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New Drug Price Control Order of India: Is it Directionally Right Improving Access to Medicines?

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The last Drug Policy of India was announced in 2002, which was subsequently challenged by a Public Interest Litigation (PIL) in the Karnataka High Court on the ground of being inflationary in nature. The Honorable Court by its order dated November 12, 2002 issued a stay on the implementation of the Policy.

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

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

As a result DPCO 1995 continued to remain in operation, pending formulation of a new drug policy as directed by the honorable court.

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

However, the matter is still subjudice, as the new policy would require to pass the judicial scrutiny.

In this article, I shall try to explore whether the new DPCO 2013 is directionally right in improving access to medicines for a vast majority of population in the country .

An overview:

As stated above, the new DPCO 2013 has just been notified after an agonizing wait of about 18 years, bringing all 652 formulations under 27 therapeutic segments of the National List of Essential Medicines under price control.

As prescribed in the Drug Policy 2012, in the new DPCO the cost based pricing mechanism has been replaced with a market-based one, where simple average price of all brands with a market share above 1% in their respective segments will be considered.

Only decrease in price and no immediate increase:

Companies selling medicines above the new Ceiling Prices (CP), as will be notified by the National Pharmaceutical Pricing Authority (NPPA) soon, would have to slash prices to conform to the new CP level. However, those selling these scheduled drugs below the ceiling price will not be allowed to raise prices, resulting in significant price reduction of most essential drugs with price increases in none. Prices of all these formulations will be frozen for a year. Although a silver lining is that manufacturers will be permitted an annual increase in the CPs in line with the Wholesale Price Index (WPI).

The span:

The span of DPCO 2013 will cover approximately 18% of US$ 13.6 billion domestic pharmaceutical market. However, the total coverage will increase to around 30%, for a year, after coupling it with existing price controlled medicines, as these will continue with the current prices for a year.

No change in retail margin:

DPCO 2013 continues with the provision of DPCO 1995, fixing margin for the Retailers at 16% of Ceiling Price, excluding Taxes.

Benefit to consumers:

Indian consumers will undoubtedly be the biggest beneficiaries of the new DPCO, as ceiling prices will now be based on roughly 91% of the pharmaceutical market by value, resulting upto 20% price reduction in 60% of the NLEM medicines. The prices of some drugs will fall by even upto 70%.

Overall impact:

In the short-term, Indian pharma market may shrink by around 2.3 per cent on implementation of the new policy, according to an analysis by market research firm AIOCD AWACS. The impact could be more pronounced for multinationals, given their premium pricing strategy for key brands. For the patients, anti-infective, cardio-vascular, gastro-intestinal, dermatology and painkillers would witness relatively steeper drop in prices.

However, despite initial adverse impact, higher volume growth over the next few years may help the pharmaceutical companies to recover and pick-up the growth momentum.

More transparent and less discretionary:

Moreover, the industry reportedly feels that the shift in the methodology of price control from virtually opaque and highly discretionary cost based system to relatively more transparent market based one, is directionally right and more prudent. They point out, even WHO in its feedback to the Department of Pharmaceuticals welcomed the intent to move away from cost-based pricing as it has been abandoned elsewhere.

The drafting of DPCO 2013 also appears to have reduced the discretionary criteria for the National Pharmaceutical Pricing Authority (NPPA) to bare minimum.

Check on any essential drug going out of market:

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

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

Patented Products:

DPCO 2013 does not include pricing of patented products, as the Department of pharmaceuticals (DoP) has already circulated the report of an internal committee, specially constituted to address this issue, for stakeholders’ comments.

Encourages innovation:

The new DPCO encourages innovation and pharmaceutical R&D offering significant pricing freedom. It states all locally developed new drugs, new drug delivery systems and new manufacturing processes will remain exempted from any price control for a five-year period.

Implementation:

Interestingly, the changes in prices will be effective after 45 days (15 days in the earlier DPCO 1995) from the date of  respective CP notifications. This increased number of days is expected to allow the trade to liquidate stocks with existing prices.

However, the industry feels that its hundred percent implementation at the retail level, even within extended 45 days, for previously sold residual stocks lying in remote locations, could pose a practical problem.

The Government reportedly answers to this apprehension by saying, the provisions and wordings for implementation of new CPs in DPCO 2013 are exactly the same as DPCO 1995. Only change is that the time limit for implementation has been extended from 15 days to 45 days in favor of the industry. Hence, those who implemented DPCO 1995, on the contrary, should find effecting DPCO 2013 changes in the CPs much easier.

Opposite views:

  • Reduction in drug prices with market-based pricing methodology is significantly less than the cost based ones. Hence, consumers will be much less benefitted with the new system.
  • A large section in the industry reportedly does not co-operate with the NPPA in providing details, as required by them, to make the cost based system more transparent.
  • Serious apprehensions have been expressed about the quality of outsourced market data, which will form the basis of CP calculations.

