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A Kaleidoscope of Drug Price Control Spanning Across the World and Its Relevance to India

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How much to charge for a drug?

While there is no single or only right way to arrive at the price of a medicine, how much the pharmaceutical manufacturers will charge for a drug still remains an important, yet complex and difficult task, both locally and globally.

A paper titled, “Pharmaceutical Price Controls in OECD Countries”, published by the US Department of Commerce, after examining the drug price regulatory systems of 11 OECD countries concluded that all of them enforce some form of price controls to limit spending on pharmaceuticals.

The report also indicated that the reimbursement prices in these countries are often treated as the de facto market price. Moreover, some OECD governments regularly cut prices of even those drugs, which are already in the market.

An evolving rational system of drug pricing:

The values of health outcomes and pharmacoeconomic analysis are gaining increasing importance for drug price negotiations/control by the healthcare regulators even in various developed markets of the world.

In countries like, Australia and  within Europe in general, health outcomes data analysis is almost mandatory to establish effectiveness of a new drug over the existing ones.

Even in the US, where the reimbursement price is usually negotiated with non-government payors, many health insurers have now started recognizing the relevance of such data.

Such price negotiations at times take a long while and may also require other concessions by manufacturers, for example:

  • In the UK, a specified level of profitability may constrain the manufacturers.
  • Spain would require a commitment of a sales target from the manufacturers, who are made responsible to compensate for any excess sales by paying directly to the government either the incremental profit or by reducing the product price proportionately.

Pharmacoeconomic Based or Value-Based Pricing (PBP/VBP):

Pharmacoeconomics, as we know, is a scientific model of setting price of a medicine commensurate to the economic value that the drug/therapy would offer.  Pharmacoeconomic principles, therefore, intend to maximize the value obtained from expenditures towards medicines through a structured evaluation of products costs and disease outcomes.

PBP/VBP is widely considered to offer the ‘best value for money’ spent to buy a medicine, as it is ‘the costs and consequences of one treatment compared with the costs and consequences of alternative ones’.

A contrarian view:

Let me hasten to add that some shortcomings in PBP/VBP system have already been highlighted by some experts and are being debated threadbare. The key question that is being mooted now is, how to quantify the value of a saved life or relief of intense agony of patients while arriving at a price of a drug based on PBP/VBP model.

PBP/VBP could help ‘freeing-up’ resources to go to front-line healthcare: 

As per the Department of Health, UK, ‘Value-Based Pricing (VBP)’ ‘will help creating a world-class NHS that saves thousands more lives every year by freeing up resources to go to the front line, giving professionals power and patients choice, and maintaining the principle that healthcare should be delivered to patients on the basis of need, not their ability to pay’.

Pharmaceutical Price Control has assumed global importance:

Pricing of pharmaceutical products has now become one of the most complex and a very sensitive area of the business, like never before. This is mainly because of the concerns on the impact of medicine prices to access of medicines, especially, in the developing markets, like India and the cost containment pressure of the governments as well as the healthcare providers in the developed markets of the world.

Evolving Pharmaceutical pricing models:

Pharmaceutical pricing mechanism has undergone significant changes across the world. The old concept of pharmaceutical price being treated as almost given and usually determined only by the market forces with very less regulatory scrutiny is gradually but surely giving away to a new regime.

Currently in many cases, the prices of even patented medicines differ significantly from country to country across the globe, reflecting mainly the differences in their healthcare systems and delivery, along with income status and economic conditions.

Global pharmaceutical majors, like GSK and Merck (MSD) have already started following the differential pricing model, based primarily on the size of GDP and income status of the people of the respective countries. This strategy includes India, as well.

Reference pricing model is yet another such example, where the pricing framework of a pharmaceutical product will be established against the price of a reference drug in the reference countries.

The reference drug may be of different types, for example:

  1. Another drug in the same therapeutic category
  2. A drug having the same clinical indications available in the country of interest e.g, Canada fixes the drug prices with reference to prices charged for the same drug in the US and some European Union countries.

A Kaleidoscope of Drug Price Control across the world:

In most of the countries around the world drug price control in some form or the other has been put in place by the respective governments. Following are just a few examples:

Price Control in Germany:

In not so distant past pharma companies operating in Germany could fix any price for both patented and generic medicines. As a result, the drug prices in Germany have since long been among the highest in Europe.

‘The Act on the Reform of the Market for Medicinal Products (AMNOG)’ that came into effect in January 2011 to regulate the price of new prescription drugs in Germany, is expected to assist in the overall effort to curb in exploding costs for the country’s public health insurance system.

Under the new law, as reported by ‘InPharm’ dated November 12, 2010, pharmaceutical manufacturers in Germany, after the launch of a new drug, will have a one-year window to negotiate prices with health insurers. In case there happens to be no positive outcome of such negotiations, German Health Ministry would set a maximum price for the drug, which would then undergo a cost/benefit analysis by Germany’s ‘Health Technology Assessment (HTA)’ body IQWiG. Thereafter, the price will be fixed for the said new drug accordingly.

Price Control in Spain:

In Spain the local law has made HTA mandatory to ascertain the efficacy, cost, efficiency, effectiveness, safety, and therapeutic utility of different alternatives for the treatment of a disease condition.

After marketing approval of a new drug, either by the European Medicines Agency (EMEA) or the Spanish Medicine Agency (AEMPS),  the Ministry of Health (MSC) invites the manufacturer to provide all relevant information to allow the ‘Inter-Ministerial Pricing Commission (CIPM)’, chaired by the MSC, to decide the right price of the product. After negotiation, if the outcome is positive for inclusion of the product in the national reimbursement list, the decision is implemented across the country.

Effective June 2010, price cuts have been imposed by Spain on reimbursed patented drugs with rebates of 7.5% of sales, under the National Health System (NHS).

Effective July 2010, an average 25% cut has also been implemented for generic medicines in the country.

New Price Control mechanism in the UK:

Quite like US, UK has been one of those western countries, which allows pharmaceutical manufacturers to set their own prices. However, after the expiry of the current ‘Pharmaceutical Price Regulation Scheme (PPRS)’ in 2013, despite many concerns, as decided by the ‘National Institute of Health and Clinical Excellence (NICE)’,  ‘Value-based pricing (VBP)’ is expected to be followed for pharmaceutical product pricing in the UK.  VBP will be worked out ‘by the maximum affordable cost per ‘Quality Adjusted Life Years (QALY)’ generated by the use of new medicines.’

To arrive at VBP for a new product, pharmaceutical manufacturers will require furnishing enough evidence, based on clinical trial, to establish superiority of a new drug over the ones already available in the market.

However, VBP will be followed only for the new prescription drugs and not for the existing ones or generic medicines, with the main regulatory focus being on profit rather than on price control of drugs.

Price Control in France:

As per ISPOR, in France the price control of pharmaceutical products is implemented as follows:

“All registered pharmaceuticals are subjected to Evaluation of Therapeutic Benefit (Amelioration du Service Medical Rendu, or ASMR) by ‘Commission de Transparence (Transparency Commission)’, which is expressed as a classification between 1 & 6, as follows:

  1. Innovative product of significant therapeutic benefit
  2. Product of therapeutic benefit, in terms of efficacy and/or reduction in side effect profile
  3. Already existing product, where equivalent pharmaceuticals exist; moderate improvement in terms of efficacy and/or reduction in side effect profile
  4. Minor improvement in terms of efficacy and/or utility
  5. No improvement but still granted recommendations to be listed
  6. Negative opinion regarding inclusion on the reimbursement list

The ASMR evaluation is based on the expert judgment of the Transparency Commission of the Pharmaceutical Agency ‘(Agence du Medicament)’. Subsequently, a reimbursement price negotiated with ‘Comité Economique du Médicament (CEM)’. The price negotiated with CEM becomes the price at which the drug is sold throughout the country, even for private prescriptions.”

As a part of the 2011 Social Security Budget Bill, France has decided to significantly reduce its healthcare cost by enforcing price cuts including parallel import of drugs.

Price Control in Australia:

Just as many OECD countries, Australia also use drug price control mechanisms to contain its healthcare expenditure. The Australian government manages their healthcare expenditure through the Pharmaceutical Benefits Scheme (PBS), where the pharma companies are required to prove the cost-effectiveness of their drugs for subsequent pricing negotiations with the government.

Price Control in China:

In China, since 2007, ”The National Development and Reform Commission (NDRC)’ controls drug prices in the country. There was, however, a significant re-engineering of the system in  November 2010, when NDRC drastically reduced the prices of essential drugs manufactured locally in partnership with global pharma majors like, Novartis, Pfizer and Roche. In March 2011 prices were slashed for over 1,000 drugs in China.

Patented and imported products enjoyed relatively free-market pricing in China, for some time. However, recently to increase the coverage of ‘Universal Healthcare’, the Chinese pricing authorities have initiated price control measures for many pharmaceutical products in the country.

Pricing mechanism in Singapore:

Singapore also follows a free-market pricing approach for pharmaceutical products, which is, reportedly, to recognize the value and importance of patented products in the country. Though Singapore Government provides ‘Universal Healthcare’ to its residents, individuals are required to share the costs of healthcare services they consume.

