Reaping Rich Harvest With Orphan Drugs

Posted on October 21, 2019 by Tapan Ray

A set of perplexing questions on the drug industry has been haunting many, since long. One such area is intimately associated with the core purpose of this business, as enunciated by each company, often publicly. Just to give a feel of it, let me quote what one of the largest global pharma players – Pfizer articulated in this regard, on April 5, 2019: “Health for All is at the core of our company’s purpose. We advance breakthroughs that change patients’ lives by ensuring they have access to quality health care services and Pfizer’s medicines and vaccines.”

Publicly expressed core purpose of any pharma business being generally similar, it may be construed as the same of the industry, at large. Hence, some baffling questions – not ethical, but purely commercial in nature, float at the top of mind, such as:

How the core purpose of business – “Health for All”, gets served when companies bring to the market mostly exorbitantly high-priced drugs, having access only to a minuscule patient population?

How are these companies growing at a faster pace and doing better commercially, by focusing more on orphan drugs approved for the treatment of rare diseases, affecting a very small patient population.

At this point, it will be worthwhile to have a quick recap on ‘orphan drug’ and ‘rare disease’. According to MedicineNet, orphan drugs are those which are developed to specifically treat rare medical condition. This rare medical condition is also referred to as an orphan disease. With that preamble, I shall now focus on this knotty area in search of evidence-based answers to – Is it possible to reap a rich harvest in business with orphan drugs for rare disease? And, if so, how?

Is the focus on high priced orphan a strategic business move?

Regardless of an affirmative or negative answer to the above questions, many people are head scratching with anguish while observing this trend in the drug industry. Mainly because, it is possibly the most important industry for most patients, not only while suffering from an ailment, but also before and after it happens, for various reasons.

The anguish increases manifold, when top manufacturers of popular mass-market drugs, such as, the cholesterol blockbuster Crestor, Abilify for psychiatric conditions, cancer drug Herceptin, and rheumatoid arthritis drug Humira, the best-selling medicine in the world, at a later stage seek and receive orphan drug status for these products reaping a rich harvest. The underlying intent being leveraging ‘additional advantages’ for exorbitant pricing and lesser competition. Hence, it is a strategic business move. I shall discuss this point in greater details, as was raised in a Kaiser Health News (KHN) investigation, in this article.

The same feeling gets resonated in several articles and papers, such as the one titled ‘Big Pharma’s Go-To Defense of Soaring Drug Prices Doesn’t Add Up,’ published in The Atlantic on March 23, 2019. It questioned, ‘How is it that pharmaceutical companies can charge patients $100,000, $200,000, or even $500,000 a year for drugs – many of which are not even curative?’ Nonetheless, the strategy is working well, as we shall find below.

More drugs for rare diseases entering the market at a higher price:

Another article, titled ‘Drug Prices for Rare Diseases Skyrocket While Big Pharma Makes Record Profits,’ published by America’s Health Insurance Plans (AHIP) on September 10, 2019 wrote, drugs for rare diseases are now entering the market at higher prices than ever before, ranging from tens-of-thousands to hundreds-of-thousands of dollars per patient. It further wrote, according to a new report by AHIP, ‘out-of-control drug prices mean too many patients are forced to choose between paying for their prescriptions or paying their mortgage. The prices for drugs to treat rare medical conditions are 25 times more expensive than traditional drugs. That is 26-fold increase in two decades.

The rationale behind so high pricing:

To explore the rationale behind the exorbitant pricing of such drugs, let’s examine what the expert organizations, such as the Tufts Center for the Study of Drug Development (CSSD) said in this regard. Quoting a senior research fellow of CSDD, the article - ‘The High Cost of Rare Disease Drugs,’ published by the Genetic Engineering & Biotechnology News (GEN) on March 04, 2014 reported, although biopharma players generally set higher prices for orphan drugs, there is no causal link between cost of development and pricing. Instead, rare-disease drug prices reflect typical supply and demand situation: ‘Few treatment alternatives allow companies to charge what they can, knowing that payers will often ultimately foot the bill.’

It further explained: “The rarity of the disease means that few people are affected. Generally, the fewer disease sufferers there are, the higher the price of the drug. Companies that invest the same amount of money or more in orphan drugs as they would non-orphan drugs, want to recoup their investment.”

The situation in India for such drugs:

The January 05, 2019 issue of The Pharma Letter captures it all in its headline – ‘India lifts price caps on innovative and orphan drugs; major fillip for Big Pharma.’ It said, with the new legislation announced on January 4, 2019, the Indian government has decided to remove price restrictions on new and innovative drugs developed by foreign pharmaceutical companies for the first five years. In a rider, the government notification also states, the provisions of the Drug Price Control Order (DPCO) 2013 will not apply to drugs for treating orphan diseases (rare diseases).

How will it impact Indian patients?

Consequent to the above government decision, as the report indicated: ‘Orphan drugs to treat rare disease, like Myozyme (alglucosidase alfa) and Fabrazyme (agalsidase beta), both from Genzyme, which are used in the treatment of rare genetic diseases, are among a host of medicines that are to be kept out of price control.’

Quoting officials, the paper pointed out, the most challenging part in the fight against rare diseases is access to affordable treatment. As on date, the prices of these drugs tend to vary, e.g., the cost of treatment with enzyme replacement therapies may reach more than $150,000 per treatment per year. Whereas, in some other areas it may even be as much as $400,000 annually. Moreover, most of these drugs are rarely available in India. As a result, Indian patients suffering from rare diseases have to import these drugs directly. This makes affordability of medicines with an orphan drug regulatory status, a major issue for different stakeholders.

Why patient groups are not generally too vocal about this issue?

An interesting paper of 2008-09 brought to the fore the importance of patient organizations to further patient interest in various areas of health care. With the example of rare diseases and orphan drugs, it aptly expressed: ‘by changing the scale of their organizational efforts, patients’ organizations have managed to integrate themselves into the relays of power through which matters of health are thought about and acted upon. Through their formation into coalitions, patients’ organizations have been able to assume a number of important functions in relation to the government of health.’ The paper further added that the orphan drug problem can be thought of as having changed the scale and organizational form of rare disease patients’ groups.

Regrettably, a recent report of October 09, 2019, raised a big question in this area with a startling headline - ‘Big Pharma’s shelling out big-time to patient organizations. Is there any quid pro quo?’ It said, the Senate Finance Committee of the United States, while looking into the drug pricing decisions, ‘is digging into pharma funding for patient advocacy groups, which have been known to speak in tune that are music to the industry’s ears.’ It added, some Big Pharma constituents together contributed more than $ 680 million to hundreds of patient groups and other nonprofits last year.

It’s worth noting, earlier this year, several patient advocacy groups rallied in objection to a Trump-administration plan that would introduce step therapy requiring patients to try cheaper drugs before moving to more costly ones. ‘A Kaiser Health News analysis found that about half of the groups that objected had received funding from the pharmaceutical industry.’ Be that it may, rallying behind high drug prices by patient groups would help the industry only at the cost of patients’ interest. This is beyond an iota of doubt.

The motivation behind marketing more drugs for rare diseases:

There are several motivating factors to market drugs, which also treat rare disease, attaching startling price tags. The top drivers are generally considered, as follows:

The company gets seven years of market exclusive rights with the drug marketing approval for a rare or orphan disease. Interestingly, many drugs that now have an orphan status aren’t entirely new, either. Even if, the product patent runs out, USFDA won’t approve another version to treat that rare disease for seven years. This exclusivity is compensation for developing a drug, designed for a small number of patients whose total sales weren’t expected to be that profitable, otherwise.

Market exclusivity rights granted by the ‘Orphan Drug Act’ in the United States, can be a vital part of the protective shield that companies create.

Leveraging associated free pricing incentive, the concerned company can attach any price tag of its choice to the orphan drug, sans any competition.

Interestingly, more than 80 orphan drugs won USFDA approval for more than one rare disease, and in some cases, multiple rare diseases. For each additional approval, the drug manufacturer is qualified for a fresh batch of incentives.

The system ‘is being manipulated by many drug makers’:

That this system is being manipulated by many drug makers was also established by the Kaiser Health News (KHN) investigation dated January 17, 2017 titled, ‘Drugmakers Manipulate Orphan Drug Rules To Create Prized Monopolies.’ The analysis brought out that ‘the system intended to help desperate patients, is being manipulated by most drug makers. It reiterated, the key driver is to maximize profits, besides protecting niche markets for even those medicines, which are already being taken by millions. Thus, many orphan drugs, originally developed to treat diseases affecting fewer than 200,000 people, come with astronomical price tags.’

Even some familiar brands were later approved as orphan drugs:

The KHN’s investigation also uncovered that many drugs that now have an orphan status aren’t entirely new. Over 70 were drugs first approved by the USFDA for mass market use. These medicines, some with familiar brand names, were later approved as orphans. ‘In each case, their manufacturers received millions of dollars in government incentives plus seven years of exclusive rights to treat that rare disease, or a monopoly’, the investigation revealed.

The same KHN study also cited the example of AbbVie’s Humira – the best-selling drug in the world. ‘Humira was approved by the USFDA in late 2002 to treat millions of people who suffer from rheumatoid arthritis. Three years later, AbbVie asked the FDA to designate it as an orphan to treat juvenile rheumatoid arthritis, which they told the FDA affects between 30,000 and 50,000 Americans. That pediatric use was approved in 2008, and Humira subsequently was approved for four more rare diseases, including Crohn’s and uveitis, an inflammatory disease affecting the eyes. The ophthalmologic approval would extend the market exclusivity for Humira for that disease until 2023, the report highlighted.

The report also indicated, much touted Gleevec of Novartis, a drug that revolutionized the treatment of chronic myeloid leukemia, has nine orphan approvals. Similarly, Botox, started out as a drug to treat painful muscle spasms of the eye and has three orphan drug approvals. It’s also approved as a drug for mass-market for a variety of ailments, including chronic migraines and wrinkles. Despite humongous pricing, recent reports show that drugs with orphan status are eclipsing many new drugs with outstanding commercial success.