Key challenges:

I reckon, there will be some key challenges in the implementation of DPCO 2013. These are as follows:

  • Accuracy of the outsourced market data based on which Ceiling Prices will be calculated by the NPPA.
  • In case of any gross mistakes, the disputes may get dragged into protracted litigation.
  • Outsourced data will provide details only of around 480 out of 652 NLEM formulations. How will the data for remaining products be obtained and with what level of accuracy?
  • The final verdict of the Supreme Court related to the Public Interest Litigation (PIL) on the NPPP 2012, based on which DPCO 2013 has been worked out, is yet to come. Any unfavorable decision of the Honorable Court on the subject may push the NPPP  2012 and DPCO 2013 back to square one.

Conclusion:

Thus, DPCO 2013 should achieve the objectives of the Government in ensuring essential medicines are available to those who need them most by managing prices in the retail market and balancing industry growth on a longer term perspective. Interestingly, it also encourages indigenous innovation and R&D.

Thus, DPCO 2013, at long last, seems to be a well balanced one.

That said, making drug prices affordable to majority of population in the country is one of most important variables to improve access to medicines. This is an universally accepted fact today, though not an end by itself.

It is worth noting, price control of medicines since the last four decades have certainly been able to make the drug prices in India one of the lowest in the world coupled with intense cut-throat market competition. Unfortunately, this solitary measure is not good enough to improve desirable access to modern medicines for the common man due to various other critical reasons, which we hardly discuss and deliberate upon with as much passion and gusto as price control.

Therefore, industry questions, why despite so many DPCOs and rigorous price control over the last four decades, 47% of hospitalization in rural area and 31% of the same in urban areas are still financed by private loans and selling of assets by individuals?

Others reply with equal zest by saying, the situation could have been even worse without price control of medicines.

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.

 

 

 

Does the Landmark Glivec Judgment Discourage Innovation in India?

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No, I do not think so. The 112 pages well articulated judgment of the Supreme Court of India delivered on April 1, 2013, does not even remotely discourage innovation in India, including much talked about ‘incremental innovation’. This landmark judgment reconfirms the rules of the game for pharmaceutical innovation, as captured in the Indian Patents Act 2005.

When one reads the judgment, point 191 in page number 95 very clearly states as follows:

“191. We have held that the subject product, the beta crystalline form of Imatinib Mesylate, does not qualify the test of Section 3(d) of the Act but that is not to say that Section 3(d) bars patent protection for all incremental inventions of chemical and pharmaceutical substances. It will be a grave mistake to read this judgment to mean that section 3(d) was amended with the intent to undo the fundamental change brought in the patent regime by deletion of section 5 from the Parent Act. That is not said in this judgment.”

Thus all ‘incremental innovations’, which some people always paint with a general broad brush of ‘evergreening’, should no longer be a taboo in India. The judgment just says that Glivec is not patentable as per Section 3(d) of Indian Patents Act based on the data provided and arguments of Novartis.

To me, the judgment does also not signal that no more Glivec like case will come to the Supreme Court in future. It vindicated inclusion of Section 3(d) in the amended Indian Patents Act 2005.

It is interesting to note that honorable Supreme Court itself used the terminology of ‘incremental innovation’ for such cases.

That said, I find it extremely complex to imagine what would have happened, if the judgment had gone the opposite way.

A critical point to ponder:

The judgment will also mean that all those products, having valid product patents abroad, if fail to meet the requirements of Section 3(d), will not be patentable in India, enabling introduction of their generic equivalents much sooner in the country and at the same time causing a nightmarish situation for their innovators.

However, this again, in no way, is an outcome of this judgement or a new development, as stated above. It is just vindication of the intent behind inclusion of Section 3(d) in the amended Indian Patents Act, when it was enacted by the Parliament of India in 2005.

Patentability of ‘Incremental Innovations’ in India:

Patentability criteria for any ‘incremental innovations’ has been defined in the Section 3(d) of the Indian statute as follows:

“The mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance or the mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant.

Explanation: For the purposes of this clause, salts, esters, ethers, polymorphs, metabolites, pure form, particle size isomers, mixtures of isomers, complexes, combinations and other derivatives of known substance shall be considered to be the same substance, unless they differ significantly in properties with regard to efficacy.”