This has made the cost of healthcare in Singapore rather expensive, especially for the retired persons and low-income citizens of the country. As a consequence of which, many individuals who would require regular treatment with medicines, very often go to nearby Malaysia to buy those medicines at much lesser prices, probably causing a revenue loss to the Singapore market.

Price control in Japan:

In Japan, the Ministry of Health, Labor, and Welfare (MHLW) follows a system of pricing where the new drugs prices are determined based on those comparable drugs, which are already available in the country. However, in those cases where MHLW cannot find any comparable drug for assessment ‘cost based pricing’ system is followed. The new drugs which are assessed as innovative by the MHLW may attract a premium based on pre-determined criteria.

Price Control in Brazil:

In Brazil, the government controls the drug prices through designated agencies. The ‘Agência Nacional de Vigilância Sanitária (ANVISA)’ is responsible for the marketing approval of new drugs and the ‘Câmara de Regulação do Mercado de Medicamentos (CMED)’ is responsible not only for determining the prices of new drugs, but also for any subsequent price changes for all drugs in the market.

Price Control in Russia:

Currently pricing regulations are applicable to only ‘essential drugs’ in Russia. However, ‘thepharmaletter’ in its January 25, 2011 edition reported that ‘Federal Commission on Safety of Medical Business (FCSMB)’ of Russia has proposed a quick introduction of the government control over prices of all drugs in the domestic market costing more than 100 Roubles (US$3.34).

FCSMB believes that the current system of drug pricing in Russia offers a distinct advantage to the global pharmaceutical players. Hence, the agency feels, the state regulation on all drug prices is necessary in the country.

A damning article from “Los Angeles Times”:

Though United States of America (USA) still remains a free-market even for pharmaceutical product pricing, increasing number of voices are now being heard in favor of pharmaceutical price control even in that country.

‘Los Angeles Times’ in its October 10, 2009 edition commented, “Healthcare reform without drug price controls? That’s sick”.

While, acknowledging high cost of pharmaceutical research, the article continued to state, ”In fact, the companies’ actual research costs are one of the industry’s most closely guarded secrets. In the 1970s and 1980s, pharmaceutical companies waged a decade-long legal battle to keep even government auditors from reviewing those costs, leaving it unclear whether they include non- scientific costs such as promotion”.

The article stated that the bigger issue that has largely escaped public scrutiny is that “Over the last 30 years, the industry hasn’t focused its efforts on discovering those truly amazing innovations that can change the practice of medicine. Instead, the companies have taken the easy path, ordering their scientists to turn out mostly rehashes of medicines already being sold. It’s far cheaper to copy a medicine — tweaking a molecule just enough so it gets its own patent — than it is to do the years of work needed to find new and better cures”.

The author further highlighted, “This focus on copycat medicines is apparent in the list of drugs approved by the Food and Drug Administration. Of the medicines approved between 1990 and 2004, only 16% were what government reviewers deemed to be actually new and significant. The rest were medicines we were already using in a slightly different form. This explains why our pharmacies are stocked with a multitude of medicines that reduce cholesterol in the same exact way. With no price controls, the industry gets away with charging exorbitant amounts — even for drugs that barely work.”

High out-of-pocket expenses for health makes price control relevant in India: 

Medicines are essential for all and constitute a significant cost component of modern healthcare systems, globally. However, in India, overall healthcare system is fundamentally different from many other countries, including China.

Around 80% of expenses towards healthcare, including medicines, are reimbursed either by the Governments or through Health Insurance or similar other mechanisms in many countries.

However, in India the situation is just the reverse, more than 70% of overall healthcare costs are private or out-of-pocket expenses, incurred by the individuals/families. In addition, out of the total 70% out-of-pocket expenses, medicines contribute around 71%, making the life more difficult for many. (Reference: ‘High Level Expert Group Report on Universal Health Coverage for India’ Instituted by Planning Commission of India).

Thus the issue of price control of ‘Essential medicines’ is extremely relevant in the country, more so when pharmaceuticals come under its Essential Commodities Act.

Conclusion:

It is now widely believed that pharmaceutical products, which play a pivotal role in keeping the population of any nation healthy and disease free to the extent possible, should not be exploited by anyone.

Pharmaceutical companies are often criticized in this area by those stakeholders who are genuinely concerned with the well-being of particularly ailing poor and underprivileged population across the world.

While looking through the ‘Kaleidoscope of Drug Price Control’ spanning across the world, it appears quite obvious that the raging debate on improving access to modern medicines will continue to revolve round the pharmaceutical pricing mechanism in almost all countries of the world. India is no exception, in any way.

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.

“Indian Drug Regulator Accords Primacy to Pharma Industry Instead of Safegurding Public Health and Safety” – Parliamentary Committee

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The Department Related Parliamentary Committee on Health and Family Welfare presented its 59th Report of 118 pages in total on the functioning of the Indian Drug Regulator – the Central Drug Standards Control Organization (CDSCO) in both the houses of the Parliament on May 08, 2012.

Regulations and the Regulator for the Pharmaceutical Industry of India – A snapshot:

The pharmaceutical industry in India is regulated, broadly, in the following ways:

  • Drugs and Cosmetics Act of India 1940 together with Drugs and Cosmetics Rules regulate the Pharmaceutical Industry across the country for all types of drugs, irrespective of the fact whether these are locally produced or imported from other countries of the world.
  • The office of the Drug Controller General of India (DCGI) is primarily responsible for effective enforcement of most of these laws and rules across the country.
  • All issues related to clinical trials, product approval and standards, import licenses and introduction of new drugs are the direct responsibilities of the DCGI’s office.
  • Health being a state subject in India, on the ground, Foods and Drugs Administrations (FDA) of the State Governments enforce laws related to approvals for setting up pharmaceutical production facilities and obtaining licenses to stock and sell drugs in their respective states.
  • A valid license from the Drug Regulator is necessary for location-wise manufacturing of each type of drugs in the country with a mandatory requirement of periodic renewal of such licenses, as specified therein.

A key point to ponder from the Report:

The report begins with the following observations:

Medicines apart from their critical role in alleviating human suffering and saving lives have very sensitive and typical dimensions for a variety of reasons. They are the only commodity for which the consumers have neither a role to play nor are they able to make any informed choices except to buy and consume whatever is prescribed or dispensed to them because of the following reasons:

  • Drug regulators decide which medicines can be marketed
  • Pharmaceutical companies either produce or import drugs that they can profitably sell
  • Doctors decide which drugs and brands to prescribe
  • Consumers are totally dependent on and at the mercy of external entities to protect their interests.

In this prevailing condition, the committee felt that effective and transparent drug regulation, free from all commercial influences, is absolutely essential to ensure safety, efficacy and quality of drugs keeping just one objective in mind, i.e., welfare of patients.

Quite in congruence with this critical requirement the Committee examined in detail the functioning of CDSCO, which includes the office of the DCGI, as well, to ascertain whether applicable rules and laws are being implemented efficiently and honestly for the best interest of patients by the Drug Regulator of India.

Why is the ‘Mission Statement’ of CDSCO industry oriented and not patient focused?

Very interestingly, the report highlights with the following examples, how out of line the ‘Mission Statement’ of CDSCO is as compared to the same of other countries by being blatantly industry oriented instead of safeguarding Public Health and safety:

Drug Regulator

The ‘Mission Statement’
1

CDSCO, India

 Meeting the aspirations…. demands and requirements of the pharmaceutical industry.
2.

USFDA, USA

 Protecting the public health by assuring the safety, efficacy, and security of human and veterinary drugs.
3.

MHRA, UK

 To enhance and safeguard the health of the public by ensuring that medicines and medical devices work, and are acceptably safe.
4.

TGA, Australia

 Safeguarding public health & safety in Australia by regulatingMedicines…

Consequently, the Committee took a very strong exception for such utter disregard and continued neglect of patients’ interest by the Drug Regulator of India and recommended immediate amendment of the ‘Mission Statement’ of CDSCO incorporating in very clear terms that the existence of the organization is solely for the purpose of protecting the best interest of patients and their safety. It is needless to say that thereafter, it will require stringent conformance with the same with high precision.

Some very critical findings:

The committee in its report made the following critical findings, besides others:

  • “A total of 31 new drugs were approved in the period January 2008 to October 2010 without conducting clinical trials on Indian patients.
  • Thirteen drugs scrutinized by the panel are not allowed to be sold in the United States, Canada, Britain, European Union and Australia.
  • Sufficient evidence is available on record to conclude that there is collusive nexus between drug manufacturers, some functionaries of CDSCO and some medical experts.
  • When it comes to approving new drugs, too much is left to the absolute discretion of the CDSCO officials.
  • The Central Government can either issue directions under Section 33P to states to withdraw the licenses of FDCs granted without prior DCGI approval or the Central Government can itself ban such FDCs under Section 26A.
  • Though the Ministry is forming Drug Approval Committees, which are given very important powers, there is no transparent procedure for the selection of experts of such Committees.
  • Accurate information on drugs for patients is absolutely essential to prevent inappropriate use more particularly in children, elderly, during pregnancy and lactation.
  • Due to the sensitive nature of clinical trials in which foreign companies are involved in a big way and a wide spectrum of ethical issues and legal angles, different aspects of Clinical trials need a thorough and in-depth review.”

