India’s Drug Quality Concerns: Is Light At The End of The Tunnel In Sight Now?

A brief chronology of some recent events on issues pertaining to patient-health-safety with drugs, as captured below, would possibly generate a mixed feeling for many. This includes a serious concern about, especially generic drug quality safety standards in India, on the one hand, and a ray of hope in the tools available to patients to know more about drugs that they have been prescribed. In this article, I shall dwell on this area. My intent is to bring to the fore the vital point – Is the beginning of the end of a long dark tunnel in sight now?

 A chronology of some recent events:

As reported on July 16, 2023, while talking on the subject, “Pharmaceutical Quality — What are we missing?”, the Drug Controller General of India (DCGI) made a notable comment. He, reportedly, said that the poor quality of drugs exported from India to foreign countries had tarnished the image of the country in the international market. The DCGI further added, pharmaceutical quality has become a subject of discussion on the global platform and the international community has started doubting whether India is capable of making quality pharmaceuticals for the global population.

He underscored, “We boast of our country as the pharmacy of the world, but it seems that it is too difficult to maintain the top position for long. If the position is lost, it will be painful and difficult to restore the faith of the international community. Further, we will lose the opportunity to serve the whole humanity of the world. The responsibility of the loss will not only fall on the manufacturers, but equally on all the stakeholders.”

Alongside, a news report on August 01, 2023, brings some hope in this regard, which I shall elaborate in course of this deliberation.  

A long saga of events: 

Yes, as it appears from the following backdrop:

Over the last several decades, there have been many instances where international drug regulators, including the U.S. FDA, expressed concerns about the quality standards of Indian manufactured drugs. These concerns have generally been related to specific manufacturing facilities – ranging from top domestic manufacturers to smaller ones, raising an uncomfortable apprehension – does India produce ’World-Class’ medicines, for all? 

About a decade ago, one of the most well-known cases was in 2013 when the U.S. FDA issued an import alert on products from the Ranbaxy Laboratories facility in India due to data integrity and manufacturing quality issues. This led to significant scrutiny of other Indian pharmaceutical companies as well. Issues related to data integrity, product quality, and good manufacturing practices lead to inspections, warning letters, import alerts, or other regulatory measures.

It continued. For example, around that time, even Sun Pharmaceutical Industries, one of India’s largest pharmaceutical companies, received a warning letter from the U.S. FDA in 2015 (Source: U.S. FDA). Similarly, Wockhardt, another top Indian pharmaceutical company, faced regulatory scrutiny in 2013 when the U.S. FDA issued an import alert and seized products manufactured at their facility in India. The FDA raised concerns about violations of good manufacturing practices and data integrity issues at the facility. This led to recalls of several products and affected the company’s reputation. (Source: Reuters).

As the juggernaut kept moving, on  December 08, 2016, I wrote in this blog, “Even Smaller Countries Now Question Indian Drug Quality Standard.” On March 04, 2023, the Mint reported, “Death of children in Gambia linked to consumption of India made cough syrups, as the US CDC report states.”  

As I write, the veracity of impact of such incidences remains as serious, if not more, although instances seem to be much fewer. For instance, as reported by Reuters on August 01, 2023: “India has directed Riemann Labs, a manufacturer linked to cough syrup deaths in Cameroon, to stop manufacturing activities, the country’s health ministry said in a statement on Tuesday.”

Thus, On May 27, 2019, I again wrote about: “Drug Quality Imbroglio And ‘Culture of Bending Rules’ in India” in this blog– and that was not the first time I flagged this menace in the country against patient safety.

Even big Indian pharma continued to be struggling with GMP issues:

Big Indian pharma companies are also involved in issues related to lapses in high drug quality standards even recently. Such as, even in 2021, Dr. Reddy’s Laboratories, received a warning letter from the U.S. FDA after an inspection of their manufacturing facility in India. The letter cited violations of good manufacturing practices, data integrity issues, and inadequate investigations of product complaints. Source: The Economic Times). Just a year before, in 2020, the U.S. FDA noted several observations related to good manufacturing practices and quality control. (Source: Moneycontrol).

Drug regulators fight the fire as and when it comes up:

Both the state drug regulators and the Drug Controller General of India (DCGI) fight the fire at the respective manufacturing locations, as and when these come up. No significant actions on the ground for patient safety against such drugs were visible on the ground.  

For example, as reported on August 03, 2023: “Following recent incidents of several countries reporting deaths allegedly linked to “contaminated” India-manufactured drugs, the government has set a deadline for mandatory implementation of the Good Manufacturing Practices (GMP) which were revised in 2018, bringing them on par with World Health Organization (WHO) standards.”

The government ponders making technological interventions for patients:

There are early signs of the government trying to embrace technology for patients’ safety. For example on November 17, 2022, the Union Health Ministry released a gazette notification no 823Eimplementing the Drugs (Eighth Amendment) Rules, 2022, making it mandatory for pharmaceutical companies to affix a QR code on the pack of top 300 formulations from August 1, 2023. A QR code, as reported, will contain the unique product identification code, generic name of the drug, brand name, name and address of the manufacturer, batch number, date of manufacture, expiry date and manufacturing license number.

This was part of the Ministry’s ‘track and trace’ mechanism, and of course, an intent at that time. However, a specific timeline for implantation has now been clearly enunciated.

This time it’s a two-pronged action:

For the first time, I think, a two-pronged action has been announced by the government – an enabling action for patients on the one hand against a strong punitive measure for the errant drug manufacturers on the other:

According to the above gazette notification of the Union Ministry of Health, on August 01, 2023, the central government announced stricter regulations for drug authentication and transparency by imposing mandatory QR codes on drugs. This will be effective from the same day. Patients will now be able to check the QR code on their medicines to ensure their authenticity. 

On August 03, 2023, the government set a deadline for adopting WHO-standard good manufacturing practices for drug manufacturers. Companies with a turnover of over Rs 250 crore will have to implement the revised GMP within six months, while medium and small-scale enterprises with turnover of less than Rs 250 crore will have to implement it within a year. 

Conclusion:

Besides all important patient safety, there are, at least, three other important factors for manufacturing high quality drugs for all and on an ongoing basis, sans lapses, as below:

  • Patients’ trust in the healthcare system relies on the availability of reliable medication. When patients have confidence in the drugs they are prescribed, they are more likely to comply with treatment regimens, leading to better health outcomes. 
  • A strong pharmaceutical sector that focuses on safe and effective drugs can foster economic growth by generating revenue, creating jobs, and attracting investments. It can also stimulate research and development efforts.
  • A reputation for producing quality drugs can boost India’s position as a global leader in pharmaceuticals, attracting international collaborations and partnerships.

Which is why, from the entire perspective, as above, amid India’s drug quality concerns, I reckon, one may still tend to wonder now – Is a light in sight now at the end of the dark and long tunnel? 

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.

 

Pharma Policy Execution Gap Limits Access To Affordable Medicines?

“The cost of new drugs is putting increasing pressure on people in both rich and poor countries”- was eloquently expressed in an article, titled “Why do new medicines cost so much, and what can we do about it?”. This was published by “The Guardian” on April 09, 2018.

Almost synchronically, expressing concern on this issue, the World Health Organization (W.H.O) advised the world leaders ‘to take bold new approaches’ for increasing access to medicines for all. A UN high-level panel on ‘access to medicines’ spent almost a year deliberating over related issues. The panel members were from pharma companies, as well as civil society and academics. The final report coming in September, backed de-linkage of the costs of R&D from the eventual price of the drug. Notably, the author who is also the health editor of the above publication, feels that any positive outcome in this direction is unlikely to materialize soon.

The majority of big pharma constituents, with the possible exception of GSK, whose then chief executive Sir Andrew Witty was unenthusiastic about the UN report. Probably because, it supported governments’ right to invoke ‘a get-out’ from the World Trade Organization’s TRIPS agreement. This is to bypass drug patents and make cheaper versions of the respective generic equivalents, in the interests of public health, in accordance with the 2001 Doha declaration. However, the author is hopeful that, “as happened with AIDS, each new crisis over access to medicines – whether concerning a common liver disease or a rare cancer, and particularly over the antibiotics that are under threat and vital to all our lives – is likely to put pressure on companies to find ways to bring the costs of medicines down.”