Supreme Court interpretation of the term “Efficacy” in Section 3(d): 

The Honorable Supreme Court in page 90 of its above order under point 180 stated that in case of medicines, efficacy can only be “therapeutic efficacy”, which must be judged strictly and narrowly. The interpretation goes as follows:

180. “What is “efficacy”? Efficacy means ‘the ability to produce a desired or intended result’. Hence, the test of efficacy in the context of section 3(d) would be different, depending upon the result the product under consideration is desired or intended to produce. In other words, the test of efficacy would depend upon the function, utility or the purpose of the product under consideration. Therefore, in the case of a medicine that claims to cure a disease, the test of efficacy can only be “therapeutic efficacy”.

The Honorable Court under the same point 180 further elaborated:

“With regard to the genesis of section 3(d), and more particularly the circumstances in which section 3(d) was amended to make it even more constrictive than before, we have no doubt that the “therapeutic efficacy” of a medicine must be judged strictly and narrowly…Further, the explanation requires the derivative to ‘differ significantly in properties with regard to efficacy’. What is evident, therefore, is that not all advantageous or beneficial properties are relevant, but only such properties that directly relate to efficacy, which in case of medicine, as seen above, is its therapeutic efficacy.” 

Based on this interpretation of Section 3(d), the Honorable Supreme Court of India ordered that Glivec does not fulfill the required criteria of the statute.

The rationale behind Section 3(d):

A report on ‘Patentability of the incremental innovation’ indicates that the policy makers keeping the following points in mind formulated the Indian Patents Act 2005:

  • The strict standards of patentability as envisaged by TRIPS pose a challenge to India’s pharmaceutical industry, whose success depended on the ability to produce generic drugs at much cheaper prices than their patented equivalents.
  • A stringent patent system would severely curtail access to expensive life saving drugs to a large number of populations in India.
  • Grant of a product patents should be restricted only to “genuine innovations” and those “incremental innovations” on existing medicines, which will be able to demonstrate significantly increased efficacy over the original drug.

IPA challenges: 86 pharmaceutical patents granted by IPO fall under Section 3(d):

A study by the ‘Indian Pharmaceutical Alliance (IPA)’ indicates that 86 pharmaceutical patents granted by the IPO post 2005 are not breakthrough inventions but only minor variations of existing pharmaceutical products and demanded re-examination of them.

Possible implications to IPA challenge:

If the argument, as expressed above in the IPA study, is true by any stretch of imagination, in that case, there exists a theoretical possibility of at least 86 already granted product patents to get revoked. This will invite again another nightmarish situation for innovators.

Examples of revocation of patents in India:

On November 26, 2012, the Intellectual Property Appellate Board (IPAB) reportedly denied patent protection for AstraZeneca’s anti-cancer drug Gefitinib on the ground that the molecule lacked invention.

The report also states that AstraZeneca suffered its first setback on Gefitinib in June 2006, when the Indian generic company Natco Pharma opposed the initial patent application filed by the global major in a pre-grant opposition. Later on, another local company, GM Pharma, joined Natco in November 2006.

After accepting the pre-grant opposition by the two Indian companies, the Indian Patent office (IPO) in March 2007 rejected the patent application for Gefitinib citing ‘known prior use’ of the drug. AstraZeneca contested the order through a review petition, which was dismissed in May 2011.

Prior to this, on November 2, 2012 the IPAB revoked the patent of Pegasys (Peginterferon alfa-2a) – the hepatitis C drug of the global pharmaceutical giant Roche.

Though Roche was granted a patent for Pegasys by the Indian Patent Office (IPO) in 2006, this was subsequently contested by a post-grant challenge by the large Indian pharma player – Wockhardt and the NGO Sankalp Rehabilitation Trust (SRT) on the ground that Pegasys is neither a “novel” product nor did it demonstrate ‘inventiveness’, as required by Section 3(d) of Patents Act of India 2005.

It is worth noting, although the IPO had rejected the patent challenges by Wockhardt and SRT in 2009, IPAB reversed IPO’s decision revoking the patent of Pegasys.

Similarly the patent for liver and kidney cancer drug of Pfizer – Sutent (Sunitinib) granted by IPO in 2007, was revoked by the IPAB in October, 2012 after a post grant challenge by Cipla and Natco Pharma on the ground that the claimed ‘invention’ does not involve inventive steps.

Patent challenges under section 3(d) may come up even more frequently in future:

Some observers in this field have expressed, although ‘public health interest’ is the primary objective for having Section 3(d) in the Indian Patents Act 2005, many generic companies, both local and global, have already started exploiting this provision as a part of their ‘business strategy’ to improve business performance in India, especially when an  injunction is usually not being granted by the honorable Courts for such cases on public health interest ground.

Thus, as stated above, there is likely to be many more cases like, Glivec coming before the Supreme Court in the years ahead.

Another related development of the last week:

It has been reported that American pharma major MSD has last week filed a suit in the Delhi High Court against Indian pharma major – Glenmark for alleged patent violation of its leading anti-diabetic drugs Januvia and Janumet. In this case also no interim injunction has reportedly been granted to MSD by the Honorable Delhi High Court.