Companies focus on orphan drugs for better financial results:

Many top global companies’ sharp strategic focus on orphan drugs, presumably for the above reasons, is paying a rich dividend. This is evident from a number of recent reports, such as, ‘Orphan Drug Report 2019’ of Evaluate Pharma, released in April. The report says, orphan drugs will make up one-fifth of worldwide prescription sales, amounting to $242bn in spending by 2024 – much of it is going to either big pharma or big biotech players. It also found that the drugs prescribed for the treatment of rare diseases now account for seven of the 10 top-selling drugs of any kind, ranked by annual sales.

Another study of October 2019 by Prime Therapeutics LLC (Prime) shows, with more of ultra-expensive drug treatments coming to market, there is a sharp jump in the number of drug super spenders. While small in number, this group of drug super spenders grew 63 percent, which resulted in $800 million in additional drug costs. In the same period, the number of drug super spenders with drug costs over $750,000 increased 38 percent. This explains, why many companies are focusing on orphan drugs for better financial results.

Conclusion:

As the above quoted report of AHIP articulated, the regulators’ primary intent behind creating lucrative incentives for orphan drugs, was to encourage drug makers to develop treatments for rare diseases by earning a modest profit. ‘Unfortunately, drug makers have responded by building lucrative business models that empower them to achieve a gross profit margin of more than 80 percent – compared to an average gross profit margin of 16 percent for the rest of the pharmaceutical industry,’ the report said.

The AHIP study also finds, from 1998 to 2017, orphan drugs were 25 times more expensive than non-orphan drugs, resulting 26-fold increase in average per-patient annual cost, while the cost of specialty and traditional drugs merely doubled. Today, 88 percent of orphan drugs cost more than $10,000 per year per patient, which will be no different even when Indian patients import the same. The paper also revealed, in 2017, seven out of ten best-selling drugs had orphan indications. And among newly launched drugs, the share of orphan drugs increased more than 4-fold, from 10 percent to 44 percent, over a 20-year period.

Coming back to the core purpose of the pharma and biotech business, as defined by the pharma organizations themselves, one would have expected the situation to be much different. Their stated business purpose – ‘Health for All’, does not seem to recognize: “Every patient deserves to get the medications they need at a cost they can afford,’ as AHIP reiterates. Whereas, “drug makers are gaming well-intentioned legislation to generate outsized profits from drugs intended to treat a small population of patients with rare diseases.” In this scenario, reaping a rich harvest with the orphan drug status seems to have become a new normal.

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.

Protect Generic Drug Margin Moving Up The Value Chain

Posted on December 3, 2018 by Tapan Ray

As an innovative drug molecule goes off-patent, it paves the way for market-entry of cheaper generic equivalents of the same. It benefits not just the patients, but all generic drug players awaiting this opportunity. But, in case of even those generic drugs enjoying 180-day exclusivity in the United States, the price erosion would still be significant, at least, 20 percent to 30 percent. Post 180-day exclusivity, intense competition between different formulations of the same molecule can bring the price down by even 85 percent or more, as compared to the original one.

While looking at the world’s largest pharma market, one sees an interesting scenario unfolding in this area. The Generic Access and Savings Report in the United States 2018 released on July 10, 2018 by the Association for Accessible Medicines, captures it well. Some of the key findings of which on generic drugs are as follows:

In 2017, generic medicines account for nine out of every 10 prescriptions filled in the United States.
Patients fail to fill their prescriptions for brand-name drugs at a rate 2-3 times higher than for generics.
93 percent of generic prescriptions are filled at $20 or less.
Average patient copay for a generic prescription is $6.06.
Generic medicines generated a total of $265 billion in savings.

That’s a good story for the patients in general, and specifically for those who are in the United States. That said, there is a business aspect of this story, as well. In this article, I shall focus on that, venturing into the way forward. However, before proceeding further, for the understanding of all, let me briefly explain, what is this 180-day exclusivity period as described by the FDA in the United States (USFDA).

180-day exclusivity period for generic drug:

USFDA may grant some exclusivity to Abbreviated New Drug Applications (ANDAs) for generic drugs. For this purpose, under the Drug Price Competition and Patent Term Restoration Act, or the Hatch-Waxman Act, a company can seek approval from the FDA to market a generic drug before the expiration of a patent relating to the brand name drug upon which the generic is based. The first company to submit an ANDA with the FDA has the exclusive right to market the generic drug for 180 days. This is called 180-day exclusivity and:

Provides an incentive of 180 days of market exclusivity to the “first” generic applicant who challenges a listed patent by filing a paragraph IV certification and running the risk of having to defend a patent infringement suit.
Begins either from the date the sponsor begins commercial marketing of the generic drug product, or from the date of a court decision finding the patent invalid, unenforceable or not infringed, whichever is first.
In some circumstances, an applicant who obtains 180-day exclusivity may be the sole marketer of a generic competitor to the innovator product for 180 days
FDA does not send letters to the sponsor indicating the grant of exclusivity. The Orange Book is the official vehicle for dissemination of this information.

It is worth noting that some drugs have both patent and exclusivity protections while others have just one or none. Patents and exclusivity may or may not run concurrently and may or may not encompass the same claims.

Increasing pressure on margin:

Nevertheless, after 180-day exclusivity period or as in most other cases, cut-throat price competition starts among product proliferation. On the other hand, even after patent expiry, the prices of original brand name drugs keep attracting a substantial premium. According to another study: “Brand-name drugs have been shown to be priced 20 percent higher than generic drugs in the Netherlands, 30 percent higher in Germany, 50 percent higher in Canada, 50–90 percent higher in the US, and 80 percent higher in the UK.”

In today’s environment, generic drugs are under severe cost pressure also because of direct government interventions in many large markets, such as the United States. A couple of other factors also play a major role in squeezing the generic drug margin in several countries, such as:

Large wholesalers while fighting with each other to get the pharmacy business, often exert tough pressure on generic manufacturers to lower the price.
Other bulk buyers also do the same making the margin wafer-thin.

Its cumulative impact leads to commoditization of generic drugs.

Commoditization of generic drugs:

As is known to many, for a commodity there are many suppliers mostly without any tangible differentiating features and benefits. The same thing happens to generic medicines of the same molecule without any worthwhile difference in efficacy, quality and safety standards. Thus, the price of a generic formulation generally includes its total cost, plus a margin, and depends market demand and supply for products outside any price control. Intense competition within many players with more supply of the same molecule, often squeezes the margin out to a dangerous level.

This scenario was well captured in an 2018 article published in the Journal of Bioequivalence & Bioavailability (volume 10(3): 48-49 (2018) –48). It reiterated, cutthroat competition and public pressure pose challenges for ethical and generic pharma companies. 7 to 10 percent annual price erosion, increased competition coupled with other pressure push margins lower leading to decreased profitability.

Major costs did not change much:

Moreover, the major fixed costs involving raw materials, packing materials, labor and conversion expenditure did not change commensurately. The manufacturing process and yield improvement measures did help. But up to a certain point and not beyond that, to keep the quality of finished formulations within the accepted regulatory requirements of the respective countries, such as the United States.

The trend prevails in 2018:

The above trend prevails even in 2018, in continuation with the previous year. One may recall that in August 2017, due to serious price erosion, several billion dollars in market value were wiped out for some top generic companies. These names include India’s homegrown Dr. Reddy’s Lab., besides Teva and Mylan.

The article titled, ‘Opportunities and Obstacles for Generic Drugs,’ published in PharmTechalso emphasized: ‘Continued pressure on generic-drug prices may reduce product development and limit manufacturing in the US. Numerous state officials have filed lawsuits against generic-drug makers for alleged price-fixing, and debate continues over brand vs. generic product labeling to warn consumers about safety issues. All these trends will shape generic-drug production and costs in the coming months.’

In this situation, the ability of the generic companies to find ways to increase their margin will be the key to success in this business, if not for a long-term survival too.

Ways to achieve it:

One of the novel ways to achieve this goal is entry into ‘Complex Generics’ business.

According to Market Realist – an independent investment research organization, ‘Complex Generics’ are attractive due to high margins. Unlike, commoditized generic formulations, ‘complex generics’ are not easy to manufacture and are generally used in specialty care, namely for treating serious chronic diseases or several life-threatening ailments, such as cancer, HIV or hepatitis C. To some extent complex generics create a market entry barrier for many generic players, due to higher manufacturing cost and complex processes involved in developing this genre of drugs.Complex generics may be classified into several categories, such as:

Complex Active Ingredients: like, peptides
Complex Formulations: like, liposomes, iron colloids
Complex Delivery System: like, locally acting drugs
Complex Drug-Device Combinations: like respiratory metered dose inhalers, transdermal system or a medicated adhesive patch
Biosimilar drugs

On October 09, 2018, a statement from USFDA Commissioner Scott Gottlieb highlighted a new effort to advance the development of generic copies of complex drugs to improve patient access to medicines. Gottlieb said, complex generics “aredrugs that, by nature of their formulation or delivery systems for example, are harder to ‘genericize’ under our traditional approaches. As a result, these drugs often face less competition. Today, we’re announcing a series of guidance documents that will advance the development of generic transdermal and topical delivery systems (TDS).”

This is an interesting development in the world’s largest pharma market.

Lucrative prices of complex generics:

Prices of complex generics are much higher than conventional generic drugs. According to Market Realist a complex generic could cost around US$ 6,000 per month to patients, but would still remain way below the cost of related original brand. Hence, it is a win-win situation – both for patients and also the generic drug manufacturers. Additionally, alongside benefiting patients in terms of cost, complex generics show potential to fetch higher profitability with a reasonable product differentiation.

The ball has started rolling:

It happened in a big way this year, when due to intense price pressure on generics, Sandoz division of Novartis took a major step. On September 6, 2018 - Novartis announced that it has agreed to sell selected portions of its Sandoz US portfolio, specifically the Sandoz US dermatology business and generic US oral solid portfolio, to Aurobindo Pharma USA Inc. It also said, ‘this transaction supports the Sandoz strategy of focusing on complex-generics, value-added medicines and biosimilars to achieve sustainable and profitable growth in the US over the long-term.’