The Report named some pharmaceutical companies:

While arriving at these points, the report indicted some pharmaceutical companies, both national and international as follows (in alphabetical order):

Company Company Company
1. Bayer 8. Lundbeck 15. Ranbaxy
2. Cipla 9. Macleods 16. Sanofi
3. Centaur 10. Mars 17. Sun Pharmaceuticals
4. Emcure 11. Merck 18. Themis
5. Eli Lilly 12. Novartis 19. Theon
6. GlaxoSmithKline 13. Pharmacia (acquired by Pfizer) 20. UCB
7. Hetero 14. Phamasset Inc. (a subsidiary of Gilead) 21. Venus

A scathing remark against CDSCO:

The report made the following scathing remarks on CDSCO in its point 2.2:

“The Committee is of the firm opinion that most of the ills besetting the system of drugs regulation in India are mainly due to the skewed priorities and perceptions of CDSCO. For decades together it has been according primacy to the propagation and facilitation of the drugs industry, due to which, unfortunately, the interest of the biggest stakeholder i.e. the consumer has never been ensured.”

Allegation of possible collusion needs to be thoroughly probed:

The report also deliberates not only on the utter systemic failure of CDSCO along with the DCGI’s office to enforce law effectively, but also towards a possible collusion between CDSCO and the pharmaceutical industry to implement a self-serving agenda by hoodwinking the system. This is a very serious allegation, which needs to be thoroughly probed and the findings of which should be made public for everybody’s satisfaction.

Parliamentary Committee Report is a ‘considered advice and of persuasive value’:

Though any report of such Parliamentary Committee has been stated to have a persuasive value and be treated as considered advice given by the Committee, which in this case is to CDSCO, DCGI, Ministry of Health and also the industry.

Some probes already initiated:

Reuters in its publication of May 9, 2012 indicated that this Parliamentary Committee Report has prompted greater scrutiny even from the US regulators, which are reportedly investigating a number of drug companies under the Foreign Corrupt Practices Act (FCPA).

Initial reports also indicate that both the Indian Government and some large international pharmaceutical companies have announced detail probe based on this report at their respective ends.

Some remedial measures - Mashelkar Committee Recommendations:

Considering all these, besides taking appropriate remedial measures related to Clinical Trials of drugs in India, it is about time to reconsider the recommendations of Dr. R. A. Mashelkar Committee on the subject and make amendments in the Act accordingly to facilitate creation of a ‘Central Drugs Authority (CDA)’ introducing, along with other measures, a centralized licensing system for the manufacture, sale, export and distribution of drugs.

Why does India need CDA?

I firmly believe that the formation of the ‘Central Drugs Authority (CDA)’ will provide the following significant benefits to the Industry and also to the Government for the best interest of public health and safety:

  1. Achieving uniform interpretation of the provisions of the Drugs & Cosmetics Act & Rules
  2. Standardizing procedures and systems for drug control across the country
  3. Enabling coordinated nationwide action against spurious and substandard drugs
  4. Upholding uniform quality standards with respect to exports to foreign countries from anywhere in India
  5. Implementing uniform enforcement action in case of banned and irrational drugs
  6. Creating a pan-Indian approach to drug control and administration
  7. Evolving a single-window system for pharmaceutical manufacturing and research undertaken anywhere in the country.

Conclusion:

As a consequence of the above report of the Parliamentary Committee identifying gross irregularities in the functioning of the CDSCO, the Minister of Health and Family Welfare (MoHFW) of India Mr. Ghulam Nabi Azad has already announced constitution of a three-member committee to probe into the matter in depth.

Following well-known experts have been named as members of this high powered committee, which will submit its report and recommendations in two months’ time:

  • Dr. V.M. Katoch: Director General, Indian Council of Medical Research (ICMR),
  • Dr. P.N. Tandon: President, National Brain Research Centre
  • Dr. S.S. Aggarwal: Former Director, Sanjay Gandhi Postgraduate Institute of Medical Sciences, Lucknow

The committee has been mandated to:

  • Examine the validity of the scientific and statutory basis adopted for approval of new drugs without clinical trials
  • Outline appropriate measures to bring about systemic improvements in the processing and grant of statutory approvals
  • Suggest steps to institutionalize improvements in other procedural aspects of functioning of the CDSCO

The outcome of the report of this high powered committee, internal probes voluntarily initiated by some pharmaceutical companies and possible implementation of the ‘Mashelkar Committee’ recommendations on the formation of CDA in the country will hopefully bring in some systemic changes in the drug regulatory system of India, for patients’ sake.

By: Tapan Ray

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

Reaping rich harvest with less moaning and bagful of creative ideas from emerging Rural Markets of India

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About 72 percent of the population and 135 million households of India live in the rural areas of the country. Many of them are poor.

Definition of ‘Rural’:

Agencies of the Government of India like, National Council of Applied Economic (NCAER) and Insurance Regulatory and Development Agency (IRDA) have defined the terminology ‘rural’ as “villages with a population of less than 5000 with 75 percent population engaged in agriculture…”

Rural India is no longer an agrarian economy:

A recent study by ‘Credit Suisse’ indicates that rural India is no longer a pure agrarian economy, depending mostly on the quality of rain falls during monsoon season. This has been corroborated by the fact that the contribution of agriculture to the total GDP of rural India has come down from 50 percent, as registered during the turn of this century, to its current level of about 25 percent.

This transition of rural India from agriculture to industry and services, is now taking place at a much faster pace than ever before, as the rural economy is getting increasingly attuned to the national economic cycle, creating more and more non-agrarian jobs in those areas. Most of the incremental job creation is taking place in manufacturing, construction, retail and wholesale trade and also in the community services.

Currently, 55% of India’s GDP from manufacturing comes from rural India as the ‘Credit Suisse’ report highlights. As a result, since April 2000, per capita GDP in rural India has grown at a much faster pace than in urban India.

This welcoming change, in turn, is expected to play a key role in significantly improving the consumption of reasonably affordable healthcare, besides many other products and services, in the rural India.

Rural share of GDP growing faster:

Since last several years with various rural reform initiatives of the Government, the hinterlands of India have started growing faster than ever before.

A National Council of Applied Economic (NCAER) Research survey, indicating rural share of India’s GDP improved from 40 percent in 1980 to 54 percent in 2010, vindicates this point. At the same time, aggregate rural consumption (US$ Bn) increased from 94 in 1985 to 203 in 2005 and is expected to reach 350 in 2015. (Source: National Statistical Offices, UN, Euro Monitor International, Office of the Registrar General & Census Commissioner, India).

A new growth opportunity:

According to McKinsey Report, rural India currently accounts for 21 percent of the Indian Pharmaceutical Market (IPM). It is interesting to note from the NCAER report that both urban and rural India spend 5% of their total income on health.

Rural growth drivers:

McKinsey estimates that by 2015, upcoming smaller towns and the rural markets will contribute as much to the growth of IPM as the metros and top tier towns.

The following factors are expected to drive the growth of the pharmaceutical industry in the rural India:

  • Large patient base
  • Increasing overall income (over 1 percent of the total population coming above the poverty line every year)
  • Increasing number of middle class in rural areas
  • Disease pattern gradually shifting to chronic ailments
  • Improving healthcare infrastructure with increasing Government spend on the National Rural Health Mission (NRHM)
  • Rashtriya Swasthya Bima Yojana (RSBY), which is the National Health Insurance Scheme for Below Poverty Line (BPL) families, will provide health cover to increasing number of BPL households
  • New initiatives of the Department of Pharmaceuticals (DoP) like, “Janaushadhi”  scheme will provide low cost quality medicines to boost the uptake

Rural market size:

The rural markets contribute about 21 percent of U.S$ 12.5 billion pharmaceutical market in India (AIOCD-AWACS, February, 2012). As reported in ‘India Pharma 2015’ of McKinsey, by 2015 rural pharma market size is expected to reach U.S$ 4.8 billion from U.S$1.2 billion in 2005.

Currently, rural markets are dominated by ailments related to various types of infections. As stated above, this disease pattern is expected to change by the next decade to non-infectious chronic illnesses, like diabetes, cardiac, cancer, hypertension etc.

Increasing Pharmaceutical growth trend in the rural markets:

In 2011 the rural markets of India registered a growth of around 23 percent over the previous year. This decent pace of growth is expected to continue in the next decades.

MAT Dec 2011 (INR M)

MAT Dec 2011 (Saliency)

Growth %
Indian Pharma Market

538,028

100.00

14.92
CLASS I TOWNS

168,339

31.29

12.12
METROS

164,625

30.60

16.33
CLASS II TO VI

102,536

19.06

9.93
RURAL

102,528

19.06

23.19

(Source: IMS Town Class Data – Dec MAT 2011)

Moreover, McKinsey Report forecasts that rural markets will contribute around 27 percent of the total consumption of India by 2020 and by 2015, rural India will account for over 24 percent of the domestic pharmaceutical market from its current level of 21 percent.