Glenmark has stated through a media report, “It is a responsible company and has launched the products after due diligence and research.” The company has also announced that their version of the molecule named Zita and Zita Met will be available to patients at a 20 percent discount to MSD’s price.

Hence, once again, the Indian court to decide, the balance of justice would now point to which direction.

Government has no role to play – patent challenge is a legal process across the world:

The proponents of ‘no change required in the Section 3(d)’ argue, ‘Patent Challenge’ is a legal process all over the world, the Government has hardly got any role to play in settling such disputes. The law should be allowed to take its own course for all disputes related to the Patents Act of the country, including Section 3(d).

They also opine that India must be allowed to follow the law of justice without casting aspersions on the knowledge and biases of the Indian judiciary for vested interests.

That said, there is certainly an urgent need to add speed to this legal process by setting up ‘Fast-track Courts’ for resolving all Intellectual Property (IP) related disputes in a time bound manner.

Arguments against Section 3(d):

Opposition to the Section 3(d) counter-argues by saying, this is a critical period for India to help fostering an appropriate ecosystem for innovation in the country. This group emphasizes, “Providing the right incentives for incremental pharmaceutical innovation can move India forward on this path and encourage the development of drug products that meet the needs of Indian patients. Reforming Section 3(d) to encourage and protect incremental pharmaceutical innovation would create such incentives and help India become a true powerhouse of innovation.”

Another group says that the main reason in favor of Section 3(d) being the provision will prevent grant of frivolous patents, the ultimate fallout of which will result in limited access to these drugs due to high price, is rather irrelevant today. This, they point out, is mainly because the Government is now actively mulling a structured mechanism of price negotiation for all patented drugs to improve their access to patients in India.

Importance of ‘Incremental Innovation’ in India:

Incremental innovations are indeed very important for the country and have been benefiting the patients immensely over decades, across the world.

A report titled, “The Value Of Incremental Pharmaceutical Innovation” highlighted as follows:

  • As per the National Knowledge Commission, while 37.3% of Indian companies introduced breakthrough innovations in recent years, no fewer than 76.4% introduced incremental innovations.
  • 60 percent of the drugs on the World health Organization’s essential Drug list reflect incremental improvements over older drugs.

The report indicates some of the benefits of ‘Incremental Pharmaceutical Innovation’ for India as follows:

  1. Improved quality of drug products, including products that are better suited to India’s climate.
  2. Development of treatments for diseases that are prevalent in India for which new drug discovery is currently limited or otherwise inadequate.
  3. Increasing likelihood that for every therapeutic class, there is a treatment to which an Indian patient will respond.
  4. Development of the R&D capacity and expertise
 of Indian pharmaceutical companies.
  5. Reduction of healthcare and other social costs in India through improved drug quality and selection.
  6. Increased access to medicine as a result of price competition.

The study concluded by saying that Section 3(d) potentially precludes the patenting of hundreds of incremental pharmaceutical innovations that Indian companies are attempting to patent and commercialize outside India.

There are umpteen numbers of examples that can ably demonstrate, ‘incremental innovation’ of the pharmaceutical innovators help significantly improving the efficacy and safety of existing drugs. All such innovations should in no way be considered “frivolous” as they have very substantial and positive impact in improving conditions of the ailing patients.

Be that as it may, the Supreme Court judgment has categorically mentioned that all ‘Incremental innovations’ should conform to the requirement of the Section 3(d) of the statute.

“West should learn from India’s high patent standards”

An article appeared just yesterday written by a well-regarded Indian economist recommended, “West should learn from India’s high patent standards”. It observed that    over-liberal patent system of the West is now broken and it should learn from India’s much tougher patent system.

Patent monopolies needs to be given only for genuine innovations, as defined in the Indian Patents Act 2005, where the public benefits clearly exceed the monopoly cost.

The author concluded by saying, “This means setting a high bar for innovation. High standards are desirable for patents, as for everything else.”

View of the Glivec inventor: 

In another interview titled, “If you erode patents, where will innovations come from?” Dr Brian Druker, whose work resulted in the development of Glivec, re-emphasizing the need for R&D by the pharmaceutical industry, commented,  “I’m going to stay away from the legal judgment … but as a physician, I do recognize that the advances will come from new products, not modifications.”

Are discordant voices out of step with time?

The interpretation of the Section 3(d) of the statute by the Honorable Supreme Court of India is the last word for all, despite a few voices of discord from within and mostly outside India. These voices, many would reckon, could well be out of step with time, especially in relatively fast growing, modern, independent, thinking and assertive young  India.