Indian generic drug manufacturers have also sniffed this opportunity. Several Indian players, such as Sun Pharma, Cipla, Lupin, Reliance Life Science, Dr. Reddy’s Laboratories, Glenmark, Biocon and Aurobindo Pharma, to name a few, have made forays into complex generics, including biosimilars. All put together Indian companies have filed around 50 ANDAs in the United States. This number is good, but may not guarantee success for all the applicants. Only the quality of these ANDAs will determine how soon, or how late, or how expensive would be the process of getting marketing approval for complex generics in the United States.

Conclusion:

As ‘The Lancet Oncology’ editorial of June 2015 noted: ‘In recent years, generics manufacturers have increased investment in the development of complex generics.” I reckon, this won’t include a large number of drug exporters from India – not just yet.

The development process of complex generics isn’t everybody’s cup of tea. Thus, venturing into this area by any generic player of all sizes and scale, would call for greater commitment from the company concerned. This path is arduous as compared to conventional generics. If not navigated properly, cost may also be high in certain circumstances. For example, if and when the regulator asks more elaborate trial, or repeat trials, or even the marketing approval process itself could be tough to conform with. That said, complex generics are expected to eventually contribute a significant percentage of the generic market, as their approval challenges are overcome.

Be that as it may, to improve, if not for protecting the profitability of the generic drug business, transacted especially in the developed world, there doesn’t seem to be much option left now, but to move up the value chain.

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.

Dwindling Drug Innovation: Declining Image: Unchanged Business And Advocacy Models

Posted on February 20, 2017 by Tapan Ray

A report of ‘The United States International Trade Commission (USITC)’ released on December 22, 2014 suggested, if tariffs and investment restrictions were fully eliminated, and standards of IP protection were made comparable to the U.S and Western European levels, American exports to India would rise by two-thirds.

A year later, on February 01, 2015 an interesting news article highlighted that the flashpoint of this issue “has clearly been pharmaceutical companies and their lobby group Pharmaceutical Research and Manufacturers of America (PhRMA), which have made some of the strongest representations to the US government against India’s IPR regime.” The same report also indicated that many other companies including the aircraft maker Boeing and the generic drug giant Abbott felt that India offered adequate IP protection and that they had not experienced major IP problems in the country.

The above stance of USITC continued echoing right from the beginning of this year. In January 2017, the CEO of US Biotechnology Innovation Organization (BIO) reportedly told our Prime Minister Narendra Modi, ‘if he follows western practices on intellectual property protection, his country would see a “tidal wave” of biotech industry investment.’

On February 08, 2017, when the fifth edition of ‘U.S. Chamber International IP Index’ report was released by the ‘Global Intellectual Property Center (GIPC)’, India featured in the 43^rd rank out of 45 countries. With this India remained virtually at the bottom of the IP index for the fourth year on the trot. The GIPC report underscored India’s “anaemic IPR policy”, Section 3.d of the Indian Patents Act, besides several others, as major market access barriers.

On February 14, 2017, another news article reported that America’s pharma sector has asked the US Trade Representative (USTR) to continue to keep India on its Priority Watch List (PWL), which includes countries that are alleged violators of US patent laws, claiming that the environment on the ground remains ‘challenging’ in India. Among the areas of concern for the US pharma companies operating in India, unpredictable IP environment, high tariffs and taxes on medicines, regulatory data protection failure, discriminatory and non-transparent market access policies and unpredictable environment for clinical research were listed among others.

With this backdrop, the key question that haunts many industry watchers, when the World Trade Organization (WTO) has no complaint with the Indian Patents Act 2005, and finds it TRIPS compliant, why are these reports coming from the United States consistently emphasizing that the current IP regime of the country is a key barrier to market access, especially for research-based pharma companies?

Is the core issue of the global pharma industry in India is predominantly not encouraging innovation well enough, or the dearth of inadequate Intellectual Property (IP) protection – or it is something beyond that, and is more fundamental in nature. In this article, I shall dwell in this area, first in the global perspective, and then zeroing-in to India.

A global perspective:

“The past 60 years have seen huge advances in many of the scientific, technological and managerial factors that should tend to raise the efficiency of commercial drug research and development (R&D). Yet the number of new drugs approved per billion US dollars spent on R&D has halved roughly every 9 years since 1950, falling around 80-fold in inflation-adjusted terms. There have been many proposed solutions to the problem of declining R&D efficiency. However, their apparent lack of impact so far and the contrast between improving inputs and declining output in terms of the number of new drugs make it sensible to ask whether the underlying problems have been correctly diagnosed,” articulated an important article published on March 01, 2012 in the Nature Reviews Drug Discovery.

This trend continues, virtually unchanged. R&D efficiency continues to remain a cause of great concern to the research-based global pharmaceutical companies. Accordingly, a 2016 report of the Deloitte Center for Health Solutions titled, ‘Measuring the return of pharmaceutical innovation’, among other findings, has captured the following:

Annual projected pharma R&D return declines to 3.7 percent from 10.1 percent in 2010
Peak sales per asset fall 11.4 percent year-on-year since 2010

What then is its basic solution?

When the right solution eludes:

In this scenario, when the right solution is still eluding, to record growth in corporate profit and earning to meet shareholders’ expectations, keeping the existing business model intact, the global research-based pharma companies have the following two limited options, which they are actively pursuing:

Take high price increases for the existing products
Launch the limited new products at a very high price

A report published in The First Word Pharma on October 06, 2015 quoting The Wall Street Journal (WSJ) vindicated exercising the first option. It reported that many drug makers have succeeded in increasing revenue on products despite a flat or declining demand by consistently increasing prices. An analysis revealed that revenue for the top 30 products in the United States zoomed by 61 percent over the past five years, three times the increase in the number of prescriptions sold over that period. While another report by Credit Suisse illustrated that 80 percent of the growth in net profit for the top 20 drug makers was attributable to price hikes.

To substantiate application of the second option, I quote from the CBS News, which on April 05, 2016 reported that an investigation into the cost of prescription drugs revealed huge price hikes over the past five years. Several brand name medications more than doubled in price. Again, on August 24, 2016, it gave a sense of this trend with the following examples, covering the launch price of innovative drug, and price increases of generic drugs:

Gilead fixed their new hepatitis C drug Sovaldi’s cost at US$ 900 – 1,000 per pill
Mylan Pharmaceuticals’ increased the cost of its anti-allergic drug EpiPen from about US$ 57 in 2007 to more than US$ 500 in 2016
Turing Pharmaceuticals increased the price of the anti-malaria drug Daraprim by 5,000 percent last year, charging US$ 750 per pill for a drug that used to cost US$ 13.50 per pill.

PhRMA – the often quoted trade association in America, representing the country’s leading pharma and bio-pharmaceutical research-based companies, reportedly said in a statement: “Focusing solely on the list prices of medicines is misleading because it ignores the significant discounts and rebates negotiated by insurers and pharmacy benefit managers.”

Even if, this argument is accepted as such, the tough impact of regular hefty drug price increases on the consumers is real, unquestionably.

The current business model leaves behind many patients:

The ‘Access to Medicine Index 2016’ report also finds that companies generally do not systematically target populations with the highest needs in their registration, pricing and licensing actions. Although, we continue to make progress toward major public health goals, such as, polio is close to being eradicated, as is guinea worm; more than 45 percent of people living with HIV/AIDS have access to ARVs; important vaccines for malaria and dengue fever are being implemented, still business models for providing healthcare are leaving many people behind. Globally, two billion people cannot access the medicines they need, most of whom live hand to mouth.

Particularly, the big global pharma companies, as the innovators and producers of life-saving medicines, need to act much earlier in the patients’ value chain. Without or inadequate action by these companies, alongside governments, NGOs and others, it will be impossible to bring modern medicine to everyone.

Public outrage over high drug prices:

Many studies indicate that the research-based global pharma and biotech companies, still strive hard to stick to their existing overall business models with a sharp focus on improving both the top and bottom lines of the business, though the R&D projects are becoming lesser and lesser productive. This prompts them resorting to hefty price increases, and introducing new products with high price. Fueled by this self-serving mindset, a simmering public outrage, globally, over high drug prices is fast catching up, further undermining the trust in the industry, as another report says.

No wonder why in the Gallup Poll of August 15, 2016, pharmaceutical industry featured just one above the bottom among the ‘Worst-Rated U.S. Business Sectors’. Moreover, even the Harris Poll released on January 17, 2017 found that 91 percent of U.S. consumers believe pharmaceutical and biotechnology companies put profits over patients.

The industry continues chasing rainbows:

In response to this mounting stakeholders’ criticism, arguably the richest pharma association in the world in its member subscriptions – PhRMA, reportedly launched a new ad campaign costing tens of millions of dollars on January 25, 2017. It aims to highlight innovation and scientific breakthroughs to change the public’s negative perception of the industry. This campaign will span across television, print, digital, and radio, the report elaborates.

Following is an example, as reported, listing three important and interesting comments on this campaign for pharma image revamp from some of those who matter:

Lawmaker Peter Welch, who chairs the House Democratic Caucus’ task force on drug pricing, said, “The issue here is not whether drugs have some benefits … The issue is whether pharma is going to be able to kill us with their pricing power or whether we will get transparency and competition.” He added, “The campaign is all about defending their pricing power and pushing their product.”

Similarly, another lawmaker Sen. Chuck Grassley (R-Iowa) said, “This is [PhRMA] trying to change the subject and to try and divert people’s attention away from drug pricing. Continuing to ignore drug pricing is probably not going to work.”

Ameet Sarpatwari, a drug pricing policy researcher at Harvard University said, “It’s really a matter of being tone deaf in terms of thinking somehow that this is going to change public perception”

Isn’t a great example of chasing rainbows by the industry association, in the number one pharma and biotech market of the world, instead of amending to the root cause of this burning issue?

The situation in India:

In this backdrop, amid a tough global situation, let me assess the related Indian scenario.

The research-based global pharma companies, apparently want to introduce the whole range of their patented products at a high price and in a monopolistic situation in India too, for much higher growth in revenue and profits. Thus, they are consistently pushing hard, with all guns blazing, for major changes in the Indian Patents Act 2005, which would involve jettisoning many patients’ health interest related safeguard conditions enshrined in the Act, such as Section 3.d that restricts ever-greening of patents, and introducing several other tougher IP measures, such as data exclusivity under the garb of imaginary patient safety issues with generic drugs.

