the Supreme Court:

As a result of the above apprehensions, a Public Interest Litigation (PIL) is now pending before the Supreme Court for hearing challenging DPCO 2013.

Ground Zero of the quality of outsourced market data:

While assessing from the ‘Ground Zero’, keeping aside instances of hoodwinking DPCO 2013 with tweaked formulations, the core issue of the quality of outsourced market data forming the bedrock of CP calculation by the NPPA, undoubtedly becomes more fundamental, creating huge discomfort for many pharma players .

Unlike DPCO 1995, where NPPA used to calculate the CP based on its own audits, data provided by the concerned companies and from many other reliable market sources, the calculations to arrive at the CP for DPCO 2013 products are based predominantly on data outsourced from IMS Health, if not solely.

IMS data does not always capture correct brand prices:

As stated above, many leading pharmaceutical companies are now reportedly pointing out repeatedly that the CP fixation by the NPPA is not accurate, as the IMS Health data does not represent the real prices in many cases.

This is not a new issue either. I have been hearing similar complaints since ages in different forum, wearing different hats and also from various other reliable industry sources. Moreover, NPPA and the Department of Pharmaceuticals (DoP) have indicated several times in the past that IMS data do not capture the requisite details as needed for over 100 products featured in NLEM 2011.

According to Pharmabiz of April 2, 2014, some of the companies expressing the above apprehensions are Sun Pharma, Unichem Labs, Panacea Biotec, Win-Medicare, Albert David, Baxter (India), Indi Pharma and Gland Pharma.

Responding to such widespread complaints, the DoP has directed NPPA to revalidate the IMS data, now being used for CP calculations, for all notified medicines. Accordingly, NPPA has sought the relevant details from respective companies. However, till such data validation takes place, pharma players must comply with all CPs, as notified by the NPPA from time to time.

Difficulty in data validation:

In my view, it would not be easy for the NPPA to revalidate the IMS data due to the following reasons:

  • Those companies, whose prices are showing higher than the current ones in the IMS Health data, may not report to NPPA, as that could ultimately affect them adversely.
  • Pharma companies’ response, in general, to requests from NPPA for furnishing cost and price related information has traditionally been much less than encouraging.

The logjam to continue:

With this evolving scenario, I reckon, till the Supreme Court intervenes responding to the PIL on DPCO 2013 related issues, the dissatisfaction of the industry and the constraints of the NPPA would continue, patients being the primary sufferers.

Conclusion:

Despite the reported concern expressed in the 2014 National Trade Estimate (NTE) Report on Foreign Trade Barriers over the Indian drug price control mechanisms as a deterrent to foreign investments, government price control for essential medicines in India is here to stay for a long haul, to uphold the patients’ health interest.

That said, the final verdict of the Supreme Court related to the PIL on the NPPP 2012, based on which DPCO 2013 has been worked out, is yet to come. Any unfavorable decision of the Honorable Court on the subject may push both the NPPP 2012 and DPCO 2013 back to square one, yet again.

In this backdrop, considering the key fundamental flaw in the CP calculation process of DPCO 2013 with associated loud hiccups as evidenced by the GSK Consumer Healthcare episode and others, would a well-considered verdict of the Supreme Court on the subject be more desirable for greater access to more affordable essential drugs by the patients in India?

By: Tapan J. 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.

 

 

Sets 2013, Dawns 2014: Top 7 Pharma Developments

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Wish You Good Health, Happiness, Success and Prosperity in 2014

In this article I shall focus on ‘Top 7 Pharma Developments’, both while ‘Looking Back to 2013′ and also during my ‘Crystal Gazing 2014′.

Looking Back to 2013:

While looking back, the ‘Top 7  Pharma Developments’ unfolded in India during 2013, in my opinion, are as follows:

1. Supreme Court judgment on Glivec: 

The landmark Supreme Court judgment on the Glivec case has vindicated, though much to the dismay of pharma MNCs, the need to strike a right balance between encouraging and protecting innovation, including incremental ones, and the public health interest of India.

2. DPCO 2013:

Following the National Pharmaceutical Pricing Policy (NPPP) of December 2012, the new Drug Price Control Order 2013 (DPCO 2013) signaled a significant departure from the decades old systems of arriving at both the ‘span’ and also the ‘methodology’ of drug price control in India. However, its implementation has been rather tardy as on today.

As a result, at the very beginning of the process of its effective roll-out, the new DPCO faltered badly. It created unprecedented complications and dead-locks not just for the pharmaceutical companies and the trade, but for the National Pharmaceutical Pricing Authority (NPPA), as well, which has not been able to announce the new ceiling prices for at least 100 essential drugs, even 8 months after notification of this order.

The pharma companies and the NGOs have already taken this policy to the court, though for different reasons. The rationale for the National List of Essential Medicines (NLEM) 2011 has also been questioned by many along with a strong demand for its immediate review.

Thus much awaited DPCO 2013 is still charting on a slippery ground.

3. India, China revoked 4 pharma patents:

In the Intellectual Property Rights (IPR) arena many National Governments have now started asserting themselves against the prolonged hegemony of the Western World pressing for most stringent patent regime across the globe, at times even surreptitiously. Such assertions of these countries signal a clear tilt in the balance, favoring patients’ health interest rather than hefty gains in business profits, much to the delight of majority of world population.

Revocation of four drug patents by India and China within a fortnight during July-August 2013 period has thus raised many eyebrows, especially within the pharma Multinational Corporations (MNCs). In this short period, India has revoked three patents and China one.