Conclusion:

In my view, nothing materially has changed on the ground before and after the Supreme Court judgment on the Glivec case so far as the Indian Patents Act is concerned and also in its interpretation.

While encouraging all types of innovations, including incremental ones and protecting them with an effective IPR regime are very important for any country. No nation can afford to just wish away various socioeconomic expectations, demands and requirements not just of the poor, but also of the growing middle class intelligentsia, as gradually getting unfolded in many parts of the globe.

Available indicators do 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 socioeconomic status of the local population.

This critical balancing factor is essential not only for the progress of the pharmaceutical industry, but also to alleviate sufferings of the ailing population of the country, effectively.

For arguments sake, in an ideal scenario, if the Central and State Governments in India decide to buy such drugs to supply to all patients free of cost, just like any ‘welfare state’, will even the Government be able to afford these prices and fund such schemes in India?

It is, therefore, now widely expected that innovator pharmaceutical companies, which play a pivotal role in keeping population of any nation healthy and disease free to the extent possible, should also proactively find out ways to help resolving this critical issue in India, working closely with the Government of 1.2 billion Indians, including other concerned stakeholders.

In that context, the landmark Supreme Court judgment on the Glivec case has vindicated the need of striking a right balance between encouraging and protecting innovation, including incremental ones and the public health interest of India.

By: Tapan J. Ray

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

New ‘Patient Compensation’ Norms on Clinical Trials in India: Overdue Action, Sharp Reaction and Ethical Issues

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Responding to the damning stricture made by the Supreme Court on January 3, 2013, the Ministry of Health, as expected, by a gazette notification of January 30, 2013 has made the norms of compensation to patients participating in Clinical Trials (CT) more stringent.

‘Patient Compensation’ will now include injury or death, even if those are not related to the drugs being tested in the CT.

It is worth mentioning that these guidelines have been reportedly worked out after due consideration of around 300 comments received from the stakeholders on the draft proposal circulated by the Ministry of Health in July 2011, couple of rounds of discussion with the members of the civil society, expert groups and against reported ‘stiff opposition from the drug companies’.

Just a day after, on February 1, 2013, the Ministry of Health also notified final regulations on the conditions under which CT sites will be authorized by the local licensing and the inspection authorities of the Central Drugs Standard Control Organization (CDSCO).

Key features of the new Government ‘Action’ on patient compensation:

Following are the key features in the new norms for patient compensation:

1. The sponsors of CTs will now be liable for injuries or deaths, which will take place during the course of a clinical trial and will be required to pay compensation to the patients or their families.

2. The investigator of the CT must inform the concerned pharmaceutical company, the Clinical Research Organization (CRO) and the Ethics Committee regarding injury or death during CT within 24 hours.

3. It will be mandatory for all CT Ethics Committees to be pre-registered with the Drug Controller General of India (DCGI), unlike the old system where this was not required and trial sponsors reportedly could staff the committee.

4. The pharmaceutical companies and the CROs will get 10 days time to submit a detailed report on related serious adverse event to the Ethics Committee, which in turn will get another 10 to 11 days to convey its evaluation on compensation to be paid to the independent expert committee. The Expert Panel will then advise the DCGI of an appropriate financial compensation within 30 days from the date of receiving the above report.

5. It will no longer require inclusion of specific amount of compensation for injury or death in the informed consent form and does not refer to insurance coverage for potential liability.

6. It requires the sponsors of CTs to provide the trial subject with free “medical management” for as long as it will require.

Will make CT more expensive in India:

Clinical Trials (CT), as we know, are of critical importance for obtaining marketing approval of any new drug and at the same time forms a major cost component in the new drug development process, across the world.

Any savings in this area, both in terms of time and money, will add significantly to the profit margin of the product. In that context the above notification will now make CT more expensive in India.

Sharp ‘reaction’ of CT related industry:

Understandably, reacting to this notification, some Clinical Research Organizations have expressed concerns in areas like:

  1. Lack of distinction between study-related injuries and non-study related injuries
  2. The use of placebos in placebo-controlled trials,
  3. Lack of any arbitration mechanism in case of disagreement on causality/quantum of compensation and the lack of clarity on who constitutes the Expert Committee and its composition.

Some other Experts related CT industry do highlight a few more troubling issues in the notification, as follows:

1. Compensation to be paid for ‘failure of an investigational product to provide intended therapeutic effect.’ This, they expressed, is intriguing as the very nature of a CT is to ascertain whether the investigational drug is efficacious or not.

2. If compensation is not paid as required, a sponsor or CRO may be banned from conducting any further trials in the country. This, they feel, provision could make India a challenging place to conduct CT.

3. There should also be clarity on the formula to determine compensation, the process for determining a compensation amount, and how an appeal process would work.

The bottom-line is, due to this new policy on ‘Patient Compensation’ CT expenses may go up considerably in India.