They don’t seem to like price control of essential drugs in India, either. While intensely lobbying for it, the lobbyists vehemently argue in favor of the absurd, which is the affordability of medicines does not help to increase drug access to all those who need these most, even when on the ground, the out of pocket expenses for drugs in the country is as high as around 65 percent and universal health care does exist in the country, much to the dismay of many.

It has now been generally established by many global experts, including our own National Pharmaceutical Pricing Authority (NPPA) that market competition does not necessarily bring down drug prices, including for generics, quite unlike many other industries, but various pressure groups, including the media, can catalyze it, and quite effectively. What has happened recently with the cardiac stents price in the country, is just an example.

Is the devil in the traditional pharma business model?

An article titled, “How Pharma Can Fix Its Reputation and Its Business at the Same Time”, published on February 03, 2017 in The Harvard Business Review, emphatically states: “It’s a fact that the current business model of pharma companies is not working efficiently.” It suggests, besides enhancing the current unenviable public image of the industry, expanding access to medicines will help pharma companies enhance shareholder value. The success of a new business model depends on both the willingness and the ability of pharmaceutical companies to fully integrate access to medicine into their business strategies, the article emphasizes.

A July 2015 paper of McKinsey & Company titled, “Pharma’s next challenge”, also reiterates that in the developed economies, market access is chiefly concerned with pricing, and with satisfying local conditions. Whereas, in the emerging markets, to overcome the barriers, pharma players need to shift the focus of their commercial models from marketing and sales to access, and from brand-by-brand access planning to integrated cross-brand planning.

In pursuit of a new model:

Based on the above premises, the search for a new pharma business model, especially for the research-based pharma companies, in my view, may broadly focus on the following areas:

Learn from innovation models of the IT industry: Win-Win collaborative innovation models, including ‘Open Source Drug Discovery’, if scaled up, could reduce the cost of innovation significantly and making the new innovative drugs generally affordable. Thus, larger volume sales may adequately offset a voluntary cut in the product margin, creating a multiplier effect.

Be a part of the solution and not the problem: Because of fiercely pushing the blatant self-serving agenda, inconveniencing many patients, the core mindset of the pharma industry is considered by many as an integral part of the main problem. While pharma industry, quite rightly, seek more market access, they need to act as a facilitator too, to improve general access to medicines, in various imaginative ways, which is, of course, possible. This will make the pharma industry to be a part of the solution to the national problem, over a period of time.

Walk the talk: While pharma industry speaks all right things, in terms of ethical conduct of business, at a time when both national and international media frequently expose their gross wrongdoings. This continues, unabated. Sales and marketing functions are indeed very important, but not at the cost of good corporate governance. I am aware, all compliance rules exist immaculately on paper for many companies, but the senior management officials should demonstrate that they walk the talk, giving exemplary punishment to the wrongdoers, including their peers.

Change the current advocacy model: The current advocacy model of the research-based pharma companies is too self-serving. For example, in India it mostly demands, which is bordering obsession, to change the IP laws of a sovereign country, when the World Trade Organization (WTO) has no problem with these, whatsoever. There is a need for them to demonstrate, sans any shade of arrogance, visible respect to any country’s general sentiment on its Patents Act, as it’s their own decision to operate in those countries. An imaginative win-win change in this area, would significantly help to create a strong bond and mutual respect with other important stakeholders.

Are senior citizens in pharma business a barrier to change?

A recent white paper of ‘Eye for Pharma’, says in its conclusion “many of those now running pharma organizations have come through the ‘golden age’ of pharma and so may be reluctant to change”. Does this issue need to be addressed first by the Independent Directors of the respective Boards of the pharma companies?

In conclusion:

Many questions do spring up while addressing this issue. One common belief is that, pharma industry, in general, is reluctant to change its traditional business model, beyond just tweaking, despite declining overall productivity and in its public image.

In advocacy initiatives, while drawing stakeholders’ attention to the core grievance agenda, though they try hard to project their business focus on patients, especially using the buzzwords, such as, ‘patient centric approach’ or ‘patient engagement’, among many others, has anything visibly changed, just yet?

As the business environment is getting tougher and consumer expectations are fast changing, drug innovation is also steadily dwindling, so is the declining industry image. However, pharma business and advocacy models continue to remain mostly unchanged. It remains intriguing, why are the ‘wise guys’ of pharma business still so deeply obsessed with chasing rainbows, with so much of zeal, hectic activity and money, while majority of patients keeps bearing the brunt?

By: Tapan J. Ray

At The Indian IPR Front: ‘Ground Control, There’s No Major Storm’

Posted on September 5, 2016 by Tapan Ray

The incessant pressure of the developing countries on India, from 2005 to date, to include various restrictive conditions in the Indian Patents Act 2005, still continue. This demand spans across the inclusion of even those provisions, which many experts term as TRIPS-Plus, as these are not required by the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement. More interestingly, the pressure group also insists on the simultaneous deletion or dilution of some existing important provisions in the statute that guarantee public health interest of the nation.

This pressure is expected to mount in the G20 summit of September 4-5, which is now being held in China.

Refreshingly, on 30 August 2016, just ahead of this summit, the eminent economist Dr. Arvind Panagariya, who is also the incumbent Vice Chairman of Niti Aayog of India, and India’s Sherpa at the G20 summit reiterated, as follows, in an interview to a leading National English Business Daily:

“India has strongly opposed the language of the draft on Intellectual Property Protection (IPR) to be taken up at the upcoming G20 meeting in Beijing.”

In the interview, having re-emphasized the critical point that “there is a certain flexibility that we have under the TRIPS agreement and anything that dilutes that flexibility is not acceptable to India,” Dr. Panagariya clearly reaffirmed, yet again that ‘Indian IPR laws and policies are absolutely TRIPS compliant’.

This statement indeed sends a very positive signal to all on the ground, regarding the robust position maintained by the Government, to ward off any move by the overseas vested business interest to derail the flexibility that Indian well-balanced patent regime offers today, not just for public health, but also to foster innovation ecosystem in the country.

At the same time, India’s Sherpa at G20 summit also reportedly clarified that the IPR framework being proposed at the G20, in its strictest sense, cannot be construed as TRIPS-Plus. Nevertheless, some language used in the proposed G20 draft could be subject to interpretation, and India feels that it should not leave any room for ambiguity that has the potential to stretch this demand further, as we move on.

According to Dr. Panagariya: “Right now, these documents have some language where people in the Department of Industrial Policy & Promotion (DIPP) feel that it impinges a bit. We have to fight it out at the summit.”

The basis of apprehension:

There are many reasons for the recent apprehension that India may buckle under the US pressure to dilute its IP laws and policies. One of the reasons could well be a possibility that India has come to an understanding with USTR in this area.

An interesting article published in the ‘spicyip’ on March 14, 2016 also captured this scenario pretty well. I am reproducing below in verbatim a paragraph of this paper, just as an example:

“Last month, the Indian government privately assured the US-India Business Council (“USIBC’’) that it would not invoke compulsory licensing for commercial purposes, as reported in their submissions (available here) to the United States Trade Representative (“USTR”) for the 2016 Special 301 Review. The USIBIC stated that it would be “further encouraged” if the government of India were to make a public commitment, or a written declaration to only issue compulsory licenses in the event of public health emergencies, and not for commercial purposes. This, in their eyes, would “greatly enhance legal certainty for innovative industries”. While such a private assurance doesn’t give rise to any legal commitments, it may well be indicative of a policy shift.”

Prior to this, among many others, a March 3, 2016 ‘The Wire’ report captioned “India Assures the US it Will Not Issue Compulsory Licenses on Medicines”, also raised the same red flag.

The pressure continues even post engagement:

Be that as it may, America has been, repeatedly, raising its concerns over India’s patent regime, driven by its powerful pharma lobby groups.

To keep the kettle boiling, the Office of the United States Trade Representative (USTR) in its 2016 Special 301 Report released this year on April 12, continued to keep India, along with 11 countries, on the Priority Watch List (PWL) for the current year.

USTR reportedly expressed serious concern about Indian IP policies stating that the regime apparently ‘favor’ indigenous manufacturing or Indian innovators. It also alleged that such direction ‘damages’ the patent infrastructure not just in India, but across the world.

It is believed by many that the Special 301 Report is, in fact, a formal posturing of the country on their unilateral IP related business hurdles for the year, exhibiting the power to implement unilateral trade sanctions when the US demands are not met.

In that context, the 2016 Special 301 Report caught many by surprise, as the Indian ‘IPR Think Tank’ (a body of the Union Government-selected experts) was also working closely with the United States to identify and address their issues of concern, such as, patent system, copyright infringement, trademark and counterfeiting, among others.

At that time, this discussion was possibly in its final stage as, just a month after, on May 12, 2016, the Union Cabinet approved the National Intellectual Property Rights Policy (IPR) of India, as proposed by the ‘Think Tank’, in consultation with, among others, especially the United States, which reportedly expressed its overall satisfaction with the final IPR policy.

Key concerns:

From the pharma industry perspective, the key IP concerns are centered, primarily, in the following three areas, besides a few others:

Patentability
Compulsory Licensing (CL)
Data Exclusivity

I would, therefore, concentrate briefly on these three areas to argue how reasonable is the Indian Patents Act 2005 to create a win-win situation both for the patients and the industry while fostering pharma innovation in the country.

Patentability:

One of their key concerns on patentability, revolves round an important provision in the statute – Section 3 (d).

Pharma Multinational Corporations (MNCs), and their trade associations have been going overboard, since long, to lobby hard to make all concerned believe that section 3 (d) is a stumbling block for pharma innovation, as it does not allow patent protection on known chemical substances lacking any significant improvement in clinical efficacy.

This provision of the statute prevents ever-greening of patents with frivolous incremental innovation. Consequently, it blocks the possibility of pricing such ‘me too’ new molecules, exorbitantly, and persuading the prescribers of the existing molecule switching over to the new brand, backed by contentious marketing campaigns, adversely impacting affordability and access to the majority of the patients in India.