Stakeholder pressure for increasing access to medicines continues. Even in smaller developed countries, such as Switzerland, a section of the public demands that “Swiss authorities must act to make lifesaving drugs more affordable by introducing compulsory licensing.” Or, one can now see reports saying,“Irish patients are being denied access to nine drugs that are widely available across Europe, largely, on cost grounds.”

Nevertheless, regardless of mounting pressure for drawing a reasonable symmetry between cost of, especially new drugs and their improved access to patients, ongoing status-quo continues. In this article, I shall dwell on this concern from the Indian perspective, focusing on an agonizingly stark implementation-gap related to the current Indian pharma pricing policy.

Under pressure, pharma now recognizes the need for affordable drugs:

Coming under intense pressure of patients and other stakeholders, even the largest trade association of Big Pharma has recently changed its stance on this issue, though clearly sharking any responsibility for the same. It just recognized the need for affordable medicines for improved patient access to treatments by saying: “Too often patients have to fight to access breakthrough medicines that are revolutionizing how we fight disease.” It also accepted the fact that “many Americans are struggling to afford their medicines.”

“We can improve patient access and affordability by moving toward a system that prioritizes results for patients. Biopharmaceutical companies are working with insurers to develop innovative and flexible ways to pay for medicines that focus on results, lower out-of-pocket costs and enable patients to access the right treatments the first time” – it added.

What it really means: 

What it really means ‘treatment outcomes-based drug pricing’ or ‘value-based drug pricing (VBP)’. In other words, a situation where drug prices are set in line with their real and demonstrated clinical and economic value to patients, against other available products. This model will also ensure that patients’ money doesn’t get wasted from drugs that aren’t effective on them. The VBP model is, thus, significantly different from product pricing, based on ‘undisclosed’ cost of ongoing innovation for new drugs.

Is this Big Pharma’s new way to change optics?

The intent for imbibing VBP, as expressed by the above pharma association, throws open the door for discussion of its core intent. Is the intention real, or another Big Pharma way of changing general optics on the sensitive issue of new drug pricing? This doubt creeps in from the findings of some important studies on this issue. One such is an interesting paper, titled “Pricing for Survival” from KPMG. The analysis highlighted very limited application of VBP concept, and also why it is not yet viable – despite the hype being created around it.

According to KPMG, “there were 25 drugs engaged in various types of VBP with payers in the fragmented United States market as of September 2017. The problem is, these models appear to be limited in applicability to disease states with more standardized protocols and dominated by drug therapies with single indications – notably osteoporosis, diabetes and hepatitis C.” To date, VBP models seem to be facing several constraints, such as it is appealing mostly to payers that are fully integrated with healthcare delivery i.e., closed-loop payer-provider health systems or integrated delivery networks.

“The takeaway is, when it comes to specialty and orphan drugs, outcomes-based pricing simply faces too many barriers at present” – the article elaborated. Be that as it may, let me now explore the relevance of VBP in India.

Any relevance of VBP in India?

VBP has been tried in a health care environment where payers and drug companies are two critical players for access to affordable medicines, as we see in the KPMG study. Under any value-based pricing agreements for pharmaceuticals, both payers and pharma companies agree to link payment for a medicine to the value achieved, rather than volume.

Whereas, in the Indian healthcare scenario, as we are experiencing today, payers are mostly individuals.  Despite various well-publicized health schemes, expenditure on health, including drugs, remains by and large ‘out of pocket (OoP)’ – for a large Indian population. Hence, copying western framework for implementation VBP in India, would call for scores of ‘pharma – individual payer agreements.’ This would be a daunting task, if not impractical, to even try it out.

In this context, let me touch upon the Ayushman Bharat scheme that was launched by the Prime Minister on September 23, 2018, but just in one of the 29 states of India – Jharkhand. If, or as and when it will cover the entire country, the scheme is expected to bring 107.4 million families and more than 550 million people under health insurance coverage. However, the work seems to be still in progress.

There are three financing models for this scheme – insurance model, trust model and hybrid model – and the 19 states that have come on board for the scheme’s implementation in the country, have chosen a trust model, according to the Union Health Minister. The minister also reiterated: “Things are still unfolding. Only when the letters reach the beneficiaries will they understand and react.”

Nevertheless, the Union Health Minister himself, just like his counterparts in the previous governments, exhibited confidence that the country is “moving towards universal health cover with Ayushman Bharat scheme,” – as was the headline of the above media report.

Going by the past and current outcomes of several such government schemes in the country, and what the minister himself articulated on September 17, 2018, a large section of the Indian population still remains  apprehensive on the fast pan-India rollout and overall success of this ambitious health scheme. Hence, at this stage, I reckon, it may not be relevant to discuss the application of VBP model on Ayushman Bharat project. I wrote about such apprehensions in this Blog on June 18, 2018.

Having said that, VBP still remains relevant when we look at the government’s intent captured in the National Pharmaceutical Pricing Policy (NPPP) 2012,’ as I shall discuss below.

VBP and the policy implementation gap:

For making the point clearer, let me keep the Ayushman Bharat scheme aside because of its associated uncertainties. Even in the current health care environment of high OoP expenditure on drugs, especially on high priced new drugs, if one tries to make use of the VBP model, it is very much possible.

This is because, the National Pharmaceutical Pricing Policy 2012, under point 4 (XV) on ‘Patented Drugs, categorically states:  “There is a separate Committee constituted by the Government order dated February 01, 2007 for finalizing the pricing of Patented Drugs, and decisions on pricing of patented drugs would be taken based on the recommendations of the Committee.”

Curiously, even 6 years down the line, no meaningful decision has been taken on patented drug pricing in India by the successive governments. As I wrote in this Blog on December 12, 2016, Price Negotiation For Patented Drugs: Still A Policy Paralysis.

Parliamentary Standing Committee intervenes:

Six years after the constitution of the committee by the Department of Pharmaceutical (DoP), the long-awaited report was eventually submitted with a vague formula for pricing patented drugs in India. Intriguingly,the issue remained as such, until the Parliamentary Standing Committee’s August 2016 report was placed before the parliament. It strongly criticized the DoP’s efforts to recommend measures in regulating prices of life-saving patented drugs, despite government assurances for the same.

On September 23, 2016, media reported: “Upbraided by the parliamentary standing committee for its gross negligence and lackadaisical attitude, the department of pharmaceuticals has set about seeking suggestions from different ministries on price regulation of patented drugs.”

According to reports, a new inter-ministerial committee was formed thereafter, under the chairmanship of one of the Joint Secretaries of the DoP to suggest a new mechanism to fix prices of patented drugs in the country.
The other members of the committee are Joint Secretary – Department of Industrial Policy and Promotion (DIPP); Joint Secretary – Ministry of Health and Family Welfare; and Member Secretary – National Pharmaceutical Pricing Authority (NPPA). But, the saga continues – at the cost of patients’ health interest.

Conclusion:

As it appears, there still lies a clear opportunity for Indian drug pricing policy makers introduce VBP concept for patented drugs in the country. Following this model, the prices of new and innovative drugs under patents can be set in line with their real and demonstrated clinical and economic value to patients, over the available existing products. Health Technology Assessment (HTA), for example, could be an effective tool in this process.

Additionally, the VBP model could also minimize, if not eliminate the risk of patients paying a high a price for new drugs coming through incremental innovation, adding too little clinical and economic value over existing drugs. There may, of course, be some teething trouble or even important issues in arriving at consensus on value-metrics for VBP. But, this can be sorted out through meaningful engagement with concerned parties.

Strikingly, even after 6 years since the NPPP 2012 was announced, nothing tangible has been made known to stakeholders on the execution of ‘patented drug pricing policy’ in India. An avoidable policy execution gap continues, limiting access to affordable new medicines to a vast majority of the Indian population, even today.

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.

Innovation: Is Big Pharma Talking Differently?

“Nearly 2 billion people have no access to basic medicines, causing a cascade of preventable misery and suffering. Good health is impossible without access to pharmaceutical products.” The World Health Organization’s (WHO) ‘Access to Medicine’ report on ‘Ten years in public health 2007–2017’ made this observation.