Charting the uncharted frontier:

It has been reported that growth rate of the rural markets of many companies have more than doubled due to their rural marketing focus. Possibly as a testimony to this new business opportunity, one can now see:

1. Novartis with its “Arygoya Parivar” initiative is rolling out a tailor-made program for rural areas of seven states of India, to start with. They have developed special packs of essential medicines with special prices to reach out to the rural population. To create disease awareness within the target population and also for disease prevention and treatment, Novartis has deployed health educators for this project.

2. Sanofi has initiated a dedicated rural marketing initiative called ‘Prayas’.  The initiative is aimed at ‘bridging the diagnosis‐treatment gap through a structured continuing education program for rural doctors across India’.

The Company says, “through ‘Prayas’, specialists from semi‐urban areas will share latest medical knowledge and clinical experience with general practitioners based in smaller towns and villages in the interiors of India”. Their second strategy, reportedly, is for improving healthcare access by making quality medicines available at affordable prices for the rural patients.

3. Novo Nordisk is currently engaged in screening patients for diabetes in the rural areas of Goa with mobile clinics. This initiative is expected to create widespread awareness about diabetes and early detection of the disease, so as to prevent early onset of the disease related complications.

4. Eli Lilly developed a program along with the Self-Employed Women’s Association in Ahmedabad to educate and encourage rural patients suffering from tuberculosis to go for treatment.

5. Elder pharmaceuticals created a dedicated 750 strong rural marketing sales force called Elvista.

6. Cadila Pharma has set up a dedicated rural marketing arm called ‘Explora’.

7. Alembic Chemicals created a rural business unit called ‘Maxis’.

These are just a few illustrations and not an exhaustive list. However, the issue is whether the rural marketing initiative will continue to remain an experimental one to the pharmaceutical companies in India or will get translated into a decent long term strategic business move.

“The Fortune at the Bottom of the Pyramid”:

The iconic management guru C K Prahalad in his well-known book titled, “The Fortune at the Bottom of the Pyramid” wrote:

“If we stop thinking of the poor as victims or as a burden and start recognizing them as resilient and creative consumers, a whole new world of opportunity will open up.” I am not sure whether the above profound observation is encouraging the pharmaceutical companies to explore the rural India with the wings of courage, where majority of the Indian populations live and most of them are poor.

A ‘Pot of Gold’ in the rural markets?

Currently around 20 million middle class households live in over 6,00,000 villages of India. This is almost the same as the number of middle class households residing in urban India and holds the key to significant increase of healthcare spending in rural India.

Rural market-entry strategy:

Instead of transplanting the urban marketing strategy into rural India, some companies, as mentioned above, have taken the community-welfare route to make the rural population aware of particular disease segments like, tuberculosis, diabetes, cardiovascular, waterborne diseases etc. together with the treatments available for such ailments.

These value added marketing strategies offer benefits to both the patients and the company concerned. The local medical practitioners, in turn, are also benefited as they get increasing number of patients in their clinics through such disease awareness community program by the pharmaceutical companies.

Key challenges:

There are some key challenges for effective rural penetration by the Indian pharmaceutical industry, as follows:

• Inadequate basic healthcare infrastructure. Only 20 percent of total healthcare infrastructure of the country is in rural areas where over 72 percent population of the country lives. • Density of doctors per 10,000 populations in India is just 6. A large number of villages in India do not have any doctor. As per AC Nielson study, an average rural Indian has to travel about 6 km to visit a doctor. A Medical Representative will require traveling about 250 to 300 km every day just to meet about 10 doctors and 4 dealers. • Many villages are not well connected by proper all season roads. • Lack of appropriate supply chain network and logistics support.

Conclusion:

With increasing infrastructural support and tailor made innovative marketing strategies for rural India, simultaneously delivering both preventive and curative therapies under one umbrella, it may not be difficult for the Indian pharmaceutical companies to discover ‘The Fortune at the Bottom of the Pyramid’ – a win-win situation indeed for both the ‘haves’ and a vast majority of ‘have-nots’ living in an amazing country called India.

The name of the game is less moaning and a bagful of implementable creative ideas.

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 – Young Today, Old Tomorrow: Emerging Issues of Aging, Health and Socioeconomic Profile of the Country

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‘World Health Day’ is celebrated every year on April 7, the day ‘World Health Organization (WHO)’ was founded in 1948.

Each year, on this day, people from all walks of life across the globe are invited by WHO to focus on a particular emerging health challenge of global relevance, which becomes the theme of the ‘World Health Day’ for the year.

In 2012, the theme for this day was, “Aging and health: Good health adds life to years”. It focuses on how good health throughout the life span can help the senior citizens to lead a full and productive life and in turn makes them valuable and experienced resources not just to their respective families, but also to the societies and communities they belong to.

Aging affects all:

The process of aging, without any exception, affects the entire population, young or old, male or female, rich or poor, alike, across the world and is considered as one of the key factors of social transformations through the passage of time.

With the advancement in medical science coupled with increasing social awareness for living a healthy life, the average life expectancy of the population in the 20th century reportedly increased by around 30 years in the developed world and is expected to maintain similar growth trend in the 21st century, as well.

Now, with an increasing life expectancy even in the developing world, the issue is assuming greater magnitude and at a much faster pace.

In the language of Steve Jobs:

Steve Jobs, the global icon and the former CEO of Apple Inc., during his commencement speech to Stanford in 2005, very aptly articulated as follows:

“No one wants to die. Even people who want to go to heaven don’t want to die to get there. And yet death is the destination we all share. No one has ever escaped it. And that is, as it should be, because Death is very likely the single best invention of Life. It is Life’s change agent. It clears out the old to make way for the new. Right now the new is you, but someday not too long from now, you will gradually become the old and be cleared away. Sorry to be so dramatic, but it is quite true.”

In a normal situation old age precedes death and just like the inevitability of death, everybody, even a baby born today will need to embrace the old age before being cleared away by death. Thus, as the population will age as a natural process, there will be growing need to make even the old age more meaningful. Sounds like a tall call, but quite pertinent indeed.

Although, an average elderly person of today is much healthier than of the past generations, they will still need appropriate health management and social security plans, especially for an emerging economy, like India.

World population aging faster:

Population Division of the Department of Economic and Social Affairs of the United Nations in its publication titled, “World Population Aging:  1950-2050”, described the trend of ageing of the global population and highlighted the following:

  • Population aging is unprecedented : This is unparallel in human history and the current century will witness even more rapid aging than the previous one.
  • Population aging is pervasive:  It is affecting every man, woman and child across the world, though currently it is at different stages of progress in different countries.
  • Population aging is enduring:  The world will not return to the young populations of our ancestors.
  • Population aging has profound implications:  It affects many facets of lives of human beings.

Increasing burden of disease:

The burden of some serious age related diseases increases by manifold as the life progresses towards its ‘twilight zone’. Even now, the treatment costs and overall burden of age related diseases, both in the developed and the developing countries, are escalating in an alarming proportion.

Age related diseases:

According WHO, in the industrialized countries over 75 percent of deaths in people of over 65 years of age are due to cancer, cardiovascular and cerebrovascular diseases, in addition to disabilities like, loss of bone density leading to osteoporosis.

As per published reports, the incidence of age related Alzheimer’s disease, which is now incurable, will almost double every 20 years to reach around 66 million in 2030 and over 115 million in 2050.

Research for delaying the onset:

Reuters in an article titled, “Is aging a disease?” published in May 20, 2010 reported that many scientists from various parts of the world are now studying the genetic mechanisms of the old persons to help delay, if not overcome, the onset of diseases like Alzheimer’s, cancers, diabetes, cardiovascular ailments and many other age-related illnesses to help leading a better quality of life during old age of the human population.

Elderly population and the impact:

As per an estimate of the United Nations (UN), there will be around 1200 million people over 65 years of age by 2025. Currently, from across the world millions of aging people are denied of proper health care for various reasons. The situation in India is much worse.

It is envisaged by many that failure, either on the part of the Government or society at large, to address this critical issue today, could have a snowballing effect tomorrow.

In Japan, currently half of the national health budget is spent on the elderly individuals, which constitute around a whopping 23 percent of the country’s population. According to another estimate of the Japanese Government, by 2055 half of their total population will constitute of retired senior citizens.

India:

With over 65 percent of the population of India being now below 30 years of age, the country is  well poised to have one of the largest numbers of young and productive population in the world, though 7 percent of country’s 1.13 billion people are now over 60 years of age and the number is growing.

The Median Age of the population will keep on increasing over a period of time as follows:

Aging Profile: India and other countries

Year 2000 2015 2025 2030 2035 2040 2050
Median Age–India 23.4 27.2 30.3 31.4 33.5 35.0 37.9
Median Age–World 26.4 29.5 31.9 33.0 34.0 34.9 36.8
Median Age–More Developed Regions 37.3 41.2 43.3 44.2 45.0 45.4 45.2
Median Age–Less Developed Regions 24.1 27.5 30.0 31.2 32.4 33.5 35.7
Median Age–Least Developed Regions 18.1 19.6 21.2 22.2 23.3 24.5 27.1

(Source: Population Division, Department of Economic and Social Affairs, United

Nations Secretariat)

Growth of elderly population is much faster than the population:

As as per the paper titled, “Implications of an Aging Population in India: Challenges and Opportunities” presented at ‘The Living to 100 and Beyond Symposium’ of the Society of Actuaries in Orlando on January 12–14, 2005, the Indian population has approximately tripled during the last 50 years, but the number of elderly Indians has increased more than fourfold.