Notwithstanding the shrill voices of vested interests, Section 3 (d) has been upheld by the Supreme Court of India in the famous Glivec case of Novartis against Cipla.

The Submission of the Federation of Indian Chambers of Commerce and Industry (FICCI) to USTR for the Review of ‘2016 Special 301 Report’, categorically also states that the Indian Patent Act prescribes a higher threshold on inventive step for medicines, which is in keeping with the TRIPS Agreement, Paris Convention and the Doha Declaration. Hence, Section 3 (d) is sound in terms of the TRIPS, Public policy and Health policy.

Compulsory License (CL):

Besides the hard fact that India has, so far, granted just one CL in a span of more than the last ten years, the Doha Declaration on the TRIPS Agreement related public health clearly provides the flexibility to all its member states to decide on the necessary grounds for granting CL. It is noteworthy that for public health interest, TRIPS flexibilities for CL has been used even by the developed countries, such as, Canada, United States and Germany, in the not too distant past.

Data exclusivity:

The terminologies ‘Data Exclusivity’ and ‘Data Protection’ are quite often used interchangeably by many, creating a great deal of confusion on the subject. However, in a true sense these are quite different issues having a critical impact on the public health interest of a nation.

In an article published in ‘ipHandbook’, titled “Data Protection and Data Exclusivity in Pharmaceuticals and Agrochemicals”, the author Charles Clift, a former Secretary, Commission on Intellectual Property Rights, Innovation and Public Health, World Health Organization; differentiated these two terminologies as follows:

Data Protection (DP): Protection of commercially valuable data held by the drug regulator against disclosure and unfair commercial use.

Data Exclusivity (DE): A time bound form of Intellectual Property (IP) protection that seeks to allow companies recouping the cost of investment in producing data required by the regulatory authority.

According to Charles Clift, Article 39.3 only articulates widely accepted trade secret and unfair competition law, and is not an invitation to create new IP rights, per se, for test data. Nor does it prevent outside parties from relying on the test data submitted by an originator, except in case of unfair commercial practices.

Some developed countries, such as the United States and the European Union have argued that Article 39.3 of TRIPS requires countries to create a regime of DE, which is a new form of time-limited IP protection. However, it is worth noting that in both these countries DE regime was adopted prior to the TRIPS Agreement. Hence, many experts construe such approaches and pressure, thus created for DE, as ‘TRIPS-Plus’.

In its new IPR Policy, India has successfully resisted the demands of TRIPs-Plus provisions, such as, data exclusivity, patent linkage and patent-term extension.

Even the draft IPR policy had reiterated that India accepts: “Protection of undisclosed information not extending to data exclusivity.”

Any near-term possibility of a change in the statute?

While the new IPR Policy of India focuses on consolidating institutional mechanisms to create a robust IPR ecosystem in the country, besides resolving some pressing issues, such as, expediting approval processes involving patents or trademarks, it does not indicate any possible change in the important provisions in the Patents Act 2005, including the much talked about Section 3 (d) and compulsory licensing, despite concerns expressed by the US and pharma companies.

Moreover, a May 13, 2016 Press Trust of India (PTI) report on the Union Cabinet approval of Indian IPR Policy quoted a Government official, as follows, negating the apprehensions that the government may yield to the pressure of developed countries with regard to its IR regime:

“India will never go beyond its current commitments in the TRIPS. Section 3 (d), patent linkage, data exclusivity and compulsory licensing are red lines.”

On the same day and in the same context, Union Finance Minister Arun Jaitley also reportedly stressed that India’s IPR policies are TRIPS-compliant and encourage invention of life-saving drugs, while at the same time, “we must also be conscious of the need to make it available at a reasonable cost so that drug cost does not become prohibitive as has become in some parts of the world”, he articulated, unambiguously.

Conclusion:

Despite all these developments, reiterations and interpretations, a lurking fear on India’s diluting the current patent regime of the nation was refusing to die down in the country.

Many experts were also quite apprehensive about what would be India’s stand on IP in the G 20 summit on September 4-5, currently being held in China.

Is it, then, just a storm in a tea cup on the ground?

This is not a very easy question to answer, though, as many industry watchers sense. Nonetheless, yet another emphatic statement on the subject coming from a top Government echelon and none other than Dr. Arvind Panagariya, the Vice Chairman of Niti Aayog and India’s Sherpa at G20 summit, possibly sends a clear message, at least for now, to all those holding ground in the Indian IPR front:

‘Ground Control, There’s No Major Storm’.

By: Tapan J. Ray

Biosimilar Drugs: First Indian Foot Print In An Uncharted Frontier

Posted on April 4, 2016 by Tapan Ray

A homegrown Indian biologic manufacturer is now about to leave behind its first foot-print, with a ‘made in India’ biosimilar drug, in one of the largest pharma market of the world. This was indeed an uncharted frontier, and a dream to realize for any Indian bio-pharma player.

On March 28, 2016, by a Press Release, Bengaluru based Biocon Ltd., one of the premier biopharmaceutical companies in India, announced that the Ministry of Health, Labour and Welfare (MHLW) of Japan has approved its biosimilar Insulin Glargine in a prefilled disposable pen. The product is a biosimilar version of Sanofi’s blockbuster insulin brand – ‘Lantus’.

The Company claims that Glargine is a high quality, yet an affordable priced product, as it will reportedly cost around 25 percent less than the original biologic brand – Lantus. This ‘made in India’ biosimilar product is expected to be launched in Japan in the Q1 of 2017. Incidentally, Japan is the second largest Glargine market in the world with a value of US$ 144 Million. Biocon will co-market this product with its partner Fujifilm.

Would it be a free run?

Although it is a very significant and well-deserved achievement of Biocon, but its entry with this biosimilar drug in Japan’s Lantus market, nevertheless, does not seem to be free from tough competition. This is because, in 2015, both Lilly and Boehringer Ingelheim also obtained Japanese regulatory approval for their respective biosimilar versions of Lantus. In the same year, both these companies also gained regulatory approval from the US-FDA, and the European Medicine Agency (EMA) for their respective products.

Moreover, Sanofi’s longer acting version of Lantus – Lantus XR, or Toujeo, to treat both Type 1 and Type 2 diabetes, has already been approved in Japan, which needs to be injected less, expectedly making it more convenient to patients.

Key barriers to a biosimilar drug's success:

Such barriers, as I shall briefly outline below, help sustaining monopoly of the original biologic even after patent expiry, discourage investments in innovation in search of biosimilars, and adversely impacts access to effective and much less expensive follow-on-biologics to save patients’ precious lives.

These barriers can be broadly divided in two categories:

A. Regulatory barriers:

1. Varying non-proprietary names:

A large number of biosimilar drug manufacturers, including insurers and large pharmacy chains believe, just as various global studies have also indicated that varying non-proprietary names for biosimilars, quite different from the original biologic, as required by the drug regulators in the world’s most regulated pharma markets, such as, the United States, Europe, Japan, and Australia, restrict competition in the market for the original biologic brands.

However, the innovator companies for biologic drugs hold quite different views. For example, Roche (Genentech), a developer of original biologic, reportedly explained that “distinguishable non-proprietary names are in the best interest of patient safety, because they facilitate Pharmacovigilance, and mitigate inadvertent product substitution.”

Even, many other global companies that develop both original biologic and also biosimilar products such as, Amgen, Pfizer and others, also reportedly support the use of ‘distinguishable nonproprietary names’.

That said, the Biosimilars Council of the Generic Pharmaceutical Association argues that consistent non-proprietary naming will ensure robust market formation that ultimately supports patient access, affordability, Pharmacovigilance systems currently in place and allow for unambiguous prescribing,

2. Substitution or interchangeable with original biologics:

Besides different ‘non-proprietary names’, but arising primarily out of this issue, automatic substitution or interchangeability is not permitted for biosimilar drugs by the drug regulators in the major pharma markets of the world, such as, the United States, Europe and Japan.

The key argument in favor of interchangeability barrier for biosimilar drugs is the fact that the biological drugs, being large protein molecules, can never be exactly replicated. Hence, automatic substitution of original biologic with biosimilar drugs does not arise. This is mainly due to the safety concern that interchangeability between the biosimilars and the original biologic may increase immunogenicity, giving rise to adverse drug reactions. Hence, it would be risky to allow interchangeability of biosimilar drugs, without generating relevant clinical trial data.

On the other hand, the Generic Pharmaceutical Association (GPhA) and the Biosimilars Council, vehemently argue that a biosimilar drug has a lot many other unique identifying characteristics “including a brand name, company name, a lot number and a National Drug Code (NDC) number that would readily distinguish it from other products that share the same nonproprietary name.”

Further, the interchangeable status for biosimilar drugs would also help its manufacturers to tide over the initial apprehensions on safety and quality of biosimilar drugs, as compared to the original ones.

3. 12-year Data Exclusivity period for biologics in the United states:

Currently, the new law for biologic products in the United States provides 12 years of data exclusivity for a new biologic. This is five years more than what is granted to small molecule drugs.

Many experts believe that this system would further delay the entry of cost-effective biosimilar drugs, restrict the biosimilar drug manufacturers from relying on the test data submitted to drug regulator by the manufacturers of the original biologic drugs while seeking marketing approval.

A rapidly evolving scenario in the United States:

The regulatory space for approval of biosimilar drugs is still evolving in the Unites States. This is vindicated by the fact that in March 2016, giving a somewhat positive signal to the biosimilar drug manufacturers, the US-FDA released another set of a 15-page draft guidelines on how biosimilar products should be labeled for the US market. Interestingly, it has come just around a year of the first biosimilar drug approval in the United States – Zarxio (filgrastim-sndz) of Novartis.

The US-FDA announcement says that all ‘comments and suggestions regarding this draft document should be submitted within 60 days of publication in the Federal Register of the notice announcing the availability of the draft guidance.’ Besides labeling issues, this draft guidance document, though indicates that the ‘interchangeability’ criteria will be addressed in the future, does not still throw enough light on how exactly to determine ‘interchangeability’ for biosimilar drugs.