It also reemphasized: “A significant proportion of the world’s population, especially in developing countries, has yet to derive much benefit from innovations that are commonplace elsewhere.” Despite this, continued lobbying of many pharma companies for TRIPS-plus measures and legislation, the breaching of laws or codes relating to corruption and unethical marketing, and several blatant instances of company misconduct continues, even today.

In the midst of this situation, has Big Pharma started thinking differently about the purpose of innovation? I shall try to explore the ground reality in this article.

The argument of Big Pharma:

In response to the above observation or anything akin to that, Big Pharma has counter arguments, which are rather contentious, as many believe. They generally say, it is the responsibility of the different governments to alleviate health misery of the citizens, and not theirs. In tandem, they keep repeating the same old argument, underscoring lower prices of innovative drugs would lead to lower profit generation, significantly slowing down the process of innovation.

Drug innovation follows an arduous path and an expensive process: 

Big Pharma wants people to comprehend about what it entails in the journey of discovering a New Molecular Entity (NME) and converting it to a safe and effective medicine.

For example, in its booklet Bayer explained: ‘it takes about ten to twelve years to develop a new drug. during this time, highly qualified scientists from a variety of disciplines work on filtering out a suitable active ingredient from an enormous number of compounds. Between 5,000 and 10,000 compounds are rigorously studied in numerous laboratory tests and the best ones further optimized. out of four or five drug candidates that are then tested on humans in clinical studies often only one substance is approved and becomes available to physicians and patients.”

The entire process reportedly takes around 14 years, and according to a 2016 study by the Tufts Center for the Study of Drug Development - developing a new prescription drug, which gains marketing approval, is estimated to cost drug manufacturers USD 2.6 billion. Besides, a new analysis conducted at Forbes finds that getting a single drug to market may involve an expenditure of USD 350 million before the medicine is available for sale. It concludes, large pharmaceutical companies that are working on dozens of drug projects, spend USD 5 billion per new medicine.

Drug innovation is only for those who can afford:

As is being witnessed by many, Big Pharma always tend to argue that high R&D costs drive new drug prices up in pharma. Moving a step further, that drug innovation is for only those patients who can afford, was justified even by the CEO of a major constituent of Big Pharma. An article published in Forbes Magazine on December 05, 2013 wrote: “At the Financial Times Global Pharmaceutical & Biotech Conference this week, Bayer AG CEO, Marijn Dekkers, is reported to have said that Bayer didn’t develop its cancer drug, Nexavar (sorafenib) for India but for Western patients that can afford it.”

How strong is the justification for high new drug cost?   

Instead of believing the pharma argument on its face value, it will be worthwhile to go for a dip-stick analysis. One such analysis, titled “Pharmaceutical industry profits and research and development”, published by the USC-Brookings Schaeffer Initiative for Health Policy on November 17, 2017, presents some interesting facts.

It says, the pharmaceutical industry is a high-fixed-cost and low-marginal-cost industry. This means, as the authors explain, that the cost of bringing a new drug to market is very high and the process is risky, while the cost of producing an extra unit of a product that is on the market is frequently “pennies a pill”. It also, indicates, though there is a disagreement about the exact cost of bringing a new drug to market, there is general recognition that the process costs run a fewhundreds of millions of dollars per new drug. Thus, innovative drugs are supposed to be somewhat more expensive to many patients. But how much – is the question to ponder, I reckon.

An example of a new drug pricing:

Let me choose here, as an example, the pricing of one of the most contentious, but undoubtedly a breakthrough medicine – Sovaldi (Sofosbuvir) of Gilead. Sofosbuvir was discovered in 2007 – not by Gilead Sciences, but by Michael Sofia, a scientist at Pharmasset. The drug was first tested on human successfully in 2010. However, on January 17, 2012 Gilead announced completion of the acquisition of Pharmasset at approximately USD 11.2 billion.

Subsequently, on December 06, 2013, US-FDA approved Gilead’s Sovaldi (Sofosbuvir) for the treatment of Chronic Hepatitis C. Sovaldi was priced at USD 1,000 a day in the U.S., costingUSD 84,000 for a course of treatment. That Gilead can’t justify the price of its hepatitis C therapy – Sovaldi, was highlighted in an article with a similar title, published in the Forbes Magazine on June 17, 2014.

It is worth mentioning that Sovaldi costs around USD 67,000 for a course of therapy, in Germany. Whereas, it costs round USD 55,000 in Canada and the United Kingdom (UK). Gilead has accepted an altogether different pricing strategy for Sovaldi in some other countries, such as India and Egypt.

When the above concept is used to explain Sovaldi pricing:

The above Forbes paper explained its pricing by saying: “Add in other therapies that supplement Sovaldi, and now you’re talking about USD 100,000 or so to treat a single patient. To use Sovaldi to treat each of the 3 million hepatitis C patients in the United States, it would cost around USD 300 billion, or about the same amount we annually spend for all other drugs combined.”

Let me now put a couple of important numbers together to get a sense of the overall pricing scenario of a new drug. The New York Times (NYT) reported on February 03, 2015: “Gilead Sciences sold USD 10.3 billion of its new hepatitis C drug Sovaldi in 2014, a figure that brought it close to being the best-selling drug in the world in only its first year on the market.”

Against its just the first-year sale, let me put the cost of acquisition of Sovaldi at USD 11.2 billion, an expenditure of USD 350 million before the medicine is available for sale as calculated in the Forbes articleand the cost to manufacture a pill of Sovaldi at around USD 130. This reinforces the point, beyond any doubt how ‘outrageous’ its pricing is.Even Gilead’s CEO admitted to failures in setting price of Sovaldi at USD 1,000-A-Pill, said another article on the subject. More important is, the costs to Gilead for Sovaldi acquisition and launch were virtually recovered in just a little over a year, but Sovaldi’s original price tag remains unaltered.

Is the Big Pharma talking differently now?

It appears that some constituents of Big Pharma have now started talking differently in this regard, publicly – at least, in letters, if not in both letter and spirit. Be that as it may, one will possibly be too naïve to accept such sporadic signals coming from pharma, as a shift in their fundamental thought pattern on drug innovation as a profit booster. Being highly optimistic in this area, I would rather say that these are early days to conclude that Big Pharma has really accepted the reality that – drug innovation is only meaningful, if it reaches those patients who need them the most.

Changing…not changing…or early days?

Let me explain this point with examples of changing…not changing…orearly days.

Changing?

On July 24, 2018 during an interview to Pharm Exec the head of the sub-Saharan African region for Roche made some key points, such as:

  • Groundbreaking innovation in medical science is only meaningful, if it reaches the patients who need it.
  • Access to healthcare is a multidimensional challenge and key to addressing the barriers, is really understanding them
  • Need to create a new business model that can sustainably – and this is very important – create access for patients.

Not changing?

When one Big Pharma constituent is showing some change in its approach on the purpose of innovation, another constituent is trying to make the entry of cheaper biosimilar drugs even tougher. This creates yet another doubt – both on safety and efficacy of biosimilars, as compared to much higher priced off-patent original biologic drugs.In August 2018, Pfizer reportedly called for US-FDA guidance on ‘false or misleading information’ about biosimilars, citing some of the following examples from other Big Pharma constituents, such as:

  • Genentech’s “Examine Biosimilars” website, which states that “the FDA requires a biosimilar to be highly similar, but not identical to the existing biologic medicine.” Pfizer argues that Genentech’s omission of the fact that an approved biosimilar must have no clinically meaningful differences from its reference product is a failure to properly communicate the definition of a biosimilar.
  • Janssen Biotech’s patient brochure for brand-name Remicade, which states that a biosimilar works “in a similar way” to a biosimilar without clarifying that the biosimilar must have the same mechanism of action as the originator. Pfizer also takes issue with the brochure’s suggestion that no infliximab biosimilar has been proven to be safe or effective in a switching study.
  • Amgen’s April 13, 2018, tweet that states that patients may react differently to biosimilars than to reference products. Pfizer also points out an Amgen YouTube video that implies that switching to a biosimilar is unsafe for patients who are well controlled on a current therapy.

Interestingly, on July 20, 2018 Pfizer announced that the US-FDA has approved Nivestym (filgrastim-aafi), a biosimilar to Neupogen (filgrastim) of Amgen, for all eligible indications of the reference product. This is the fourth US-FDA approved Pfizer biosimilar drug, the marketing and sales promotion of which expectedly, I reckon, will be no different from other biosimilars.