Assuming continuation of this trend, the United Nations have predicted that the Indian population will again grow by 50 percent in the next 50 years, with the elderly population recording another fourfold growth.

Changing demographic profile:

The situation in India, therefore, by no means is a trivial one and needs to be addressed with a right earnest and sooner, mainly because of the changes in the demographic profile of the country, as follows:

Projected Changes in Indian Demography (in Million)

Age Group

2000

2015

2025

2030

2035

2040

2050
0-14 Years

347

345

337

327

313

300

285
15-59 Years

593

782

865

895

919

937

938
>60 Years

77

119

167

195

223

248

308
Total

1,017

1,246

1,369

1,417

1,455

1,485

1,531

(Source: Population Division, Department of Economic and Social Affairs, United Nations Secretariat)

Thus, over a period of time in India, increasing number of less productive elderly people and the declining trend of the younger population, could adversely impact the overall socioeconomic profile and and the disease burden of the nation.

Conclusion:

In India, there has been hardly any support in terms of social security, especially for a vast majority of people, who are unable to work after becoming senior citizens of the country.

In a situation like this, the Government of India, civil society and the private sector enterprises of the country should work in tandem to give shape to appropriate policy measures to effectively address the issues of the increasing number aging population of the country, over a period of time.

This is necessary not just for the socioeconomic reasons, but also to arrest any significant increase in the overall disease burden of the nation with its possible adverse impact on the growing economy of the country.

Continuing lack of interest to work out a long term social and policy measures to address the important issues related to population aging in India, in a holistic way, could significantly impede the pace of economic growth of the country, celebration of the ‘World Health Day’ on April 7, 2012 notwithstanding.

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.

Balancing Strong IP Protection, Public Health Safeguards and Declining R&D Productivity – A Crafty Gutsy Ball Game

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Pharmaceutical innovation has always been considered the lifeblood for the pharmaceutical industry and very rightly so. However, many studies do point out that such innovation has benefited the developed world more than the developing world.

Product Price and Access:

In the paper titled ‘TRIPS, Pharmaceutical Patents and Access to Essential Medicines: Seattle, Doha and Beyond’, published in ‘Chicago Journal for International Law, Vol. 3(1), Spring 2002’, the author argues, though the reasons for the lack of access to essential medicines are manifold, there are many instances where high prices of drugs deny access to needed treatments for many patients. Prohibitive drug prices, in those cases, were the outcome of monopoly due to strong intellectual property protection.

The author adds, “the attempts of Governments in developing countries to bring down the prices of patented medicines have come under heavy pressure from industrialized countries and the multinational pharmaceutical industry”.

While the Trade-Related Aspects of Intellectual Property Rights Agreement (TRIPS) of the World Trade Organization (WTO) sets out minimum standards for the patent protection for pharmaceuticals, it also offers adequate safeguards against negative impact of patent protection or its abuse in terms of extraordinary and unjustifiable drug pricing. The levels of these safeguards vary from country to country based on the socio-economic and political requirements.

The Doha Declaration:

Many independent experts in this field consider the Doha Declaration as an important landmark for recognizing the primacy to public health interest over private intellectual property and the rights of the members of WTO to use safeguards as enumerated in TRIPS, effectively.

To protect public health interest and extend access to innovative medicines to majority of their population whenever required, even many developed/OECD countries do not allow a total freehand for the patented products pricing in their respective countries.

Early signals of global empathy:

While expressing similar sentiment ‘The Guardian’ reported that Andrew Witty, the global CEO of GlaxoSmithKline, has decided to slash prices on all medicines in the poorest countries, give back profits to be spent on hospitals and clinics and more importantly share knowledge about potential drugs that are currently protected by patents.

Witty further commented that he believes, drug companies have an obligation to help the poor patients getting appropriate treatment and reportedly challenged other pharmaceutical giants to follow his lead.

An interesting study:

A study titled, ‘Pharmaceutical innovation and the burden of disease in developing and developed countries’ of Columbia University and National Bureau of Economic Research, to ascertain the relationship across diseases between pharmaceutical innovation and the burden of disease both in the developed and developing countries, reported that pharmaceutical innovation is positively related to the burden of disease in the developed countries but not so in the developing countries.

The most plausible explanation for the lack of a relationship between the burden of disease in the developing countries and pharmaceutical innovation, as pointed out by the study, is weak incentives for firms to develop medicines for the diseases of the poor.

Point – Counterpoint:

A contrarian view to this study argues that greater focus on the development of new drugs for the diseases of the poor should not be considered as the best way to address and eradicate such diseases in the developing countries. On the contrary, strengthening basic healthcare infrastructure along with education and the means of transportation from one place to the other could improve general health of the population of the developing world quite dramatically.

The counterpoint to the above argument articulates that health infrastructure projects are certainly very essential elements of achieving longer-term health objectives of these countries, but in the near term, millions of unnecessary deaths in the developing countries can be effectively prevented by offering more innovative drugs at affordable prices to this section of the society.

A solution emerging:

Responding to the need of encouraging pharmaceutical innovation without losing focus on public health interest, in 2006 the ‘World Health Organization (WHO)‘ created the ‘Inter-governmental Working Group on Public Health, Innovation and Intellectual Property (IGWG)‘. The primary focus of IGWG is on promoting sustainable, needs-driven pharmaceutical R&D for the diseases that disproportionately affect developing countries.

Declining R&D productivity:

Declining R&D productivity adds another dimension to this raging debate with a snowballing effect, as it were.

Over a period of decades, the business models for small-molecule based blockbuster drugs have successfully catapulted the global pharmaceutical business to a high-margin, dynamic and vibrant industry. However, a time has now come when the golden path from the ‘mind to market’ of the drug discovery process is becoming increasingly arduous and prohibitively expensive.

Deploying expensive resources to discover a New Chemical Entity (NCE) with gradually diminishing returns in the milieu of very many ‘me too’ types of new drugs, does no longer promise a strong commercial incentive.

The impact of the above scenario also gets reflected in the status of International patent filings under the Patent Cooperation Treaty (PCT) of the ‘World Intellectual Property Organization (WIPO)’ as follows:

A. Last five years, PCT filings:

The last five years’ PCT filing status does not seem to be encouraging either.

Year

PCT Filings

Change %

2007

159,926

2008

163,240

2.1

2009

154,406

(5.4)

2010

164,316

6.4

2011

181,900

10.7 *(E)

* Estimate

B. Country-wise PCT Filing in 2011:

While having a closer look at the data, it becomes quite evident that in terms of percentage increase in the PCT filings two Asian countries, China and Japan, have registered their overall dominance. However, in terms of absolute number USA still ranks first.

County

No. Of PCT Filings

% Increase

USA

48,596

8

China

16,401

33.4

Japan

38,888

21

Germany

18,568

5.7

South Korea

10,447

8

C. Technical-field-wise PCT Filing in 2011:

In terms of the technical fields, pharmaceuticals ranked fifth in 2011.

Rank

 Industry

No. Of PCT Filings

1.

 Electrical Machinery, Apparatus, Energy

11,296

2.

 Digital Communication

11,574

3.

 Medical technology

10,753

4.

 Computer technology

10,455

5.

 Pharmaceuticals

7,683

6.

 Organic fine chemistry

5,283

7.

 Biotechnology

5,232

D. Biotech/Pharma companies featuring in WIPO’s Top 100 filers list:

Very few biotech and pharmaceutical companies featured in the Top 100 PCT filers’ list of WIPO as follows:

Company
1. Procter & Gamble
2. Sumitomo Chemical
3. DuPont
4. Dow Global
5. Novartis AG
6. Roche
7. Merck GmbH
8. Sanofi-Aventis GmbH
9. Bayer CropScience AG

E. The top five university PCT filers in 2011:

Universities of the US dominated among the PCT filings by the Academic institutions as follows:

University

No. Of PCT Filings
University of California, US

277
Massachusetts Institute of Technology, US

179
University of Texas System, US

127
Johns Hopkins University, US

111
Korea Advanced Institute of Science and Technology, South Korea

103

Need to encourage pharmaceutical innovation:

Based on the WIPO data, as mentioned above, the current status of the global pharmaceutical innovation does not seem to be very encouraging.

That said, in the environment of declining R&D productivity of the global pharmaceutical industry, there is indeed a strong requirement to encourage pharmaceutical innovation across the globe, based on the socio-economic environment of each country, together with adequate safeguards in place to protect public health interest.

Why protect patent?

The pharmaceutical major Eli Lilly has very aptly epitomized the reason for patent protection in their website called ‘LillyPad’, as follows:

“Pharmaceutical companies continue to invest in innovation not only because it is good for business, but it is what patients expect. If we want to continue to have breakthrough products, we need patent protection and incentives to invest in intellectual property.  The equation is simple, patents lead to innovation – which help lead to treatments and cures”.