That said, these key regulatory barriers are likely to continue, at least in the foreseeable future, for many reasons. The biosimilar drug manufacturers, therefore, would necessarily have to work within the set regulations, as applicable to different markets of the world.

I deliberated a related point in my article of August 25, 2014, titled “Scandalizing Biosimilar Drugs With Safety Concerns”

B. Prescribers’ skepticism:

Initial skepticism of the medical profession for biosimilar drugs are, reportedly, due to the high voltage advocacy of the original biologic manufacturers on the ‘documented variability between original biologic and biosimilars. Which is why, any substitution of an original biologic with a related biosimilar drug could lead to increase in avoidable adverse reactions.

‘The medical platform and community QuantiaMD’, released a study just around September 2015, when by a Press Release, Novartis announced the launch of the first biosimilar approved by the US-FDA – Zarxio(TM) (filgrastim-sndz). However, in 2006, Novartis after suing the US-FDA, got the approval for its human growth hormone – Omnitrope, which is a biosimilar of the original biologic of Genentech and Pfizer. At that time a clear regulatory guideline for biosimilar drugs in the United States, was not in place.

The QuantiaMD report at that time said, “Only 12% of prescribing specialists are ‘very confident’ that biosimilars are as safe as the original biologic version of the drug. In addition, a mere 17% said they were ‘very likely’ to prescribe a biosimilar, while 70% admitted they were not sure if they would.”

Since then, this scenario for biosimilar drugs is changing though gradually, but encouragingly. I shall dwell on that below.

The major growth drivers:

The major growth drivers for biosimilars, especially, in the world’s top pharmaceutical markets are expected to be:

Growing pressure to curtail healthcare expenditure
Growing demand for biosimilar drugs due to their cost-effectiveness
Rising incidences of various life-threatening diseases
Increasing number of off-patent biologics
Positive outcome in the ongoing clinical trials
Rising demand for biosimilars in different therapeutic applications, such as, rheumatoid arthritis and blood disorders.

This in turn would probably usher in an unprecedented opportunity for the manufacturers of high quality biosimilar drugs, including in India.

Unfolding a huge emerging opportunity with biosimilars:

This unprecedented opportunity is expected to come mainly from the world’s three largest pharma market, namely the United States, Europe and Japan, due to very high prices of original biologic drugs, and simultaneously to contain rapidly escalating healthcare expenditure by the respective Governments.

Unlike in the past, when the doctors were apprehensive, and a bit skeptic too, on the use of new biosimilars, some new studies of 2016 indicate a rapid change in that trend. After the launch of the first biosimilar drug in the US, coupled with rapidly increasing incidences of various complex, life-threatening diseases, better knowledge of biosimilar drugs and their cost-effectiveness, doctors are now expressing much lesser concern, and exhibiting greater confidence in the use of biosimilars in their clinical practice.

Yet another, March 2016 study indicates, now only 19.5 percent of respondents feel little or no confidence in the use of biosimilar monoclonal antibodies compared to 61percent of respondents to a previous version of the survey undertaken in 2013 by the same market research group. The survey also shows that 44.4 percent of respondents consider that the original biologic and its biosimilar versions are interchangeable, as compared with only 6 percent in the 2013 survey.

As a result of this emerging trend, some global analysts of high credibility estimate that innovative biologic brands will lose around US$110 billion in sales to their biosimilar versions by 2025.

Another March, 2016 report of IMS Institute for Healthcare Informatics states that lower-cost biosimilar versions of complex biologic, could save the US and Europe’s five top markets as much as US$112 billion by 2020,

These encouraging developments in the global biosimilar arena are expected to encourage the capable Indian biosimilar drug players to invest in this high-tech format of drug development, and reap a rich harvest as the high priced blockbuster biologic brands go off-patent.

Conclusion:

Putting all these developments together, and considering the rapidly emerging scenario in this space, it now appears that challenges ahead for rapid acceptance of biosimilar drugs though are still many, but not insurmountable, at all.

The situation necessitates application of fresh and innovative marketing strategies to gain doctors’ confidence on biosimilar medicines, in total conformance with the regulatory requirements for the same, as they are, in the most important regulated markets of the world.

It goes without saying that success in the generation of enough prescriptions for biosimilar drugs is the fundamental requirement to benefit the patients, which, in turn, would lead to significant savings in health care cost, as estimated above, creating a win-win situation for all, in every way.

As more innovator companies start joining the biosimilar bandwagon, the physicians’ perception on these new varieties of medicines, hopefully, would also change, sooner.

Biocon’s grand announcement of its entry with a ‘made in India’ biosimilar drug in one of the word’s top three pharma markets, would probably be a great encouragement for all other Indian biosimilar drug manufacturers. It clearly showcases the capabilities of an Indian drug manufacturer to chart in an uncharted and a highly complex frontier of medicine.

By: Tapan J. Ray

Ease of Doing Pharma Business in India: A Kaleidoscopic View

Posted on March 28, 2016 by Tapan Ray

Ensuring ease of doing any ethical business activity in India, is a new focus area of the Government and is very rightly so. Creating ease of doing ethical pharma business too, falls under this overall national objective.

In this article, restricting myself to the drug sector, I shall deliberate on various aspects, which are now being considered by the pharma industry, related to the ‘ease of doing pharma business in India’. My discussion would cover all subsets of pharma players, irrespective of whether they fall under Multinational (MNC) or purely homegrown Indian companies, with different scales of operations – large, medium, small, or micro.

To help the Government facilitating the ‘‘ease of doing pharma business in India’, it is just not enough to make the business models for all subsets of the Indian pharma sector looking ethical, conforming to all relevant laws, policies, rules and norms. Each pharma player need also to maintain an ongoing strict internal vigil, religiously, to ensure that the requirements of high quality clinical development, manufacturing and selling practices for effective, safe and rational medicines, are properly understood and strictly followed by all the employees within the organization.

A Kaleidoscopic View:

The above situation is something that ought to happen, as the Government keeps striving to improve the ‘ease of doing pharma business’ in India. However, while looking through a Kaleidoscope, as it were, the colors of industry expectations in this area keep changing rapidly, as the new contentious issues keep emerging. Consequently, the ground reality of assessing the same, by a large section of the pharma players in India, seems to veer only around different types of just self-serving demands, expecting those to act as a powerful tailwind pushing their business interests rapidly forward.

Such expectations keep surfacing, rather frequently, from all the subsets of the pharma industry, be they MNCs and their trade associations or the Companies of purely Indian origin and their trade bodies. The accusation to the Government pertaining to all these issues, is a common one: ‘Where is the ease of doing pharma business in India?’

Citing even some recent incidents, they are voicing with equal gusto, that the root causes of all these problems lie miles outside the pharma industry. The causative factor, they indicate, is rooted at the very doorsteps of the Government, as its ministries initiate tough action to root out corruption in the pharma industry as concurrent measures, disturbing their business comfort zones, and upsetting the apple carts.

The Government has its task cut out:

I hasten to add that I have no intention to paint it as a confrontation between the Government and the pharma industry, in any way. The Government is also facing the brunt from the various stakeholders, relentlessly, for its utter negligence of public health care, and public expenditure over it.

The impact of this Government indifference, though also comes on the patients, the industry does not seem to have much to crib over it as a direct impediment to the ‘ease of doing pharma business’ in India.

Probably as a diversionary tactic, the industry keeps using this critical Government inaction in the hope of diverting the public, or media attention from its own alleged business malpractices, even at a time when these are being covered both by the national and international media, regularly. Nevertheless, the industry credibility on these issues, seems to have started waning fast, as the genie is out of the bottle.

A common punching bag of all industry dissatisfaction on the Government:

It is worth noting that despite some key differences between the MNC and Indian pharma companies, which I shall discuss later, the common punching bag of the industry dissatisfaction on various Government decisions, always has been the lack of ‘ease of doing pharma business’ in the country.

This discontentment may be well justified. I have no qualms about it. However, when this dissatisfaction gets tagged with some recent Government action, taken to protect public health interests and does not have much to do with the ‘ease of doing ethical pharma business’, many eyebrows are obviously raised.

Against some of these critical patient-centric actions, the industry continues to express its annoyance in unison, while for some other Government decisions, it speaks in different voices – some are happy ones, and the others are not so. However, the common thread of expression of all such dissatisfactions is always linked with the lack of ‘ease of doing business’ in India.

A. Where the pharma Industry in India speaks in unison:

I shall now give two major examples of the key Government decisions, that have irked the entire pharma industry immensely, and makes it voicing that those Government actions grossly violate the fundamental requirements of its smooth running of business. Is that fair? Let me analyze that below with these two examples:

1. Drug price control:

The industry, by and large, opines that individual drug company should be allowed to decide the way it would price any drug, as the market forces, especially for generic drugs, would determine its price.

Indian Parliament, the Supreme Court of India, the Government in power at different times, most of the independent experts and the NGOs, on the contrary, consider drug price control is necessary in India, especially for essential drugs. It makes high quality essential medicines affordable and accessible to the general population.

National Pharmaceutical Pricing Authority (NPPA) has also announced and explained that the competition does not work on controlling prices for pharma products, where the consumers are not the decision makers. The key prescribing decision makers for the patients are the doctors, who are mostly and unethically influenced by the drug companies having vested interest in making such decisions. This unholy nexus has been widely alleged globally, and also established through umpteen number of studies of high credibility.

Nevertheless, the doctors, from across the globe, including in India, have long disputed that any payments, if and when they receive from pharmaceutical companies, have no relationship to how they prescribe drugs.

A March 17, 2016 study of ProPublica has conclusively established that: “The more money doctors receive from drug and medical device companies, the more brand-name drugs they tend to prescribe. Even a meal can make a difference.” This study may be in the context of the Unites States, but India in this in this regard is no exception, as captured even in the parliamentary Committee reports.

Thus, conceding to high voltage pharma advocacy, made on the pretext of ‘encouraging innovation’ and ‘ease of doing business in India’, if any Government contemplates the abolition of drug price control in India is, it would make not just essential drugs inaccessible to a large section of society, but encourage blatant corrupt practices. This caution has come, besides many others, also from a Parliamentary Committee report, unambiguously. Incidentally, the present Government too strongly speaks against corruption, in any form.