Early days?

Yes, it appears so. These are early days to draw any definitive conclusion on the subject.

Conclusion:

W.H.O observed in its above report that the ‘overall situation is somewhat improving’. It was also corroborated in the ‘2016 Access to Medicines Index’, which gave high marks to those companies that negotiated licenses for antiretrovirals and hepatitis C medicines through the Medicines Patent Pool (MPP). MPP was set up in 2010 as a public health organization supported by the United Nations to improve access to HIV, hepatitis and tuberculosis treatments in low- and middle- income countries.

It could well be, on the purpose of drug innovation some new realization has dawned, at least, on some few global pharma majors. However, it is still difficult to fathom its depth, at this point of time. There is no conclusive signal to believe that the Big Pharma is now thinking differently on the subject, not just yet.

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.

The Curious Conundrum of New Drugs Approval Process

Fathoming the details of just a short span of time, not going beyond the last 10 years, I find from the published data that many new drugs, such as, Alatrofloxacin, Aprotinin, Drotrecogin alfa, Lumiracoxib, Propoxyphene, Rofecoxib, Rosiglitazone, Sibutramine, Tegaserod, Tetrazepam, were withdrawn from a number of important global markets. Quite a few of those were withdrawn also from the world market.

The key reason for almost all these withdrawals was serious safety concerns for the patients while using these medicines. Interestingly, some of these new molecules were withdrawn even after attaining the blockbuster status, such as Rofecoxib.

Tens of thousands of patients have died only because of this reason, according to reports.

It is widely believed by the experts in this area, if full public disclosure of the entire data of drug clinical trials was made, most of these new drugs would not have seen the light of the day and without putting many patients’ health safety in jeopardy.

All this is a part of a curious conundrum in the new drug approval process, across the world, for various reasons. In this article, I would try to dwell on this issue.

Voices against this ‘unethical practice’ getting louder:                                             

On December 22, 2015, ‘CBC News’ published an interesting article, titled “Researcher issues ‘call to action’ to force release of hidden drug safety data: Bringing drug industry data into the light of public scrutiny.”

The article echoed the same belief of other global experts and, in fact, went a step forward. It categorically reiterated, if full disclosure of the entire data of drug clinical trials is made public, medical practice might have been quite different.

To drive home this point, the article cited the example of the arthritis drug rofecoxib (Vioxx), which has been linked to tens of thousands of deaths related to heart attacks.

It highlighted, although this risk was very much known to the regulatory authority of the United States, the relevant data was not released to the public for an impartial scrutiny.

Quoting different sources, the paper observed, almost half of the drug trials remain secret and the studies that are published, overwhelmingly report results that make the drug in question look good.

Independent experts’ views differed from the innovator companies:

In some cases, when researchers were able to see what is hiding in the filing cabinets of the drug innovator companies, a different picture altogether emerged on the overall profile of those drugs.

One group looked at 12 antidepressants, comparing the published studies with the internal US FDA assessments. They found that 94 per cent of the published studies were positive, as compared to 51 per cent, when they included all of the studies assessed by the drug regulator.

Based on a detailed study, the authors concluded, without considering all the data, drug effectiveness can often be exaggerated, leading doctors and patients to assume that the medications work better than what they actually do. The ongoing practice of the drug players may help them to significantly diminish the risks, related to the benefits offered by these medicines.

A few months ago, another group analyzed the data from an unpublished drug company study about the effect of Paxil on teen depression and found that the drug did not work and was not safe for the patients. This result completely contradicted the original, unpublished study on this drug.

A crusader emerged in Canada:

Interestingly, the same article, as above, states that Mathew Herder , the health law associate professor at Dalhousie University in Halifax, Canada is now taking up the fight. He is now “calling on other doctors, researchers and journalists to bombard Ottawa with their own demands for drug industry data, using the new legislative lever called the ‘Protecting Canadians from Unsafe Drugs Act,’, which was passed late last year in Canada. 

He has also created a template to help doctors, researchers and journalists access drug safety data at Health Canada. Herder reportedly could even include biomedical researchers, doctors who prescribe medicine, investigative journalists pursuing questions about drug safety, and other activists and patient groups.

This example is worth imbibing elsewhere.

The Rule Books are in place, though with loopholes:

To curb such alleged patient unfriendly practices of the innovative drug manufacturers, while obtaining the marketing approval of new drugs, various rules and procedure were put in place, by various authorities.

I shall deliberate below a few of these rules, and enough loopholes therein, enabling the interested parties to hoodwink the external experts, at the cost of patients.

International Clinical Trials Registry Platform:

Much before Herder, following a ministerial summit on Health Research in 2004, a World Health Assembly Resolution passed in 2005 called for unambiguous identification of all interventional clinical trials. This resolution led to the establishment of the ‘World Health Organization (WHO) International Clinical Trials Registry Platform’. It collates information on trials that have been notified in a network of clinical trial registries.

According to W.H.O, “The registration of all interventional trials is a scientific, ethical and moral responsibility”.

In the latest version of the Declaration of Helsinki, it reiterates, “Every research study involving human subjects must be registered in a publicly accessible database before recruitment of the first subject.”

It unambiguously states, “Researchers have a duty to make publicly available the results of their research …. Negative and inconclusive as well as positive results must be published or otherwise made publicly available”.

Understandably, W.H.O statement underscores, “There is an ethical imperative to report the results of all clinical trials, including those of unreported trials conducted in the past.”

It is worth mentioning here that on January 1, 2015, by a new policy on publication of clinical data, ‘European Medicines Agency (EMA)’ also decided to proactively publish all clinical reports submitted as part of marketing-authorization applications for human medicines, by the by pharmaceutical companies.

Big Pharma's serious apprehensions on greater Public transparency:  

Before finalization of the above policy, EMA sought comments on its draft from various state holders. On September 5, 2013, in its remarks on the draft, ‘The European Federation of Pharmaceutical Industries and Associations, EFPIA’ expressed its apprehension about the public health safety oriented proactive move by the EMA as follows:

“We are worried by a move towards greater transparency of clinical trials data that appears to be putting transparency – at whatever cost – ahead of public health interests. Our detailed response to the EMA draft policy speaks to this concern. While EFPIA values other voices and opinion in the conversation surrounding clinical trials data, we believe there are better alternatives than what the EMA is presenting.” 

This is of course understandable. That said, it also gives satisfaction to note that EMA did not wilt under any pressure on this score, whatever the anecdotal might of the external force be. 

Gross non-compliance, endangering patients health safety:

Although, the standards and requirements of “Public Disclosure of Clinical Trial Results” have been well specified now, and even in most of the Big Pharma websites one can find disclosure norms of clinical trial data, their overall compliance on the ground, is still grossly inadequate, endangering patients’ health safety.

An article published in the BMJ Open on November 12, 2015 titled, “Clinical trial registration, reporting, publication and FDAAA compliance: a cross-sectional analysis and ranking of new drugs approved by the FDA in 2012”, well captured the magnitude of this issue. 

Nevertheless, the study analyzed just a subset of drugs approved in a single year, 2012. The researchers only examined whether clinical trials were registered and reported, not what that data suggested about how the drugs worked.

The paper reported the results as follows:

“In 2012, the US FDA approved 39 novel new medicines, known as NMEs, and 35 novel drugs. Combining these lists, the FDA approved a total of 48 new drug entities, 15 of which were sponsored by 10 large pharmaceutical or biotechnology companies with market capitalizations valued over US$19 billion. A total of 342 trials were conducted to gain regulatory approval of the 15 drugs, 24 of which were excluded from our analysis, leaving 318 trials involving 99 599 participants relevant to our study, a median of 17 trials per drug.”

Based on the findings, the authors concluded asunder:

“Trial disclosures for new drugs remain below legal and ethical standards, with wide variation in practices among drugs and their sponsors. Best practices are emerging. 2 of our 10 reviewed companies disclosed all trials and complied with legal disclosure requirements for their 2012 approved drugs. Ranking new drugs on transparency criteria may improve compliance with legal and ethical standards and the quality of medical knowledge.”

Simultaneously, The Washington Post in an article of November 12, 2015, titled, “How pharma keeps a trove of drug trials out of public view”, summarized this report by highlighting to the general public that one third of the clinical trial results that US FDA reviewed to approve drugs made by large pharmaceutical companies in 2012, were never publicly reported. 