Other expert views:

On the other hand, some other experts opined to the International Weekly Journal on Science – ‘nature’ as follows:

“These reforms should go further to restore public confidence and the Indian government should establish special courts to deal quickly with allegations of medical misconduct, such as not fully disclosing to participants the risks involved in a clinical trial”.

Global concern on ethical issues with ‘Placebo Controlled’ studies:

In this context, though issues related to ‘Placebo Controlled’ trials have been raised by the CT related industry in India, very interestingly a paper of Research Administration of the University of California on the ethical issues with ‘Placebo Controlled’ studies’ clearly articulates that the use of a placebo in clinical research has remained a contentious issue in the medical community since long.

Some strongly argue that use of placebos is often unethical because alternative study designs would produce similar results with less risk to individual research participants. Others argue that the use of placebos is essential to protect society from the harm that could result from the widespread use of ineffective medical treatment.

However, as per the Office for Human Research Protections (OHRP) guidebook, “Placebos may be used in clinical trials where there is no known or available (i.e. US-FDA-approved) alternative therapy that can be tolerated by subjects.”

This issue also needs to be deliberated and effectively addressed by the Indian drug regulator in the debate of patient compensation for ‘placebo controlled trials’.

A perspective on CT in India:

Interestingly, in this critical area India is fast evolving as a major hub. This is vindicated by a study conducted by Ernst & Young and the Federation of Indian Chambers of Commerce and Industry of India (FICCI), which states that India now participates in over 7 per cent of all global phase III and 3.2 per cent of all global phase II trials. The key points of attraction of the global players, so far as India is concerned, were reported as follows:

1. Cost of Clinical Trial (CL) is significantly less in India than most other countries of the world

2. Huge patient pool with different disease pattern and demographic profile

3. Easy to enroll volunteers, as it is easy to persuade poor and less educated people as ‘willing’ participants.

Such opportunities, experts believe, should have ideally made the clinical research industry to demonstrate greater responsibility to ensure that patients’ safety needs are adequately taken care of. Unfortunately, despite such expectations, some important areas like ‘patient compensation’ have still remained blatantly neglected.

It has now come to light with the help of ‘Right To Information (RTI)’ query that more than 2,000 people in India died as a result of Serious Adverse Events (SAEs) caused during drug trials from 2008-2011 and only 22 of such cases, which is just around 1 percent, received any compensation. That too was with a meager average sum of around US$ 4,800 per family.

It has been widely reported that pharmaceutical companies often blame deaths that occur during trials on a person’s pre-existing medical condition and not related to CT.

DCGI had hauled-up 9 companies for blatant negligence:

According to another report quoting the Drug Controller General of India (DCGI), 25 people died in clinical trials conducted by nine pharmaceutical companies, in 2010. Unfortunately, families of just five of these victims received” compensation for trial related death, which ranged from Rs 1.5 lakh (US$ 3000) to Rs 3 lakh (US$ 6000).

This report also highlighted that arising out of this critical negligence, for the first time ever, the then DCGI was compelled to summon these nine pharmaceutical companies on June 6, 2011 to question them on this issue and with a clear directive to pay up the mandatory compensation for deaths related to clinical trial by June 20, 2011, or else all other CTs of these nine companies, which were ongoing at that time or yet to start, will not be allowed.

The report also indicates that after this ultimatum all the nine companies as mentioned therein had paid the compensation to the families of the patients who had died related to the CT.

Long exploitation of the fragile CT regulations in India:

For all these reasons, the subject of CT in India has created a huge ruckus, mainly for wide spread alleged malpractices, abuse and misuse of fragile CT regulations of the country by some players in this field. The issue is not just of GCP or other CT related standards but more of ethical mind-set and reported rampant exploitation of uninformed patients, especially in case of trial related injuries or even death.

The Bulletin of the World Health Organization (WHO) in an article titled, “Clinical trials in India: ethical concerns” reported as follows:

“Drug companies are drawn to India for several reasons, including a technically competent workforce, patient availability, low costs and a friendly drug-control system. While good news for India’s economy, the booming clinical trial industry is raising concerns because of a lack of regulation of private trials and the uneven application of requirements for informed consent and proper ethics review.”

“Pharmaceutical industry seeks to run studies in countries with lower costs”:

There seems to be nothing basically wrong in this approach per se. However, a recent report does highlight as follows:

“Clinical trials conducted by global drug makers and their proxies have generated increased scrutiny in recent years as the pharmaceutical industry seeks to run studies in countries with lower costs and populations where patients are not exposed to as many medications that can confound results. India has been a prime example”.