Thus, I reckon, if the industry believes that the price control of essential drugs, which are for public health interest, goes against ease of doing pharma business in India, so be it.

2. Manufacturing and selling of irrational FDCs:

A Fixed Dose Combination (FDC) drug may appear irrational to drug regulators and well-qualified experts, after necessary scientific scrutiny, for various reasons. This may happen, primarily because of the following reasons:

When the medical rationale of the FDC along with the ingredient details, submitted to the regulatory authority for marketing approval, are considered scientifically inappropriate.

When the evolving medical science establishes the irrationality of the FDC after a period of time.

When the analysis of ‘Adverse Drug Event’ reports from the ongoing Pharmacovigilance studies signals a red alert.

Widespread uncontrolled misuse or abuse of FDCs, where the consumers’ health risks far outweigh the drug benefits, as provided in the drugs Act, for public health interest.

Some regulatory loopholes were misused by the drug manufacturers in the past to get the irrational FDCs approved by the State Drug Authorities, violating the new FDC regulatory approval Policy.

Any irrational FDC so identified by the drug regulators and experts, by putting a system of scrutiny in place, must be banned forthwith, in public health interest. There should not be any scope of negotiation with drug manufacturer to make the bans effective.

Incidentally, realizing the gravity of public health risks posed by irrational FDCs, even the NPPA has reportedly decided to review afresh all new applications for price fixations of FDC and examine their safety and efficacy profile.

Moving towards this direction, the NPPA Chairman, has reportedly sent back more than 200 applications for price fixation of FDCs, instructing the concerned manufacturing and marketing companies to apply again with a declaration that their formulations are not “irrational.” It was also reported that the price regulator has also brought under the lens third-party drug makers and pharma companies that outsource to them, to check illegal sales of irrational FDCs and spurious drugs.

Two key questions being raised now:

Despite all these, the industry keeps repeating, especially, the following two questions, which are worth looking at, one by one:

1. Why is the ban now?

I discussed the issue of FDC ban in my previous article in this Blog on March 21, 2016 titled, “The Recent Ban On Irrational FDCs: History Repeats Itself”.

In the above article, I also argued that large section of the industry and its associations are protesting against the Government ban of 344 irrational FDCs, and questioning vigorously, even outside the Delhi High Court – ‘why is the ban now?’

The point ‘why now’ is absolutely irrelevant, as not taking any action ever, against a wrong doing ignored over a long period time for whatever reasons, does not confer any regulatory legitimacy to an irrational FDC formulation to be considered as a rational one for all time to come, and thereby, exposing patients to serious health risks, knowingly.

2. Why is this ban so sudden, and in some cases after decades?

Sudden banning of drugs, which are in the market for a long time, is not a recent Indian phenomenon in India. In 2011, according to a report, in the world’s largest pharma market – the United States, the FDA banned 500 prescription drugs that had been on the market and working for decades. USFDA ban also happened suddenly, and that includes cough syrups too. Thus, it is intriguing, why is this fuss created by the Industry in India now?

In the midst of it, one odd, knee-jerk, apparently ‘spoon-fed’ and ill-informed editorial in some Indian business daily, raises more questions about its real intent, rather than help finding answers to the poorly sketched problems.

I would hope, the Government would stay firm and be able to convince the Delhi High Court today, i.e. on March 28, 2016, with its robust data-based arguments, accordingly.

Be that as it may, in my perspective, if the industry still believes that bans of irrational FDCs to protect public health interest, as decided by the independent experts after long and structured deliberations, would go against ‘ease of doing pharma business’ in India, so be it.

B. Where the pharma industry in India speaks in different voices:

As stated above, there are several other key areas, where the MNC and Indian Pharma players have sharp differences in their perspectives. Despite these differences, the aggrieved section does not even blink a bit to attribute those Government actions to the lack of ‘ease of doing pharma business’ in the country.

In this area, I shall give just the following three examples:

1. The Patents Act:

MNCs say that section 3 (d) of the Indian Patents Act 2005, which is aimed at curbing patent ever-greening or frivolous inventions, is against the ease of doing business in India. However, the Indian Pharma players, do not think so, at all. Similar disagreement also exists in other critical areas too, such as, ‘Data Exclusivity (DE)’ and ‘Compulsory Licensing (CL)’.

Thus, in my opinion, if some ‘public health interest’ related provisions of the robust Indian Intellectual Property (IP) Act, such as, section 3 (d), DE and CL, are considered as going against the ‘ease of doing pharma business in India’ by the MNCs, so be it.

2. Mandatory Uniform Code of Pharma Marketing Practices (UCPMP):

Need to have a mandatory UCPMP, though, is reportedly supported by the MNCs, Indian pharma players do not seem to be quite in sync with this idea. I am not sure, whether the delay in the announcement of mandatory UCPMP, almost in every 3 months, has any coincidence with it or not. However, the reality is, no one still knows clearly, when would it definitely come, if at all.

Media reports on pharma MNC support to mandatory UCPMP, and repeated reiteration that its members in India rigidly follow the IFPMA Code of Marketing Practices, though commendable, seem to grossly lack in credibility.

Interestingly, despite the existence of this code and high-decibel vouch for its rigid conformance, maximum number of MNCs have been fined billions of dollars, by the Government in various countries, for alleged gross marketing and other business malpractices. It has been happening over a long period of time, and is being reported by the international media, frequently.

What is really happening, especially, on the so called total support of ethical marketing practices by the MNCs? Are they trying to create just good optics by craftily framing and supporting such showpiece codes, and blatantly defying these to achieve self-serving goals? The voice gets shriller, even when they are being levied hefty fines, after getting caught red handed, as reported by the global media? I guess, the future would ultimately unfold the reality. But would it, at all?

The Indian Scenario:

Even in India, such alleged marketing malpractices involving even a top pharma MNC have often been reported by the media. Just to illustrate, “Prescribe a drug maker’s medicine and get a free vacation”, reported a news article. There are several other similar reports too. Hence, the credibility of pharma MNC statements regarding strict conformance to ethical marketing codes, ably formulated by the well-known pharma trade associations, such as, IFPMA, appears to be very low, if exists at all.

The well-reputed medical Journal BMJ in one of its articles titled, “Corruption ruins the doctor-patient relationship in India”, published on May 8, 2014, expressed serious concern on this issue.

It concluded that corruption, kickbacks and the nexus between doctors and pharmaceutical firms are rampant India. This eventually prompted the BMJ, in June 2014, to launch a campaign reportedly called ‘Corruption in Medicine’.

On this issue, way back in May 08, 2012, even the Indian Parliamentary Standing Committee on Health and Family Welfare in its 58th Report, placed before the Parliament on May 08, 2012, expressed its serious concern.

Indian lawmakers, recommended in the report that the Department of Pharmaceuticals (DoP) should take decisive action, without further delay, in making the UCPMP mandatory, so that effective checks could be ensured on ‘huge promotional costs’ and the resultant add-on impact on medicine prices. Unfortunately, despite a change in the Government in 2014, UCPMP has still not been mandatory.

It is anybody’s guess, despite all these reports, what type of external pressure, if at all, the DoP is still facing to put in place a robust mandatory UCPMP with strong deterrent measures.

Under this backdrop, in my view, if mandatory UCPMP having enough teeth, to curb ongoing blatant marketing malpractices to protect patients’ health interest in India, is considered by any as going against the ‘ease of doing pharma business in India’, so be it.

3. Drug manufacturing quality:

Enough discussions have already been made on import ban of USFDA from over 45 drug manufacturing facilities of Indian Companies, of all sizes and scale of operations, on the ground of drug quality standards. USFDA considered drugs manufactured in those banned facilities are unsafe for the consumption of American patients. Some other foreign drug regulators, from the developed countries, have also taken similar action.

Taking advantage of this development, it was reported that attempts are indirectly being made to establish that MNC marketed generic drugs are superior to similar ones, manufactured even by the large Indian drug producers.

The fact, apparently, is quite different. MNCs operating in India has not come under the USFDA scanner in this regard as much, probably not because of their far superior drug manufacturing quality standards in India, as compared to even the best of their Indian counterparts. I reckon, it is mainly because, very few MNC drug manufacturing facilities in India export India manufactured drugs for consumption in the United States.

It may not, therefore, make any real sense to conclude that MNC marketed generic drugs in India, either manufactured my themselves or under loan & license or under a third party, are generally better in quality than the similar ones manufactured even by the large Indian manufacturers.

In any case, I feel that there is a huge scope for Indian drug regulators to ensure uniformly high drug quality standards. This is necessary for Indian patients’ health and safety. There also should be stringent regular quality audits in all drug manufacturing facilities in India, where non-conformance with prescribed standards would attract serious punitive measures. The Union Ministry of Health, together with the State Governments would require increasing the number of auditors accordingly.

However, the reality is, many Indian drug manufacturers have expressed that maintaining stricter drug manufacturing standards (cGMP) would involve huge expenditure, which they will not be able to afford. Consequently, this would go against the ‘ease of doing pharma business’ in India.

Again, in my view, if the stringent regulatory requirements for maintaining high drug manufacturing standards in India to protect public health interest, is considered as going against the ‘ease of doing pharma business’ in India, so be it.

Conclusion:

Improving ‘ease of doing pharma business’ in India is an absolute necessity, just as all other businesses. Pharma sector deserves it very badly too, as it has been experiencing excruciating delay in multiple regulatory clearances. Single window clearances of all applications, with a much greater sense of urgency, without bureaucratic red tapes and avoiding other unnecessary delays, is certainly the way forward for India. It would require urgent policy reforms, maintaining a right balance between, public, consumers and business interests.

Pharma sector is not all villain, either, by any yardstick. It is instrumental in saving and improving the quality of lives of so many people across the globe, since a very long time, with its both innovative and generic medicines. All must acknowledge it, and the Government does it too, openly, several times.

That said, the space of focus of the pharma industry appears to be getting increasingly narrowed down to more of its self-serving acts, and in their hard selling, through hugely expensive advocacy campaigns, even at the huge cost of attracting frequent self-defeating scathing criticisms, across the world.