Unethical practices skewing medical science:

On July 25, 2015, ‘The Economist’ published an article titled, “Spilling the beans’. It highlighted again that the failure to publish the results of all clinical trials is skewing medical science. 

This article also brought to the public attention that half of the clinical trial results are never published over several decades. It broadened the discourse with the observation that this specific unwanted practice, distorts perceptions of the efficacy of not just drugs, but devices and even surgical procedures too, in a well planned and a systematic manner. What is most important to note is, it has seriously compromised with patients’ health interest, across the world. 

It keeps on happening, as there are no firm obligations on the part of drug companies for making public disclosure of all such data, both for and against, though all these data are required to be filed with the regulatory authorities. Hence, the overall assessment of the drugs, weighing all pros and cons, is just not possible for any outside expert agency.

For granting necessary marketing approval, the designated authorities, at least theoretically, ensure that the drugs are reasonably safe, and have, at least, ‘some beneficial effects’. However, the prescribing doctors would continue to remain ignorant of the untold facts, the article states. 

According to ‘The Economist’, although in the United States the relevant laws were modified, way back in 2007, to address this issue, it still remains as a theory, the actual practices in this regard are mostly not so.

Despite vindication no tangible outcome yet:

As I said earlier, this fact got vindicated through extensive research by the ‘BMJ Online’ article and many other contemporary medical publications. 

For example, the evidence released earlier on  April 10,  2014 by the Cochrane Collaboration of London, UK, also shows that a large part of negative data generated from the clinical trials of various drugs were not disclosed to the public. 

Again, like Vioxx, though the US FDA was aware of all such data, for a well known drug Tamiflu, unfortunately the prescribing doctors were not. As a result, the U.S. Centers for Disease Control and Prevention (CDC), which doesn’t have the same access to unpublished data as the regulators, recommended this medicine not being able to evaluate it holistically. 

However, as the findings from the unpublished clinical trials eventually surfaced, CDC expressed serious apprehension on the overall efficacy of Tamiflu, quite contrary to the assessment of the concerned big pharma player.

Hence, despite quite a large number of vindications by the experts, no tangible outcome has been noticed on this pressing issue, just yet.                                                               

Conclusion:

Based on all this discussion, the moot question that springs up: Why do the doctors still prescribe such drugs, even after being aware of the full facts?

In this regard, an article titled, “Big Pharma Plays Hide-The-Ball with Data”, published in the Newsweek on November 13, 2014 raised a very valid question. 

It commented, even if Tamiflu does nothing, and there is just a slight chance of life-threatening side effects, why was it approved by the US FDA, in the first place?

Even more intriguing is: Why do the doctors continue prescribing these, especially after the Cochrane Collaboration took the Tamiflu’s maker, Roche, to task about many of its claims, in April 2014.

Incidentally, the Cochrane Collaboration is widely regarded as one of the most rigorous reviewers of health science data. It takes results of multiple trials, looks for faults and draws conclusions. It doesn’t accept funding from businesses with a stake in its findings.

The answer to this question may perhaps be too obvious to merit any elaborate discussion here. 

Be that as it may, this curious conundrum of ‘New Drug Approval’ with ‘Partial Public Disclosure of Clinical Trial Data’ needs to effectively addressed, without further delay. If not, patients’ health interest would continue to get seriously compromised with the continuation of prevailing laxity in its implementation process by the drug regulators.

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 Core Purpose of Pharma Business Much Beyond Profit Making?

Dr. Margaret Chan, the Director General of the World Health Organization (WHO), at a briefing to discuss the Ebola outbreak in West Africa at the UN Foundation in Washington on September 3, 2014 said:

“Big Pharma’s greed for profits, not lack of funding, delaying Ebola treatment development.”

Highlighting that the disease has already taken lives of 4,951 people in West Africa, Dr. Chan castigated the pharmaceutical industry for failing to develop an effective treatment for the deadly virus Ebola since 1976. “Though the Ebola crisis has become the most severe acute public health emergency seen in modern times, a profit-driven industry does not invest in products for markets that cannot pay”, Dr. Chan added.

That said, the Big Pharma has now initiated some efforts in this area, as the disease currently poses a significant threat to non-African countries, including America.

The sentiment reverberates:

Echoing similar sentiment, an article published in the BBC News on November 7, 2014 reiterated:

“Big pharma companies are in the business to make money, so will generally develop those drugs that offer the greatest potential for profit. This means a number of important drugs are neglected – the current Ebola crisis being a case in point.”

The profit oriented approach isn’t restricted just to the diseases of Africa:

The above article also points out that, besides diseases of the developing world, the Big Pharma has been slow to develop newer and multi-drug resistant antibiotics, as well.

This is mainly because, it is lot more difficult for the pharma companies to make huge quantum of profit from discovery of newer antibiotics for acute infections having limited use for around 7 to 10 days, as compared to the medicines for chronic illnesses that people will have to necessarily take every day, for life.

It appears today that the ongoing public opinion and pressure are possibly not adequate enough to trigger even a slightest change in the fetish for profit-making incentives of the Big Pharma companies.

Despite high profitability, the fetish for even more profit continues:

The pharma industry that basically exists to help saving lives of patients of all types, status and color in various ways, now seems to focus mostly on generation of more and more profit than ever before.

- The following table would vindicate the point of profitability of the industry:

Highest and Lowest Profit Margins of 5 key Industrial Sectors, 2013                        (Profit Margin in %)

No.

Sectors

Highest

Lowest

1.

Pharmaceuticals

42

10

2.

Banks

29

5

3.

Carmakers

10

3

4.

Oil & Gas

24

2

5.

Media

18

6

NB: Highest and lowest margins achieved by individual company                             (Source: Forbes, BBC News)

To generate mind boggling profits, many of the Big Pharma constituents have reportedly resorted to various types of gross misconduct and malpractices too, the Chinese saga being the tip of the iceberg.

- The following are some recent examples to help fathom the enormity of the problem:

  • In September 2014, GlaxoSmithKline was reportedly fined US $490m by China for bribery.
  • In March 2014, the antitrust regulator of Italy reportedly fined two Swiss drug majors, Novartis and Roche 182.5 million euros (U$ 251 million) for allegedly blocking distribution of Roche’s Avastin cancer drug in favor of a more expensive drug Lucentis that the two companies market jointly for an eye disorder.
  • Just before this, in the same month of March 2014, it was reported that a German court had fined 28 million euro (US$ 39 million) to the French pharma major Sanofi and convicted two of its former employees on bribery charges.
  • In November 2013, Teva Pharmaceutical reportedly said that an internal investigation turned up suspect practices in countries ranging from Latin America to Russia.
  • In May 2013, Sanofi was reportedly fined US$ 52.8 Million by the French competition regulator for trying to limit sales of generic versions of the company’s Plavix.
  • In August 2012, Pfizer Inc. was reportedly fined US$ 60.2 million by the US Securities and Exchange Commission to settle a federal investigation on alleged bribing of overseas doctors and other health officials to prescribe medicines.
  • In April 2012, a judge in Arkansas, US, reportedly fined Johnson & Johnson and a subsidiary more than US$1.2 billion after a jury found that the companies had minimized or concealed the dangers associated with an antipsychotic drug.

Many more of such instances are regularly being reported by the international media, unabated.

More profit through high drug pricing – The key argument in favor:

The Big Pharma argues that high drug pricing is absolutely necessary to generate a kind of profit, that is essential to fund heavy investments for drug innovation to meet the unmet needs of patients. Moreover, only 3 out of 10 drugs launched are profitable, on an average.

This argument really goes over the top. It does not hold much water either, as the Big Pharma reportedly spends more on the process of drug marketing than on innovation (R&D) of new drugs.