A lesson to learn by the Indian Drug Regulator:

It is worth noting that US-FDA in a communication meant for the consumers has stated as follows:

“The Food and Drug Administration’s job is to make sure medical treatments are safe and effective for people to use. FDA staff members meet with researchers, and perform inspections of clinical trial study sites to protect the rights of participants and to verify the quality and integrity of the data.”

The above approach seems to be drastically missing with the drug regulator in India as on date.

Conclusion:

Over a long period of time, a blatant negligence on reasonable care and financial compensation was allowed to continue by the Drug Regulator and the sponsors alike on the CTs conducted in India. A perceptible intent of justice to the patients, with the enforcement of stricter compensation laws and regulations for CT though belated, could dramatically change the CT scenario in India for the better in the years ahead.

In the fine balance of national priority for this area, patients’ safety and interest, I reckon, should always weigh more than the possibility of increase in the costs of CT in India. Thus,  the new norms of Patient Compensation indeed bring with it a breath of fresh air for the concerned stakeholders.

That said, the lose knots in some areas of the new norms, as discussed above, must be properly addressed and adequately tightened for greater clarity of the CT process, for all concerned.

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.

Supreme Court Intervened…But ‘Price Control’ needs striking a right balance between ‘Affordability’ and ‘Availability’ of medicines for Patients’ Sake

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On October 3, 2012, the Supreme Court bench of Justice GS Singhvi and Justice SJ Mukhopadhayareportedly asked the government not to disturb the existing price control mechanism while including all medicines featuring  in the National List of Essential Medicines 2011 (NLEM 2011) therein and posted the matter for further hearing on October 11, 2012.

This happened during the hearing of a Public Interest Litigation (PIL) filed by All India Drugs Action Network (AIDAN) and others, way back in 2003, complaining that the span of price control of only 74 bulk drugs and their formulations under the existing Drugs Prices Control Order, 1995 (DPCO  95) does not include lot many essential medicines, making those drugs unaffordable to the general population.

It is worth mentioning that during earlier hearing on the subject the council of the petitioner had expressed apprehensions to the honorable Supreme Court that the proposed Drug Policy recommending Market Based Pricing may lead to a steep increase in prices of essential medicines in India.

The purpose of ‘Price Control’:

As we know, the key purpose of the Drug Price Control in India is to ensure adequate access to essential medicines for the common man. To achieve this objective meaningfully, the process that the price regulator should follow must always ensure that all such medicines are:

  • Adequately Available
  • Reasonably Affordable

Therefore, maintaining a right balance between ‘affordability’ and ‘availability’ of medicines, while framing any drug policy, is of critical importance.

DPCO 95 does not meet the above two criteria: 

The prevailing price control mechanism has failed to meet the above two critical criteria. This is mainly because the following 26 out of 74 bulk drugs featuring in DPCO 95, though still very important, are not currently manufactured in India due to unremunerative pricing:

No

Molecule

Therapeutic Segment

No.

Molecule

Therapeutic Segment
AMODIAQUIN Anti-Malarial 14. SULPHADIMIDINE Anti-Infective
CAPTOPRIL Anti-Hypertensive 15. SULPHAMOXOLE Anti-Infective
CHLORPROPAMIDE Anti-Diabetic 16. HALOGENATED HYDROXYQUINOLONE Anti-Infective
SALAZOSULPHAPYRINE Gastrointestinal 17. TRIMIPRAMINE Anti-Depressant
MEBHYDROLINE Anti-Histamine 18. LYNESTRANOL Hormone
CHLOROXYLENOLS Anti-Infective 19. METHENDIENONE Steroid
CEPHAZOLIN Anti-Infective 20. DIOSMINE Anti- Haemorrhoidal
PENICILLINS Anti-Infective 21. PYRANTEL Anthelmintic
NALIDIXIC ACID Anti-Infective 22. PYRITHIOXINE Vitamin
STREPTOMYCIN Anti-Infective 23. VITAMIN-B1  (THIAMINE) Vitamin
CHLORPROMAZINE Anti-Psychotic 24. VITAMIN-B2 (RIBOFLAVIN) Vitamin
BECAMPICILLIN Anti-Infective 25. PANTHONATES & PANTHENOLS Vitamin
SULPHADOXINE Anti-Infective 26. VITAMIN E Vitamin

(Source: BDMA-26th May 2012)

This makes one to conclude that the honest attempt of the government to make the above drugs affordable to the patients through DPCO 95 has resulted into their non-availability, making ‘affordability’ irrelevant. Thus, such a mechanism defeats the core purpose of any drug price regulation and should not be continued with.

What happens when NLEM 2011 is included in DPCO 95?

As explained above, if all the essential medicines featuring in the NLEM 2011 are brought under DPCO 95, solely to make them more affordable to patients, there will be a high possibility that market factors, as stated above, may make many of these important medicines unavailable to the patients, as happened in case of so many bulk drugs covered under DPCO 95.