Conclusion:

Currently, various socio-economic expectations, demands and requirements, not just for the poor, but also of the powerful growing middle class intelligentsia are gradually getting unfolded on this subject from many parts of the globe. These collective demands cannot be either wished away or negotiated with a strong belief that the future should be a replication of the past.

There should be full respect, support and protection for innovation and the product patent system in the country. This is essential not only, for the progress of the pharmaceutical industry, but also to alleviate sufferings of the ailing population, effectively.

At the same time, available indicators point out that the civil society would continue to expect in return just, fair, responsible and reasonably affordable prices for the innovative medicines, based on the overall socio-economic status of the local population. Some experts have already opined that prices of life saving innovative drugs, unlike many other patented products, will no longer remain ‘unquestionable’ in increasing number of countries.

Thus, even at the time of declining pharmaceutical R&D productivity, striking a right balance  between a strong patent regime and safeguarding overall health interest of its population, particularly of those with a very high ‘out of pocket’ expenditure towards healthcare, will indeed be a crafty gutsy ball game for a country.

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.

Pharmaceutical innovation and Public Health Interest: Ways to achieving the dual objectives

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Healthcare industry in general and the pharmaceutical sector in particular have been experiencing  a plethora of innovations not only to cure and effectively manage ailments to improve the quality of life, but also to help increasing overall disease-free life expectancy of the population with various types of treatment and disease management options. Unfortunately despite all these, over half the global population is still denied of basic healthcare needs and support.

A 2011 official estimate of the current world population reads as 6.93 billion. Out of which over three billion live with a subsistence of less than US$ 2 per day. Another billion population is surviving on even less than US$ 1 per day. According to published reports around 18 million people die from poverty-related causes across the world, every year.

The World Health Organization (WHO) has estimated that over a billion population of the world still suffer from neglected tropical diseases.

On February 3, 2012, quoting a ‘World Bank and PwC report’, ‘The Economic Times’ reported that “70% of Indians spend all their income on healthcare and buying drugs.”

In a situation like this, challenges that the governments and the civil society are facing in many developing and to some extent even in some developed countries (although for different reasons), are multi-factoral. It has been well established that the humongous global healthcare challenges are mostly of economic origin.

In such a scenario, ongoing heated debate on innovation, Intellectual Property Rights (IPR) and public health interest keeps gaining momentum all over the globe and has still remained unabated.

Argumentative Indians have also got caught in this raging debate. I reckon rightly so, as India is not only the largest democracy of the world contributing 16.7% of the global population, it is also afflicted with 21% of the global burden of disease. Thus, the reason for similar heated debate in our country is indeed no brainer to any one.

Thorny issues:

One of the thorny issues in this debate is the belief that huge R&D budgets of the global pharmaceutical companies are worked out without any consideration of relative value of such investments to the vast majority of population in our society, across the world. These thought leaders argue, as the poor cannot pay for the expensive innovative drugs, they are mostly denied of the fruits of pharmaceutical innovation in their battle against diseases.

These experts also say that safeguards built into the patent system in form of compulsory licenses are not usually broad enough to improve access to innovative medicines to a larger section of the society, whenever required.

In addition, they point out that wide scope of patent grants in areas of early fundamental research, quite often is strategically leveraged by the patentee to block further R&D in related areas without significant commercial considerations to them. Such a situation comes in the way of affordable innovative drug development for public health interest, when need arises.

Inadequate access to medicines in India:

The key issue in the country is even more complicated. Inadequate or lack of access to modern medicines reportedly impacts around 50% of our population. It is intriguing to fathom, why has the nation not been able to effectively address the challenge of access to relatively affordable high quality generic medicines to the deprived population of the society over a period of so many decades?

Thus IPR in no way be considered as the reason for poor access, at least, to generic medicines, especially in India. Neither, it is the reason for inadequate availability of affordable essential medicines for the diseases of the poor.

The key reason, as is widely believed, is inadequate focus on the deprived population to address their public health concerns by the government.

Pharmaceutical innovation and the burden of disease:

A study  titled, ‘Pharmaceutical innovation and the burden of disease in developing and developed countries’ of Columbia University and National Bureau of Economic Research, to ascertain the relationship across diseases between pharmaceutical innovation and the burden of disease both in the developed and developing countries, reported that pharmaceutical innovation is positively related to the burden of disease in the developed countries but not so in the developing countries.

The most plausible explanation for the lack of a relationship between the burden of disease in the developing countries and pharmaceutical innovation, as pointed out by the study, is weak incentives for firms to develop medicines for the diseases of the poor.

A healthy debate:

Many experts argue that greater focus on the development of new drugs for the diseases of the poor, should not be considered as the best way to address and eradicate such diseases in the developing countries. On the contrary, strengthening basic healthcare infrastructure along with education and the means of transportation from one place to the other could improve general health of the population of the developing world quite dramatically.

However, another school of experts think very differently. In their opinion, health infrastructure projects are certainly very essential elements of achieving longer-term health objectives of these countries, but in the near term, millions of unnecessary deaths in the developing countries can be effectively prevented by offering more innovative drugs at affordable prices to this section of the society.

Creation of IGWG by WHO:

Responding to the need of encouraging pharmaceutical innovation without losing focus on public health interest, in 2006 the ‘World Health Organization (WHO)‘ created the ‘Inter-governmental Working Group on Public Health, Innovation and Intellectual Property (IGWG)‘. The primary focus of IGWG is on promoting sustainable, needs-driven pharmaceutical R&D for the diseases that disproportionately affect developing countries.

‘Reward Fund’ for innovation and access – an idea:

A paper  titled, “Optional reward for new drug for developing countries” published by the Department of Economics, University of Calgary, Institute of Health Economics, proposed an optional reward fund for pharmaceutical innovation aimed at the developing world to the pharmaceutical companies, which would develop new drugs while ensuring their adequate access to the poor. The paper suggests that innovations with very high market value will use the existing patent system, as usual. However, the medicines with high therapeutic value but low market potential would be encouraged to opt for the optional reward system.

It was proposed that the optional reward fund should be created by the governments of the developed countries and charitable institutions to ensure a novel way for access to innovative medicines by the poor.

The positive effects of the debate:

One positive effect of this global debate is that some global pharmaceutical companies like Novartis, GSK and AstraZeneca have initiated their R&D activities for the neglected tropical diseases of the world like, Malaria and Tuberculosis.

Many charitable organizations like Bill & Melinda Gates Foundation and Clinton Foundation are allocating huge amount of funds for this purpose.

On January 30, 2012, on behalf of the research-based pharmaceutical industry, Geneva based International Federation of Pharmaceutical Manufacturers and Associations (IFPMA) by a Press Release  announced donations of 14 billion treatments in this decade to support elimination or control of nine key Neglected Tropical Diseases (NTDs).

Without creating much adverse impact on pharmaceutical innovation ecosystem of the country, the Government of India is also gradually increasing its resource allocation to address the issue of public health, which is still less than adequate as of now.

All these newer developments and initiatives are definitely ushering in an era of positive change for a grand co-existence of pharmaceutical innovation and public health interest of the country, slow and gradual though, but surely a change for the better.

Innovation helps to improve public health:

In India, various stakeholders of the pharmaceutical industry feel that there is a need to communicate more on how innovation and IPR help rather than hinder public health. Some initiatives have already been taken in this direction with the pioneering ‘patent pool’ initiative of GlaxoSmithKline (GSK) in Europe and ‘Open Source Drug Discovery (OSDD)’ by the Council of Scientific and Industrial Research (CSIR) of the Government of India.

The pace needs to be accelerated:

The pace of achieving the dual objectives of fostering pharmaceutical innovation without losing focus on public health has to be accelerated, though progress is being slowly made in these areas through various initiatives. Additional efforts are warranted for sustainability of these initiatives, which have not yet gained the status of robust and sustainable work models.

However in India, the government in power should shoulder the key responsibility garnering all resources to develop and implement ‘Universal Health Coverage’ through appropriate innovative healthcare reform measures. Such steps will help achieving the country its national goal of providing affordable healthcare to all.

At the same time, creation of a variant of ‘reward fund’ to encourage smaller pharmaceutical players of India to pursue pharmaceutical innovation needs to be considered expeditiously. This will help encouraging pharmaceutical innovation in a big way within the country.

Address the basic issue of poverty:

It is a well-accepted fact that the price is one of the key determinants to improve access to modern medicines to a vast majority of the population. However, the moot question remains how does one make medicines more affordable by not addressing effectively the basic issue of general poverty in the country? Without appropriately resolving this issue, affordability of medicines will continue remain a vexing problem and a critical issue to address public health in India.

Conclusion:

Innovation, as is widely acknowledged, is the wheel of progress of any nation. This wheel should move on… on and on with the fuel of IPR, which is an economic necessity of the innovator to make the innovation sustainable.

In the book titled, ‘Pharmaceutical Innovation: Revolutionizing Human Health‘ the authors have illustrated how science has provided an astonishing array of medicines to effectively cope with human ailments over the last 150 years.