The following table would paint a different picture altogether, marketing expenditure being far more than the R&D costs: 

R&D and Marketing Spend of World’s largest Pharmaceutical Companies

Company Total Revenue (US$ Bn.) R&D Spend  (US$ Bn.) Marketing Spend (US$ Bn.) Profit (US$ Bn.) Profit Margin (%)
J & J (US) 71.3 8.2 17.5 13.8 19
Novartis (Swiss) 58.8 9.9 14.6 9.2 16
Pfizer (US) 51.6 6.6 11.4 22.0 43
Roche (Swiss) 50.3 9.3 9.0 12.0 24
Sanofi (France) 44.4 6.3 9.1 8.5 11
Merck (US) 44.0 7.5 9.5 4.4 10
GSK (UK) 41.4 5.3 9.9 8.5 21
AstraZeneca(UK) 25.7 4.3 7.3 2.6 10
Eli Lilly (US) 23.1 5.5 5.7 4.7 20
AbbVie (US) 18.8 2.9 4.3 4.1 22

(Source: GlobalData, BBC News)

Thus, it is difficult to fathom why are numbers of drugs, such as, Sovaldi and others costing as much as US $ 84,000 and above for a treatment course, when the cost of manufacturing is no more than an insignificant fraction of that treatment cost?

Considering all these and looking at the published profit and loss accounts of various pharma companies, it appears that, the line between ‘making reasonable profit’ and ‘profiteering’ is getting increasingly blurred in the pharma world.

Why is the marketing cost so high?

Since about the last decade and half, despite reasonably high expenditure on R&D there does not seem to have been many reports on breakthrough innovations. According to an expert of the World Health Organization (WHO), “of the 20 or 30 new drugs brought to the market each year, typically 3 are genuinely new, with the rest offering only marginal benefits.”

In a situation like this, when the challenge mostly is of generating targeted revenues with the new products of ‘me-too values’ rather than with those having intrinsic ‘unmet values’, marketing costs to generate doctors’ prescription would obviously escalate disproportionately. Even the process followed to generate these prescriptions, often cross the red line of regulatory, ethics and compliance standards, as have been cited above.

The following questions come up consequently:

- Are these exorbitant avoidable marketing expenditures adding any tangible or intangible values to the ultimate consumers – the patients?

- If not, why burden the patients with these unnecessary costs?

India is no different against similar parameters:

Back home in India, the deep anguish of the stakeholders over similar issues is now being increasingly reverberated with every passing day, as it were. It has also drawn the attention of the patients’ groups, NGOs, media, Government and even the Parliament.

The quality of the pharmaceutical sales and marketing process in India has touched a new low and continues to go south, causing suffering to a large number of patients. Well documented unethical drug promotion is increasingly becoming an emerging threat to the society.

Even today, the Ministry of Health and the Department of Pharmaceuticals of the Government of India provide few checks and balances on unethical drug promotion in India and prefer to keep the eyes meant for vigilance, closely shut.

Despite deplorable inaction of the government on the subject and frequent reporting by Indian media, the national debate on this issue is yet to attain a critical mass. A related Public Interest Litigation (PIL) is now pending before the Supreme Court for hearing, hopefully in the near future. Its judicial verdict is expected to usher in a breath of fresh air around a rather stifling environment for healthcare in India.

I deliberated on a similar issue in one of my earlier blog posts of September 1, 2014, titled, “Pharma And Healthcare: Mounting Trust deficit In Post Halcyon Days

Conclusion:

While it is well-acknowledged that pharma industry has contributed immensely for the development of a large number of life saving new drugs to save precious lives all over the globe, none can also deny that for such efforts the companies concerned have not been hugely profited either…and, as we have been witnessing, not necessarily through legitimate means, always.

That said, in the backdrop of all the above examples, the core issue that emerges today as raised by many, including the World Health Organization (WHO), is the growing inherent conflict between predominantly the profit driven business goals of the pharma players and the public health interest of a nation.

Considering a number of recent serious public outbursts of the global thought leaders and also from the international media on the ‘profit dominating goals’ of the pharma industry, in general, the following questions need to be addressed with all seriousness:

- Is there a need to define afresh the core purpose of pharmaceutical business for all?

- Does the core purpose go much beyond profit making?

- If so, how would the industry plan to engage the stakeholders for its credible public demonstration?

Meanwhile, taking a serious note of it and learning from the past examples, India should initiate experts’ debate on the subject soon, to effectively resolve the conflict of two different mindsets, not resting on the same page in many ways.

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.

 

Big Pharma’s Windfall Gain From Indian Pharma’s Loss, Costs American Patients Dear

According to US-FDA, its ‘Import Bans’ on quality grounds of the drugs manufactured at various Indian facilities, such as, Ranbaxy’s Paonta Sahib, Dewas and Mohali and Toansa plants, were reportedly solely directed at negating the health safety risks of American patients consuming those medicines.

US Media now raises a critical question:

Interestingly, the Wall Street Journal (WSJ) has now flagged a very valid question, whether such US-FDA drug ‘Import Bans’ have really worked in the best interest of American patients, as it has cost the US consumers millions of dollars.

Vindicates past apprehensions:

I also had raised similar apprehensions, at least twice, in my blog posts, one in March 17, 2014 in an article titled, “Loss of Ranbaxy, Gain of Big Pharma…And Two Intriguing Coincidences” and the other on June 9, 2014 in another article titled, “Drugs From The Same Indian Plant: Safe For Europe, Unsafe For America, Why?

Cheaper generic launches got interrupted:

The report states that the ‘Import Bans’ of products manufactured in the above four plants of Ranbaxy kept the Indian company away from its ‘first to launch’ opportunities of at least two blockbuster drugs, namely, Diovan of Novartis and Nexium of AstraZeneca, besides Valcyte of Roche.

As a result of these ‘Import Bans’ of the US-FDA, the concerned global pharma majors were able to continue selling their high priced brands even long after the respective patent expiries, causing hardship to many patients.

Caused windfall gain to Big Pharma:

WSJ reports, these ‘Import Bans’ hugely helped the Big Pharma, as the combined sales of those three drugs in the US totaled US$ 8 billion in 2013. It also states that unavailability of those three generic equivalents would cost US$125 million annually just in 39 counties of upstate New York. This is mainly because once generics are available, patented drug prices usually fall by 80 percent or more.

Thus, the net losers became the purchasers and patients, along with the federal government, the report says.

A serious question to ponder even for the US:

Quoting Columbia Law School professor Scott Hemphill, the report highlights a serious question over whether the US-FDA rules are too complex to manage, or to anticipate strange, unusual and unfortunate consequences that result from them. It also expresses concern over how such delays in generic entry raising the drug treatment costs in the United States.

A repetitive saga:

The saga of losing ‘first to launch’ opportunities, seems to be repetitive in nature for Ranbaxy.

As I stated earlier in my above blog posts, it is also worth noting from another report that:

“Nexium is the third drug for which a Ranbaxy generic has been delayed. Novartis’ heart drug Diovan went off patent in September of 2012. Instead of seeing its sales of the drug plunge last year, the Swiss drug maker earned US $1.7 billion from it, according to the drug maker’s annual report. Roche’s antiviral Valcyte has also escaped competition after going off patent last year. Roche doesn’t break down U.S. sales but reported global revenues of $ 672 million last year, up 10%.”

The same plant meets drug safety standards of Europe, but ‘unsafe’ for America!

In this context it is worth noting, according to another recent media report, quite contrary to the stern actions by US-FDA, European drug regulators have commented as follows on a plant that has been banned by the american regulator:

“The inspection team concluded that there was no evidence that any medicines on the EU market that have an active pharmaceutical ingredient manufactured in Toansa were of unacceptable quality or presented a risk to the health of patients taking them.”

They further added, “This conclusion was supported by tests of samples of these medicines, all of which met the correct quality specifications.”

Isn’t this indeed intriguing?

Conclusion:

The USFDA quagmire in India raises more questions than answes, but one critical trend, where the ultimate gainer is the Big Pharma and the net losers are the American patients and the Indian pharma industry.

Be that as it may, it is about time to for the Modi Government to take up this important issue at the highest level in the United States, as the losers would continue to be the domestic pharma manufacturers in India and in the American patients, Big Pharma being the main beneficiary.

Considering all these, doesn’t this jigsaw puzzle require to be resolved once and for all, without any further dilly-dally?

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.

 

Big Pharma Receives Another Body Blow: Would Indian Slumber End Now?