Search for a balancing formula: 

To correct this imbalance between availability and affordability of essential medicines, there is an urgent need to first work out a balancing formula and then build that into the new price control mechanism, jettisoning DPCO 95.

This will help addressing the issue of improving access to essential medicines for the common man in India much more meaningfully.

Dr. Pronab Sen Committee Report vindicates the point:

In 2005, to explore this possibility, the government constituted a special taskforce, which is widely known as ‘Dr. Pronab Sen Committee’. This committee was mandated to recommend options other than existing methodology of price control (DPCO 95) for achieving the objective of making available life-saving and essential drugs at reasonable prices.

In its report, the committee did suggest an alternative measure at that time, concluding that the present price control system (DPCO 95) is inappropriate, inadequate, cumbersome and time consuming.

High transaction costs make essential medicines more expensive:

Current transaction costs of medicines in India are over 50 percent of their ex-factory cost, excluding Excise Duty (ED). The various components of the transaction cost include ED, VAT, CST etc. and distribution (trade) margin.

As the Honorable Supreme Court arrives at the final decision on price control measures for NLEM 2011, there is a need for the government to abolish all duties and taxes like ED, VAT, CST etc. levied on such medicines for the sole benefits of the patients.

For an important policy decision involving essential drugs, all ‘patient centric’ cost-cuts, in my considered view, should be shared by both the government and the Pharmaceutical Industry together.

‘Drug Price’ control alone cannot improve access to medicines significantly: 

It is a recognized fact that to improve access to medicines, the Governments even in countries like, Germany, Spain, UK, Korea, Brazil and China have recently mulled strict price control measures in their respective countries.

However, it is equally important to note that in India, we have witnessed since almost the past four decades that drug price control alone could not improve access to modern medicines for the common man very significantly, especially in the current socioeconomic and healthcare environment of the country. Thus, there is a dire need to augment other healthcare access related initiatives in tandem for a holistic approach.

Recently the Government of India has taken ‘Public Health Interest’ oriented a landmark initiative of providing unbranded generic formulations of all essential drugs, featuring in the ‘National List of Essential Medicines 2011’, free of cost to all patients from the public hospitals and dispensaries, across the country. This laudable step could well address the issue of availability and affordability of essential drugs for a vast majority of the population in India.

Taming drug price inflation only has not helped improving access to medicines: 

It is quite clear from the following table that food prices impact health more than medicine costs:

Year

Pharma Price Increases

Food Inflation

2008

1.1%

5.6%

2009

1.3%

8.0%

2010

0.5%

14.4%

(Source: CMIE)

Exploring a realistic approach:

Imbibing the direction, as provided in ‘Dr. Pronab Sen Committee Report’ and considering other pros and cons of the key methodologies of price control of formulations featuring in NLEM, I wouldreemphasize that a middle path with a win-win strategy to overcome the weaknesses of DPCO 95 effectively, would be in the best interest of both patients and the industry alike, in the current situation. This path, I reckon, may be explored as follows with a four step approach:

  • The inclusion criteria for price control in the new Drug Policy should be based on the ‘essentiality’ criteria of the drugs, which will mean all formulations featuring in the NLEM, as announced by the Ministry of Health from time to time, will come under price control.
  • Take ‘Weighted Average Price’ of each formulation featuring in the National List of Essential Medicines (NLEM) based on Maximum Retail Prices (MRP) of all brands of high, medium and low, above a certain cut-off point, if required.
  • Abolish all duties and taxes like ED, VAT, CST etc. as currently being levied on essential medicines and rationalize high trade margins of total 24 percent to further improve affordability of such drugs to the patients.
  • Put in place effectively enough checks and balances to ensure proper availability of NLEM drugs for all and also to avoid any possible situation of artificial shortages of such drugs. 

Conclusion:

Come October 11, 2012, let us hope that the honorable Supreme Court of India will pass an order related to drug price control, which will help striking a right balance between ‘availability’ and ‘affordability’ of essential medicines in India and the government will rationalize the transaction costs of such medicines thereafter.

In that case, it will be a win-win solution both for the patients and the industry alike, paving the way for improving access to essential medicines for the entire population of India along with other related strategic initiatives towards this goal. Such measures are absolutely essential, especially when medicines contribute around 72 percent of the total ‘Out of Pocket Expenses’ of the common man of the country.

That said, it is important to realize that there is no single or only right way to arrive at the ‘affordable price’ of any medicine, essential or otherwise. However, how much the government or an apex court will allow the pharmaceutical manufacturers to charge for a drug to make the prices ‘reasonably affordable’, will continue to remain an important, complex and a difficult task, both locally and globally.

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.