While these unexpected and rather quick developments are probably double whammy for the pharma MNCs operating in India and China, a future trend would possibly emerge as soon as one is able to connect the evolving dots.

4. Supreme Court intervened in Clinical trials (CT):

With a damning stricture to the Indian Drug Regulator, the Supreme Court, in response to a PIL filed by the NGO Swasthya Adhikar Manch, came out heavily on the way Clinical Trials (CTs) are approved and conducted in the country.

Breaking the nexus decisively between a section of the powerful pharma lobby groups and the drug regulator, as highlighted even in the Parliamentary Committee report, the Ministry of Health, as reported to the Supreme Court, is now in the process of quickly putting in place a robust and transparent CT mechanism in India.

This well thought-out new system, besides ensuring patients’ safety and fair play for all, is expected to have the potential to help reaping a rich economic harvest through creation of a meaningful and vibrant CT industry in India, simultaneously benefitting millions of patients, in the years ahead.

5. US-FDA/UK-MHRA drug import bans: 

Continuous reports from US-FDA and UK-MHRA on fraudulent regulatory acts, lying and falsification of drug quality data, by some otherwise quite capable Indian players, have culminated into several import bans of drugs manufactured in those units. All these incidents have just not invited disgrace to the country in this area, but also prompted other national regulators to assess whether such bans might suggest issues for drugs manufactured for their respective countries, as well.

This despicable mindset of the concerned key players, if remains unleashed, could make Indian Pharma gravitating down, stampeding all hopes of harvesting the incoming bright opportunities.

The ‘Import Alert’ of the USFDA against Mohali plant of Ranbaxy, has already caused inordinate delay in the introduction of a cheaper generic version of Diovan, the blockbuster antihypertensive drug of Novartis AG, after it went off patent. It is worth noting that Ranbaxy had the exclusive right to sell a generic version of Diovan from September 21, 2012.

The outcome of such malpractices may go beyond the drug regulatory areas, affecting even the valuations of concerned Indian pharma companies.

6. Pharma FDI revisited in India: 

After a series of inter-ministerial consultations, the Government of India has maintained 100 percent FDI in pharma brownfield projects through FIPB route. However, removal of the ‘non-compete’ clause in such agreements has made a significant difference in the pharma M&A landscape.

7. ‘No payment for prescriptions’:

Unprecedented acknowledgement and the decision of GSK’s global CEO for not making payments to any doctor, either for participating or speaking in seminars/conferences to influence prescription decision in favor of its brands, would indeed be considered as bold and laudable. This enunciation, if implemented in letter and spirit by all other players of the industry, could trigger a paradigm shift in the prescription demand generation process for pharmaceuticals brands.

Crystal Gazing 2014:

While ‘Crystal Gazing 2014′, once again, the following ‘Top 7 (most likely) Pharma Developments’, besides many brighter growth opportunities, come to the fore:

1. Public Interest Litigation (PIL) now pending before the Supreme Court challenging DPCO 2013 may put the ‘market based pricing’ concept in jeopardy, placing the pharma price control system back to square one.

2. The possibility of revision of NLEM 2011, as many essential drugs and combinations have still remained outside its purview, appears to be imminent. This decision, if taken, would bring other important drugs also under price control.

3. Universal Health Care (UHC) related pilot projects are likely to be implemented pan-India along with ‘free distribution of medicines’ from Government hospitals and health centers in 2014. Along side, more Public Private Partnership (PPP) initiatives may come up in the healthcare space improving access to quality healthcare to more number of patients.

4. With the Supreme Court interventions in response to the pending PILs, more stringent regulatory requirements for CT, Product Marketing approvals, Pricing of Patented Medicines and Ethical Marketing practices may come into force.

5. Possibilities of more number of patent challenges with consequent revocations and grant of several Compulsory Licenses (CL) for exorbitantly priced drugs in life-threatening disease areas like, cancer, loom large. At the same time, between 2013 and 2018, US$ 230 billion of sales would be at risk from patent expirations, offering a great opportunity to the Indian generic players to boost their exports in the developed markets of the world.

6. More consolidation within the pharmaceutical industry may take place with valuation still remaining high.

7. Overall pharma IPR scenario in India is expected to remain as robust and patient friendly as it is today, adding much to the worry of the MNCs and relief to the patients, in addition to the generic industry. More number of countries are expected to align with India in this important area.

Conclusion:

The year 2013, especially for the pharmaceutical industry in India, was indeed eventful. The ‘Top Seven’ that I have picked-up, out of various interesting developments during the year, could in many ways throw-open greater challenges for 2014.

My ‘Crystal Gazing 2014’, would challenge the pharma players to jettison their old and traditional business mindsets, carving out new, time-specific, robust and market savvy strategic models to effectively harvest newer opportunities for growth.

That said, the pharmaceutical industry will continue to thrive in India with gusto, including the MNCs, mainly because of immense potential that the domestic market offers in its every conceivable business verticals, propelled by continuous high growth trend in the domestic consumption of medicines, excepting some minor aberrations.

The New Year 2014, I reckon, would herald yet another interesting paradigm for the pharma industry. A paradigm that would throw open many lucrative opportunities for growth, both global and local, and at the same time keep churning out different sets of rapidly evolving issues, requiring more innovative honed corporate skill-sets for their speedy redressal, as the time keeps ticking.

By: Tapan J. 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.