On May 13, 2014, The New York Times reported, while major pharmaceutical companies have been facing increased scrutiny of their marketing practices from governments around the world, last Wednesday the Chinese authorities sent a strong warning to the pharmaceutical industry implicating Mark Reilly, the former head of Glaxo’s China operations, of ordering his subordinates to form a “massive bribery network” that resulted in higher drug prices and illegal revenue of more than US$150 million.  Mr. Reilly, a Briton, and two Chinese-born Glaxo executives, Zhang Guowei and Zhao Hongyan, had allegedly arranged to bribe government officials in Beijing and Shanghai.

The Chinese police has reportedly said that its 10-month investigation has found that under Mr. Reilly, Glaxo had pushed its staff to meet aggressive sales targets and that the company had conducted “false transactions” through its financial department to transfer “illegal gains” made in China to overseas companies. The authorities also said Mr. Reilly and other senior executives at Glaxo had bribed officials to stop investigations of wrongdoing at the company.

The report also states, although bribery is common in China, it is rare for foreign-born executives from MNCs to be prosecuted. In 2009, a Chinese-born Australian executive at the British-Australian mining giant Rio Tinto was arrested in a bribery and money-laundering case.

“Ethics Matter” – A Chinese warning to MNCs:

On May 16, 2014, Xinhua – the official news agency of China wrote in an editorial that Chinese probe into GSK’s local sales practices should send a warning to other foreign companies doing business in the country that “Ethics Matter”.

This stern action by China is indeed another body blow on the so called ‘ethical image’ of Big Pharma, despite its sophisticated global ‘Public Relations’ machinery working overtime under the respective pharma associations across the world.

Drug price manipulation:

While citing the example of a hepatitis B drug – Heptodin, Xinhua editorial said that GSK “manipulated prices to disguise real costs”, as Heptodin is declared as 73 Yuan to customs in China even though the actual cost is 15.7 Yuan and is sold at 26 Yuan in Canada or 30 Yuan in the U.K.

Quoting a Ministry of Public Security official at a briefing on May 14, it stated that Glaxo charged prices in China that in some cases were seven times as high as in other countries, and used the extra money to pay bribes.

According to this media report, in June last year, “Chinese authorities began investigating allegations that Glaxo had funneled money through local travel agencies to pay bribes to doctors in return for prescribing its drugs. They last year detained some executives on suspicion of economic crimes involving 3 billion Yuan of spurious expenses and trading in sexual favors.”

Not a first time allegation:

This is not the first of such cases and most probably won’t be the last also. Since quite some time many pharmaceutical giants are being reportedly investigated and fined, including out of court settlements, for bribery charges related to the physicians.

In this context July 4, 2012, edition of The Guardian reported a similar astonishing story on Big Pharma. When you click on this short video clipping, which was published on September 29, 2012 you would see that Big Pharma’s Medicaid fraud penalties had reached a record high with GlaxoSmithKline fined $3 Billion in the United States at that time.

It is widespread:

Following are a few more recent examples to help fathom the enormity of the problem:

  • In March 2014, the antitrust regulator of Italy reportedly fined two Swiss drug majors, Novartis and Roche 182.5 million euros (U$ 251 million) for allegedly blocking distribution of Roche’s Avastin cancer drug in favor of a more expensive drug Lucentis that the two companies market jointly for an eye disorder.
  • Just before this, in the same month of March 2014, it was reported that a German court had fined 28 million euro (US$ 39 million) to the French pharma major Sanofi and convicted two of its former employees on bribery charges.
  • In November 2013, Teva Pharmaceutical reportedly said that an internal investigation turned up suspect practices in countries ranging from Latin America to Russia.
  • In May 2013, Sanofi was reportedly fined US$ 52.8 Million by the French competition regulator for trying to limit sales of generic versions of the company’s Plavix.
  • In August 2012, Pfizer Inc. was reportedly fined US$ 60.2 million by the US Securities and Exchange Commission to settle a federal investigation on alleged bribing of overseas doctors and other health officials to prescribe medicines.
  • In April 2012, a judge in Arkansas, US, reportedly fined Johnson & Johnson and a subsidiary more than US$1.2 billion after a jury found that the companies had minimized or concealed the dangers associated with an antipsychotic drug.

There are many more of such examples.

The situation is alarming in India too:

Back home in India, deep anguish of the stakeholders over this issue is now being increasingly reverberated on every passing day, as it were. It has also drawn the attention of the patients’ groups, NGOs, media, Government, Planning Commission and even the Parliament.

An article titled, “Healthcare industry is a rip-off” published in a leading daily, the author highlighted that the absence of regulatory oversight in the healthcare industry needs urgent attention.

The quality of the pharmaceutical marketing in India has touched a new low, causing suffering to patients. Unethical drug promotion is increasingly becoming an emerging threat to society. The Government provides few checks and balances on drug promotion.

To counter the problem of ‘Unethical Drug Promotion’ to a great extent, the author broadly recommended the following:

  • Preparing treatment guidelines,
  • Conducting periodic prescription audits,
  • Generating consumer awareness and empowering consumer with relevant information in an user friendly way
  • Regulating entertainment of doctors in the garb of Continuing Medical Education (CME)

Moreover, the Department Related Parliamentary Standing Committee on Health and Family Welfare in its 58th Report strongly indicted the Department of Pharmaceuticals (DoP) on this score. It observed that the DoP should take prompt action in making the ‘Uniform Code of Pharmaceutical Marketing Practices (UCPMP)’ mandatory so that effective checks and balances could be brought-in on ‘huge promotional costs and the resultant add-on impact on medicine prices’.

Even the Planning Commission of India has reportedly recommended strong measures against pharmaceutical marketing malpractices as follows:

“Pharmaceutical marketing and aggressive promotion also contributes to irrational use. There is a need for a mandatory code for identifying and penalizing unethical promotion on the part of pharma companies. Disclosure by pharmaceutical companies of the expenditure incurred on drug promotion to be made mandatory, ghost writing in promotion of pharma products to attract disqualification of the author as well as penalty on the company, and vetting of drug related material in Continuing Medical Education (CME) should be considered.”

Unfortunately, nothing substantive has been done in India to effectively address such malpractices in a comprehensive manner, as yet, to protect patients’ interest.

A pending PIL:

Despite deplorable inaction by the government on the subject, frequent reporting by Indian media has triggered a national debate on this issue. A related Public Interest Litigation (PIL) is also now pending before the Supreme Court for hearing in the near future. Its judicial verdict is expected to usher in a breath of fresh air around a rather stifling environment for the patients.

Ethical marketing conduct in India – A Survey:

survey report of Ernst and Young titled, “Pharmaceutical marketing: ethical and responsible conduct”, carried out in September 2011 on the UCMP and MCI guidelines, highlighted the following:

  • Two-third of the respondents felt that the implementation of the UCPMP would change the manner in which pharma products are currently marketed in India.
  • More than 50 percent of the respondents are of the opinion that the UCPMP may lead to manipulation in recording of actual sampling activity.
  • Over 50 percent of the respondents indicated that the effectiveness of the code would be very low in the absence of legislative support provided to the UCPMP committee.
  • 90 percent of the respondents felt that pharma companies in India should focus on building a robust internal controls system to ensure compliance with the UCPMP.
  • 72 percent of the respondents felt that the MCI is not stringently enforcing its medical ethics guidelines for the doctors.
  • 36 percent of the respondents felt that the MCI’s guidelines could have an impact on the overall sales of pharma companies.

 Conclusion:

Increasingly many companies across the world are reportedly being forced to pay heavily for ‘unethical behavior and business practices’ by the respective governments.

Intense quarterly pressure for expected business performance by stock markets and shareholders could apparently be the trigger-points for short changing such codes and values.

Be that as it may, I reckon, the need to announce and implement the UCPMP by the Department of Pharmaceutical under the new Modi Government, assumes critical importance in today’s chaotic pharmaceutical marketing scenario. At the same time, demonstrable qualitative changes in corporate ethics and value standards in this regard should always be important goals for any pharmaceutical business corporation in India.

Though late, China has at least started cracking down on the perpetrators of this alleged crime. As corruption conscious Modi-Government assumes office in the country, would India wake-up now to stop this growing menace by enacting and then strictly enforcing the rule of law?

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.

Global New Product Launches: Recent Success Trend Unflattering?

New products are the lifeblood for any company, including the pharmaceutical players. Business performance and sustainable growth of the pharmaceutical industry, as a whole depend on quality of R&D output in terms of ‘New Molecules’, followed by successful development and launch of those new products by the global pharmaceutical innovators.