Moreover, pharmaceutical innovation is a very expensive process and grant of patents to the innovators is an incentive of the government to them for making necessary investments towards R&D projects to meet unmet needs of the patients. The system of patent grants also contributes to society significantly by making freely available patented information to other scientists to improve upon the existing innovation through non-infringing means.

Altruism, especially in the arena of public health, may be demanded by many for various considerations. Unfortunately, that is not how the economic model of pharmaceutical innovation and IPR works globally. Accepting this global reality, the civil society should deliberate on how innovation and IPR can best be used, in a sustainable manner for public health interest, especially for the marginalized section of the society.

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.

Encourage vaccine research and improve its access to demonstrate ‘prevention is better than cure’

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Vaccines are one of the most successful and cost-effective public health interventions, which help preventing over 2 million deaths every year.

The World Health Organization (WHO) defines vaccines as:

“A vaccine is any preparation intended to produce immunity to a disease by stimulating the production of antibodies. Vaccines include, for example, suspensions of killed or attenuated microorganisms, or products or derivatives of microorganisms. The most common method of administering vaccines is by injection, but some are given by mouth or nasal spray.”

Types of Vaccines:

As per the ‘National Institute of Health (NIH)’ of USA, following are some types of vaccines that researchers usually work on:

  • Live, attenuated vaccines
  • Inactivated vaccines
  • Subunit vaccines
  • Toxoid vaccines
  • Conjugate vaccines
  • DNA vaccines
  • Recombinant vector vaccines

The first vaccine:

In 1796, Edward Anthony Jenner not only discovered the process of vaccination, alongside developed the first vaccine of the world for mankind – smallpox vaccine. To develop this vaccine Jenner acted upon the observation that milkmaids who caught the cowpox virus did not catch smallpox.

As per published data prior to his discovery the mortality rate for smallpox was as high as up to 35%. Thus, Jenner is very often referred to as the “Father of Immunology”, whose pioneering work has “saved more lives than the work of any other person.”

Later on in 1901 Emil Von Behring received the first Nobel Prize (ever) for discovering Diphtheria serum therapy.

The future scope of vaccines:

The future scope of vaccines is immense as several potentially preventable diseases, as indicated below remain still unaddressed.

Examples of effective Vaccines Examples of Potentially VaccineTreatable Diseases
Bacterial
  • Diphtheria
  • Haemophilus influenza type B
  • Meningitis A, C
  • Pneumococcus
  • Enterococcus
  • Meningitis B, W, Y
  • Group A Streptococcus
  • Staphylococcus
Viral
  • Varicella
  • Hepatitis B and C
  • Influenza
  • Polio
  • Pandemic influenza
  • RSV
  • West Nile Virus
  • Epstein Barr Virus
Other
  • Cancer
  • Alzheimer’s disease
  • Substance abuse
  • Autoimmune disorders

Source: Deutsche Bank Report 

Expanded focus for vaccines:

The focus of the global vaccine industry also has been expanded from prophylactic vaccination for communicable disease (e.g. DTP vaccine) to therapeutic vaccines (e.g. Anti-cancer vaccines) and then possibly non-communicable disease vaccines (e.g. vaccines for coronary artery disease).

The Issues and Challenges:

To produce a safe and effective marketable vaccine, it takes reportedly around 12 to 15 years of painstaking research and development process involving an investment ranging between US $500 million and over $1 billion dollars (Ibid, 7).

Moreover, one will need to realize that the actual cost of vaccines will always go much beyond their R&D expenses. This is mainly because of dedicated and highly specialized manufacturing facilities required for mass-scale production of vaccines and then for the distribution of the same mostly using cold-chains.

Around 60% of the production costs for vaccines are fixed in nature (National Health Policy Forum. 25. January 2006:14). Thus such products will need to have a decent market size to be profitable.

Unlike many other medications for chronic ailments, which need to be taken for a long duration, vaccines are administered for a limited number of times, restricting their business potential.

Thus, the long lead time required for the ‘mind to market’ process for vaccine development together with high cost involved in their clinical trials/marketing approval process, special bulk/institutional purchase price and limited demand through retail outlets, restrict the research and development initiatives for vaccines, unlike many other pharmaceutical products.

Besides, even the newer vaccines will be required mostly for the diseases of the poor, like Malaria, Tuberculosis, HIV and ‘Non Communicable Diseases (NCDs)’ in the developing countries, which may not necessarily guarantee a decent return on investments for vaccines, unlike many other newer drugs. As a result, the key issue for developing a right type of newer vaccine will continue to be a matter of pure economics.

A great initiative called GAVI: 

Around 23 million children of the developing countries are still denied of important and life-saving vaccines, which otherwise come rather easily to the children of the developed nations of the world.

To resolve this inequity in January 2000, the Global Alliance for Vaccines and Immunization (GAVI) was formed. This initiative was mainly aimed at generating sufficient fund to ensure availability of vaccines for children living in the 70 poorest countries of the world.

The GAVI Alliance has been instrumental in improving access to six common infant vaccines, including those for hepatitis B and yellow fever. GAVI is also working to introduce pneumococcal, rotavirus, human papilloma virus, meningococcal, rubella and typhoid vaccines in not too distant future.

A recent example:

As if to vindicate the above points, Reuters on December 16, 2011 reported that  “Pfizer and GlaxoSmithKline are increasing sales of cut-price pneumonia vaccine to developing countries by more than 50 percent, marking the scale-up of an international program to protect millions of children.

GAVI is buying an additional 180 million doses of Pfizer’s pneumococcal vaccine Prevenar 13 and a similar quantity of GSK’s Synflorix at a deeply discounted price of US $3.50 a shot.”

Success with vaccines in disease prevention:

Diphtheria incidence in the US  – Mortality 5/10,000 cases Peak Incidence (1921) Incidence today

2,06,939

1

 

Tetanus incidence in the US – Mortality 3/10 cases Peak Incidence (1927) Incidence today

1,314

40

 

H. Influenza type B incidence in the US – Mortality 2-3/100 cases Peak Incidence (1927) Incidence today

20,000

363

Source: Ehreth Vaccine 21:4105-4117

Development of vaccines through the passage of time:

No. of vaccines

Year

Vaccines
1. 1780-1800

Smallpox

(first vaccine for any disease)
2. 1860-1880

Cholera
1880-1900

Rabies
6.

Tetanus

Typhoid fever

Bubonic plague
11 1920-1940

Diphtheria

Pertussis

Tuberculosis

Yellow fever

Typhus
16 1940-1960

Influenza

Polio

Japanese encephalitis

Anthrax

Adenovirus-4 and 7
24 1960-1980

Oral polio

Measles

Mumps

Rubella

Chicken pox

Pneumonia

Meningitis

Hepatitis B
28 1980-2000

Haemophilus influenzae type b

Hepatitis A

Lyme disease

Rotavirus
29 2000-2010

Human papilloma virus

Current trend in vaccine development:

Malarial Vaccine:

Reuters on December 20, 2011 reported that an experimental malaria vaccine has been developed by the British scientists, which has the potential to neutralize all strains of the most deadly species of malaria parasite.

In October 2011, the data published for a large clinical trial conducted in Africa by GlaxoSmithKline on their experimental malaria vaccine revealed that the risk of children getting malaria had halved with this vaccine. Reuters also reported that other teams of researchers around the world are now working on different approaches to develop a malaria vaccine.

Tuberculosis vaccines:

On August 11, 2011, Aeras and the Oxford-Emergent Tuberculosis Consortium (OETC) announced with a ‘Press Release’ the commencement of a Phase IIb ‘proof-of-concept efficacy trial’ of a new investigational tuberculosis (TB) vaccine. OETC indicated that clinical trial for the drug will be undertaken by them in Senegal and South Africa with primary funding support from the European and Developing Countries Clinical Trials Partnership (EDCTP).

Cancer vaccines:

Cancer vaccines are, in fact, biological response modifiers, which work by stimulating or restoring the ability of the immune system to fight the disease. There are two broad types of cancer vaccines:

  • Preventive vaccines:  To prevent cancer in healthy people
  • Therapeutic vaccines:  To treat cancer by strengthening the natural defense mechanism of the human body against the disease.

The United States Food and Drug Administration (US-FDA) has approved the following cancer vaccines, which protect against two types of HPV that cause approximately 70% of all cases of cervical cancer globally:

  • Gardasil of Merck & Company
  • Cervarix of  GlaxoSmithKline

The US FDA has also approved a cancer preventive vaccine that protects against HBV infection, which can cause liver cancer. It has been reported that the original HBV vaccine was approved in 1981 and currently most children in the US are vaccinated against HBV after their birth.

In addition, the US regulator has also approved a cancer vaccine for treatment of certain types of metastatic prostate cancer.

HIV Vaccines:

‘The AIDS Vaccine 2011 conference’ held in Bangkok in the month of September, 2011 discussed some of the latest findings on the following two vaccines for prevention and control of HIV disease progression:

  • A large trial of RV 144 vaccine in Thailand demonstrated the proof of concept that a preventive vaccine with a risk reduction of 31% could effectively work.  The trial was supported by the World Health Organization (WHO) and UNAIDS.
  • Bionor Pharma announced that clinical trial participants who received Vacc-4x “experienced a 70% viral load decrease relative to their level before starting Anti-Retroviral Therapy (ART), compared with no notable reduction among placebo recipients.”

Promising ‘Therapeutic Vaccines’ undergoing clinical trial:

‘FierceVaccines’ in its October 27, 2011 reported the following 10 most promising therapeutic vaccines, which are now undergoing clinical trials on humans:

Molecule Company Indication
ICT-107 ImmunoCellular Therapeutics Glioblastoma
VGX-3100 Inovio Pharmaceuticals Cervical cancer
MAGE-A3 GlaxoSmithKline Skin, lung cancer
Neu-Vax RXi Pharmaceuticals Breast cancer
AE37 Antigen Express Breast cancer
NexVax2 ImmusanT Celiac disease
ADXS-HPV Advaxis Cervical, head and neck cancer
CRS-207 Aduro BioTech Pancreatic cancer
PEV7 Pevion Biotech Recurrent vulvovaginal candidiasis
GI-4000 GlobeImmune Pancreatic cancer

Future scope for cancer vaccines:

One school of scientists firmly believes that out of all cancers diagnosed each year globally, various types of microbes contribute 15% to 25% as a causative factor for this dreaded disease, as indicated below:

Infectious Agents

Type of Organism

Associated Cancers
Hepatitis B virus (HBV)

Virus

 Hepatocellular carcinoma(a type of liver cancer)
Hepatitis C virus (HCV)

Virus

 Hepatocellular carcinoma(a type of liver cancer)
Human papilloma virus (HPV) types 16 and 18, as well as other HPV types

Virus

 Cervical cancer; vaginal cancer;vulvar cancer; oropharyngeal cancer(cancers of the base of the tongue,

tonsils, or upper throat);

anal cancer; penile cancer;

squamous cell carcinoma of the skin
Epstein-Barr virus

Virus

 Cancer of the upper part ofthe throat behind the nose
Human herpes virus 8 (HHV8)

Virus

 Kaposi sarcoma
Human T-cell lymphotropic virus

Virus

 Adult T-cell leukemia/lymphoma
Helicobacter pylori

Bacterium

 Stomach cancer
Schistosomes

Parasite

 Bladder cancer
Liver flukes

Parasite

 Cholangio carcinoma(a type of liver cancer)

Source: The International Agency for Research on Cancer (IARC)

These findings open the doors of unique opportunities to develop both preventive and therapeutic vaccines to address the life threatening near fatal ailment of mankind – cancer.

Conclusion:

Developing countries of the world are now demanding more of those vaccines, which no longer feature in the immunization schedules of the developed nations. Thus to supply these vaccines at low cost will be a challenge, especially for the global vaccine manufacturers, unless the low margins get well compensated by high institutional demand.

To effectively focus on all important disease prevention initiatives, there is also a need to build a vibrant vaccine business sector in India. To achieve these dual objectives the government should create an enabling ecosystem for the vaccine manufacturers, academics and the government funded vaccine R&D centers to concentrate more with the relevant vaccine development projects ensuring a decent return on investments, for long term public health interest.

More often than not, the above stakeholders find it difficult to deploy sufficient fund to take their vaccine projects successfully through various stages of clinical development to obtain marketing approval from the drug regulator, working out a decent return on investments. This critical issue needs to be appropriately and urgently addressed by the Government to make the disease prevention initiatives in the country sustainable, demonstrating to all concerned that disease ‘prevention is better than cure’.

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.

Infections may cause NCDs like, diabetes and cancer: Ongoing scientific quest to decipher the mystery

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To create a positive health impact on the lives of billions of people, the United Nations (UN) on September 19, 2011 unanimously adopted a ‘Political Declaration’ on ‘Non Communicable Diseases (NCDs)’.  In the years ahead, this path-breaking initiative on NCDs, with global commitment, is expected to make a huge difference in the lives of many, across the world.

NCDs have now been identified as a key healthcare challenge of this century and include ailments like, cardiovascular, chronic pulmonary diseases, diabetes, arthritis and cancer. In the developing countries, over 80% of all deaths are related to NCDs.

There are times when NCDs raise issues related to social justice and human rights. For example, in a country like India where out of pocket expenses towards healthcare is around 80%, a major illness like cancer even in a middle income group family, can drive the entire household to huge socioeconomic hardship.

NCDs are preventable:

According to the World Health Organization (WHO), adequate physical activity, healthy diet/nutrition and tobacco avoidance can prevent:

  • 80% of premature heart disease
  • 80% of type II diabetes
  • 40% of cancers

Currently, as we shall see below, immunization is also being considered as a preventive therapy for certain types of NCDs.

NCDs may be of infectious origin:

Dr. Bennett Lorber in his article titled, ‘Are All Diseases Infectious?’, published in the ‘Annals of Internal medicine’ wrote that many common NCDs like, cardiovascular, diabetes, peptic ulcer, arthritis and even certain types of cancer originate from infections by micro-organisms.

Mainly because of this reason and its consequent adverse socioeconomic impact, the low and middle income countries of the world will require controlling many types of infections, possibly through immunization, before they ultimately develop into NCDs.  Such measures, in turn, will help them reducing the risk factors of morbidity and mortality related to NCDs.

Infections and NCDs:

As indicated above by Dr. Bennett Lorber, following are some examples of reported relationship between infection and NCDs:

Reactive Arthritis:

Reactive arthritis or spondyloarthropathy has been known to follow intestinal infection with Salmonella typhimurium and Yersinia enterocolitica or urethral infection with Chlamydia trachomatis.

Scientists from the United Kingdom have already announced that they will soon begin human trial of an experimental rheumatoid arthritis vaccine.

Peptic Ulcer and Gastric Carcinoma:

Helicobacter pylori is known to cause of gastritis and peptic ulcer disease and is an important risk factor for gastric carcinoma.

Researchers at Rhode Island Hospital in collaboration with the University of Rhode Island and EpiVax Inc, have identified a potential vaccine to reduce colonization of Helicobacter pylori, which is known to cause peptic ulcer and gastric carcinoma.

Acute Renal Failure:

It was reported that about 10% of infected persons younger than 10 years of age develop hemolytic uremic syndrome, and as many as 75% of cases of the syndrome in the United States are complications of intestinal infection with E. coli.

Vasculitis:

The most common cause of vascular damage in secondary vasculitis is now considered to be related to different types of microorganisms. Patients were reported to have developed polyarteritis nodosa a few months after having hepatitis B infection.

It is widely reported that in the developed countries most common vasculitis is related to hepatitis B and C. However, in the developing world HIV related vasculitis appears to be  common.

Inflammatory Bowel Disease (IBS)/ Crohn’s Disease:

The precise etiology of Crohn’s Disease though remains to be conclusively deciphered, it is  believed by many researchers that the disease develops due to a reaction to a persistent intestinal infection in vascular endothelial cells.

Diabetes:

A good number of experts support a link between infection with enteroviruses in the pancreata and insulin-dependent diabetes mellitus.

To arrest or slow the autoimmune response that destroys insulin-producing cells in diabetes, it has been reported that the Diamyd vaccine, now in Phase III clinical trial in both USA and Europe, has shown very promising results.

Coronary Artery Disease:

A study published in the journal of ‘Clinical Infectious Disease’, Volume 40, Issue 8 ‘demonstrates a significant association between high titers to C. pneumoniae IgG and IgA and acute Myocardial Infarction (MI) in a cohort of young men and suggests that recent or chronic active infections could be associated with an increased risk for MI.’

In other studies also, patients with acute myocardial infarction were found to have elevated serum antibody levels to Chlamydia pneumoniae. This opens up possibility of preventing heart attacks with a vaccine.

Cancer:

The US FDA has already approved two types of vaccines for cancer prevention:

  • Vaccines against the hepatitis B virus, which can cause liver cancer.
  • Vaccines against human papillomavirus, which are responsible for about 70% of cervical cancers.

In addition, US FDA has also approved another cancer vaccine for metastatic prostate cancer.

A type of cancer known as Kaposi sarcoma is linked to an infectious agent found in patients with  acquired immune-deficiency syndrome. Scientists are in the process of developing treatment vaccines against many types of cancer.

Conclusions:

In the field of NCD, a not so widely publicized scientific revolution is in the making. Many well researched findings have, to a great extent, established that infectious agents could be the causative/precipitative or risk factors for NCDs like, chronic pulmonary and cardiovascular diseases, diabetes and cancer.

The moot question raised by Dr. Bennett Lorber earlier:  ‘Are all diseases infectious?’, is gradually getting answered through intensive scientific research. Otherwise, who would have thought, until recently, that vaccines could be developed for diabetes, certain types of cancer or even peptic ulcer?

Such path breaking scientific research findings are, in turn, creating a hope and opportunity for disease prevention through immunization for many NCDs, especially for the developing nations of the world.

It is very heartening to know that United Nations (UN) have taken note of these revolutionary developments in the ‘Non Communicable Disease’ space and are deliberating on the effective ways to combat NCDs caused by infections with the development and use of appropriate vaccines.

The entire world eagerly awaits more actionable outcome of the ongoing scientific quest to decipher the mystery related to many more NCDs to ensure better health of mankind of the Planet Earth.

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.