Post-patent expiry, robust development and ‘just in time’ launch of cheaper generic versions of those innovative products, in a mega scale, usually drive the growth of the generic pharmaceutical industry, globally.

It is worth noting that for the last several years, ‘Patent Cliff’ coupled with progressively drying up R&D pipelines and mostly unflattering new product launches, are taking heavy tolls on the business performance of the global pharmaceutical majors.

The changing dynamics need to be considered:

Echoing this development, a March 2014 report of McKinsey & Company states: “About two-thirds of drug launches don’t meet sales expectations. Improving that record requires pharmaceutical companies to recognize the world has changed and adjust their marketing accordingly.”

To analyze the situation now in perspective, let us start tracking the launches from 2006 and 2007.

10 Big Pharma Sales in 2012 from NMEs approved since 2007 – A comparison

According to a June 2013 report of the ‘FirstWord Pharma’, in 2012 the combined sales of 10 top Big Pharma constituents, as named in the tables below, from the New Molecular Entities (NMEs) approved by the US-FDA since 2007, were US$ 14.8 billion i.e. 4.9 percent of the total revenue of these 10 companies in that year from the patented drugs.

Individual performance of these 10 companies are as follows:

No. Company Sales US$ Million Sales from NMEs US$ Million As % of 2012 Sales
1. Novartis 32153 3445 10.7
2. J&J 25351 2593 10.3
3. BMS 17621 1495 8.5
4. GSK 28518 1282 4.5
5. Merck 35945 1515 4.2
6. Sanofi 30879 1265 4.1
7. Roche 37578 1238 3.3
8. Eli Lilly 20566 457 2.2
9. Pfizer 47496 1040 2.2
10 AstraZeneca 27925 449 1.6

(Source: FirstWord, June 2013)

The success rate: With 2007 as the base year for NMEs

This table shows that Novartis and Johnson & Johnson were the two most successful companies with the launch of such NMEs in 2012, as they generated 10.7 percent and 10.3 percent, respectively, of their total patented drugs sales from these NMEs, as against an average of 4.9 percent, as mentioned above, during that year.

If we now try to analyze the new product launch success rates of the 10 Big Pharma constituents, based on the contribution of these new products (launched since 2007) to their respective total sales in 2012, the following picture emerges:

  • Good:  More than 10 percent - 2 Companies (20 percent)
  • Average: Between 5 and 10 percent - 1 Company (10 percent)
  • Poor: Less than 5 percent - 7 Companies (70 percent)

The success rate: With 2006 as the base year for NMEs

It is interesting to note from this report that by extending the ‘review period’ to NMEs approved by the US-FDA between 2006 and 2012 (i.e. one additional year), revenues generated by these new drugs in 2012 double to US$ 29 billion – or approximately 10 percent (instead of earlier 4.9 percent) of the total combined branded drug sales of the same 10 Big Pharma constituents in the same year, as follows:

No. Company Sales US$ Million Sales from NMEs US$ Million As % of 2012 Sales
1. Merck 35945 7518 20.9
2. Novartis 32153 5843 18.2
3. J&J 25351 3939 15.5
4. BMS 17621 2514 14.3
5. Roche 37578 2818 7.5
6. Pfizer 47496 2946 6.2
7. GSK 28518 1282 4.5
8. Sanofi 30879 1265 4.1
9. Eli Lilly 20566 457 2.2
10 AstraZeneca 27925 449 1.6

(Source: FirstWord, June 2013)

No significant overall qualitative change:

Here also, though some numbers related to the new product launch success rates of the same 10 Big Pharma constituents, based on the contribution of the NMEs launched since 2006 to their respective total sales in 2012 do change, poor to average performance with the new products still remains quite high, as follows:

  • Good: More than 10 percent - 4 Companies (40 percent)
  • Average: Between 5 and 10 percent - 2 Company (20 percent)
  • Poor: Less than 5 percent - 4 Companies (40 percent)

However, at a company level, the broad success trend with new products does not change very significantly. Just two new products approved by the US-FDA in 2006 were off to flying starts. These were:

  • Januvia of Merck: Generated sales of US$ 5.7 billion in 2012
  • Lucentis of Novartis and Roche: Generated combined sales of US$ 4 billion in 2012

Is it practically ‘The End’ of blockbuster drugs era?

While considering the larger picture on the subject, does it mean that Januvia and Lucentis would mark the end of the golden era of global blockbuster drugs…at least for now?

This picture may get clearer with the following table, prompting possibly an affirmative answer:

Best selling NMEs launched since 2006:

No. Product Company Approval Year 2012 Sales in US$ Million
1. Januvia Merck 2006 5745
2. Lucentis Novartis 2006 2398
3. Lucentis Roche 2006 1580
4. Isentress Merck 2007 1515
5. Invega J&J 2006 1346
6. Sutent Pfizer 2006 1236
7. Gilenya Novartis 2010 1195
8. Stelara J&J 2009 1025
9. Sprycel BMS 2006 1019
10 Tasigna Novartis 2007  998

(Source: FirstWord, June 2013)

Successfully launched most recent product is also on a shaky ground:

The new game-changing hepatitis C drug of Gilead Sciences – Sovaldi, has generated a turnover of around US$ 140 million in less than a month’s time from its market launch. Analysts expect an annual turnover of around US$7 billion from this brand.

However, sustaining the current sales momentum for Sovaldi in the years ahead could indeed be challenging for Gilead, as Bristol-Myers Squibb is preparing to obtain FDA approval for its own hepatitis C treatment daclatasvir, which has already been cleared in Europe. In addition, AbbVie is also progressing fast with its novel three-drug fixed dose combination in the same therapy area.

Moreover, Sovaldi’s unusually high price has reportedly created a furore in the western market. It costs US$ 1,000 a pill, raising huge concern among insurers and state funded healthcare providers in the United States. The report states that three Democratic members of the House Energy and Commerce Committee have already demanded that Gilead Sciences must justify the price of Sovaldi.

Categorization of new drugs:

Analyzing the current situation the above McKinsey report categorizes the types of new products that are now being launched, as follows:

  • Roughly one in four launches involves drugs that are strongly differentiated from competing products.
  • More than half of upcoming launches are of moderately differentiated products in well-established disease areas, and the priority is to find a way to stand out from the crowd. This requires innovative approaches to unveil insights into stakeholder needs and behaviors that competitors do not have.
  • For roughly 15 percent of launches, the priority will be to establish unmet needs effectively to ensure access to a well-differentiated treatment for a targeted population. McKinsey call these launches “category creators.” Gardasil, launched in the un-established human papilloma virus market, is an example.
  • 8 percent of launches face the substantial challenge of launching an undifferentiated product in an un-established disease area.

Broad strategic steps prescribed:

To address this challenge effectively the above report underscores the need for a systematic approach for the pharma players as follows:

  • Establish unmet needs in a disease area,
  • Develop deep customer insight as a basis for a truly differentiated positioning
  • Land the products safely in the market
  • Maximize launch uptake
  • Use early experiences in the market to fine-tune ongoing launch activities

Conclusion:

Considering the prevailing scenario of ‘Patent Cliff’, coupled with progressively drying up R&D pipelines and mostly unflattering success with the new product launches, how would a company work out its new product launch strategy, is becoming increasingly a critical question to answer on priority.

To appropriately tune a new product in its long-term sales and profit growth trajectory, it is imperative to ensure that the product exhibits its winning trends as soon as it is fired from its launch pad.

This is absolutely essential, as it appears from the above study, around one in three launches has been good in meeting the planned expectations. This makes about two-thirds of new product launches falling well short of target.  It is noteworthy that 78 percent of those new products that fell short in their first year target, lagged in their second-year forecasts too. Further, 70 percent of those laggards did not measure up to the organizational expectations even during their third year in the market.

Thus, any inadvertent mistakes in this area could make the grand finale of intense product development and strategizing efforts over a number of years together with expenses of millions of dollars, unflattering, if not catastrophic, both in terms of top and bottom line score-card of the organization, as is happening more frequently during the last several years.

This trend needs to be reversed with the application of innovative minds and charting the uncharted frontiers, sooner the better, for a healthier global pharmaceutical industry, as we move on.

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.