At the same time, the Governments in different times hugely disappointed its citizens, in charting a clear road map for quality and affordable health care for all in India, along with appropriate budgetary allocations and policy reforms, and thereafter, in its implantation with military precision.

However, that doesn’t mean, in any way, while facilitating ‘ease of doing pharma business’ in India, the Government would turn a blind eye on the rapidly breeding corruption in the pharma business practices, and give in to unjustified industry muscle-flexing, sacrificing the health interest of its citizens in the country.

While looking through this Kaleidoscope, it appears to me, if the pharma sector considers the appropriate Government actions to protect public health interest, against the unacceptable industry practices, would also go against the ‘ease of doing pharma business’ in India… Well, so be it.

By: Tapan J. Ray

‘Data Protection’: Needs A Clear Direction…But Is It An IPR Issue?

Posted on March 2, 2015 by Tapan Ray

The terminologies ‘Data Exclusivity’ and ‘Data Protection’ are quite often used interchangeably by many, creating a great deal of confusion on the subject. However, in a true sense these are quite different issues having critical impact on public health interest of a nation.

In several media reports as well, one can notice the interchangeable use of these two terms. It is especially happening when the reports are speculating whether or not the Government of India is considering putting in place ‘Data Exclusivity’/ ‘Data Protection’ along with ‘Patent Linkage’ through administrative measures, without making any amendments in the Patents Act 2005 of the country.

Tracking this development, the last week, I wrote about ‘Patent Linkage’. In this article, I shall dwell on the same area, but from ‘Data Exclusivity’/ ‘Data Protection’ perspective.

A brief overview:

Close to a decade ago, Government of India constituted ‘Satwant Reddy Committee’ to recommend a direction that India should follow on ‘Data Protection’ in the country involving pharmaceutical and agricultural products.

In 2007 the Committee submitted its report recommending ‘Data Protection’ in the country to be introduced for pharma products in a calibrated manner. However, the report did not specify a timeline for its implementation.

Interestingly, even this committee did not differentiate between the terminologies ‘Data Protection’ and ‘Data Exclusivity, as we now see in the first draft of the ‘National IPR Policy.’

According to available reports, after due deliberation, the erstwhile Government decided not to take any action on the committee’s recommendations for ‘Data Protection’ in India.

Difference between ‘Data Protection’ and ‘Data Exclusivity’:

In an article published in ipHandbook, titled “Data Protection and Data Exclusivity in Pharmaceuticals and Agrochemicals”, the author Charles Clift with a great deal of experience in the U.K. Department of International Development (DFID) and a former Secretary, Commission on Intellectual Property Rights, Innovation and Public Health, World Health Organization; differentiated these two terminologies as follows:

Data Protection (DP): Protection of commercially valuable data held by the drug regulator against disclosure and unfair commercial use.

Data Exclusivity (DE): A time bound form of Intellectual Property (IP) protection that seeks to allow companies recouping the cost of investment in producing data required by the regulatory authority.

Arguments in favor of ‘Data Exclusivity’:

International Federation of Pharmaceutical Manufacturers & Associations (IFPMA), Geneva, in its website argues in favor of ‘Data Exclusivity’ as follows:

- Health authorities require, as part of a submission for a marketing authorization, that proprietary information be disclosed in order to ensure public health and patient safety.

- The innovator assumes the entire risk for the generation of the data, what requires expensive and lengthy clinical trials.

- ‘Data Exclusivity’ is necessary to provide a measure of certainty to the innovator that they will be provided with a period of protection for their efforts of testing a drug.

- Patents and ‘Data Exclusivity’ are different concepts, protect different subject matter, arise from different efforts, and have different legal effects over different time periods

Arguments suspecting the intent of ‘Data Exclusivity’:

The above paper of Charles Clift highlights the following on DE:

- The effect of DE is to prevent entry of generic competitors, independent of the patent status of the product in question.

- DE law, wherever applicable, prevents generic manufacturers from using innovators’ test data, though it would allow the drug regulator to analyze this data prior to market approval.

- Even if the patent period has expired or there is no patent on a product, DE will act independently to delay the generic entry until the period of DE is over.

- In that way DE compensates innovators for delayed market entry and concomitant loss of potential profits.

- DE is a much stronger right than a patent, mainly because, unlike patent law, there is no exceptions or flexibilities that allow the governments to provide the equivalent of Compulsory License (CL).

- DE acts as a barrier to CL of a patent on the same product by preventing marketing approval for a CL.

TRIPS Agreement talks about DP, but not DE:

Article 39 of TRIPS Agreement on “Protection of Undisclosed Information” contains a general clause on the obligations of the members of the WTO, where Article 39.3 specifies three obligations for its member countries as follows:

- To protect data on New Chemical Entities (NCE), the collection of which involves considerable effort, against unfair commercial use.

- To protect these data against disclosure, except where necessary to protect the public

- To protect such data against disclosure, unless steps are taken to ensure that the data are protected against unfair commercial use

According to Charles Clift, Article 39.3 only articulates widely accepted trade secret and unfair competition law, and is not an invitation to create new IP rights per se for test data. Nor does it prevent outside parties from relying on the test data submitted by an originator, except in case of unfair commercial practices.

Some developed countries, such as the United States and the European Union have argued that Article 39.3 of TRIPS requires countries to create a regime of DE, which is a new form of time-limited IP protection. However, it is worth noting that in both these countries DE regime was adopted prior to TRIPS Agreement. Hence, many experts construe such approaches and pressure, thus created for DE, as ‘TRIPS Plus’.

What is ‘TRIPS Plus’?

The ‘TRIPS-Plus’ concept would usually encompass all those activities, which are aimed at increasing the level of IP protection for the right holders, much beyond what is required for conformance of TRIPS Agreement by the World Trade Organization (WTO).

Some section of the civil society nurtures a view that ‘TRIPS Plus’ provisions could significantly jeopardize the ability, especially, of developing countries to protect the public health interest adequately.

Some common examples of ‘TRIPS Plus’ provisions:

Common examples of ‘TRIPS Plus’ provisions could include:

- Extension of the patent term beyond usual twenty-year period

- Introduction of provisions, which could restrict the use of CL

- Delaying the entry of generics

Is ‘Data Protection’ an IPR issue?

In my view, the issue of ‘Data Protection’ is more a drug regulatory than an IPR related subject and should be treated as such. This is because ‘Data Protection’ is more related to the ‘Drugs and Cosmetics Act’ of India rather than the ‘Patents Act 2005′.

Thus, it is quite intriguing to make out why ‘Data Protection’, which will be governed by ‘Drugs and Cosmetics Act’, is featuring in the IPR Policy of the country.

I wrote on the draft National IPR Policy in my blog post of January 19, 2015, titled “New “National IPR Policy” of India – A Pharma Perspective”.

Conclusion:

After jettisoning the ‘Satwant Committee Report’ on ‘Data Protection’, the Government was in no mood, until recently, to discuss anything about DP and DE, despite intense pressure from the pharma MNC lobby in India. However, the issue first resurfaced during EU-FTA negotiation, when India rejected these provisions outright and unambiguously.

However, the ghost started haunting India, yet again, when the US Government started flexing its muscle on this issue, at the behest of the American pharma companies.

Although DP is a drug regulatory issue, curiously, it features in the draft National IPR Policy. Even there, the subject has taken an interesting turn, when in the first draft of ‘National IPR Policy’ of India, the six-member ‘Think Tank’ chaired by Justice (Retd.) Prabha Sridevan clearly recommended “Protection of undisclosed information not extending to data exclusivity.”

In my opinion this is indeed a very pragmatic recommendation. It deserves support from all concerned so that the profound intent continues to feature in the final IPR Policy of India, to protect public health interest of the nation.

Just like ‘Patent Linkage’, as I discussed in my last week’s article, finding a middle ground to put ‘Data Protection’ in place through administrative measures, without making any amendments either in the Drugs & Cosmetics Act or in the Patents Act of the country, seems to be desirable and very much possible, as well.

However, the very thought of considering ‘Data Exclusivity’ in India, in my view, should prompt a clear ‘No…No’ response from the present Government of India.

This is mainly because, besides all other reasons as mentioned above, even if the patent period for a molecule has expired or there is no patent on a product, DE will act independently to delay the generic entry until the period of ‘Data Exclusivity’ gets over.

By: Tapan J. Ray

What President Obama And Prime Minister Modi Discussed On IPR And Healthcare In India

Posted on February 2, 2015 by Tapan Ray

During the recent visit of the US President Barack Obama to India from January 25-27, 2015, both the domestic and international media was abuzz with the speculation, whether or not India would concede some ground to America on the prevailing, generally considered, well balanced patent regime in India.

Many expected that the American delegation would succeed in getting some specific assurances from Prime Minister Narendra Modi to follow the line of the US style Intellectual Property Rights (IPR) in India, which would help the American pharma companies to maximize their financial returns in the country.

The assurances from India were expected mainly in areas involving grant of patents even to those pharma products, that do not quality for the same under section 3(d) of the Indian Patents Act 2005, dilution of provisions for Compulsory License (CL) and creation of a new provision for Data Exclusivity in the country, besides a few others.

As everyone noticed, just before the US President’s visit, interested groups both in India and also from abroad intensified lobbying and released op-eds to create pressure on the Indian negotiators, in general, and the Prime Minister Modi in particular.

Terming the Indian Patents Act weak, the lobby groups turned the Indian IPR regime on its head. Playing the role of India’s benefactor, they re-packaged their shrill collective voice into pontificating words while giving interviews to the Indian media by saying: “A strong IPR regime could allow the country (India) to make a major contribution to tackling health challenges, both domestically and around the world.”

Additional US interest in Indian IP regime from TPP perspective:

Exemplary demonstration of India’s resistance to intense external pressure, time and again, for dilution of the IP regime in the country, seems to have become a model to follow for the emerging economies of the world, in general. This trend now gets reflected even among some of the members of the 12-nation Trans-Pacific Partnership (TPP), which is a proposed regional regulatory and investment treaty.

According to reports, TPP members, such as, Brunei, Malaysia, Singapore and Vietnam are negotiating hard to get incorporated somewhat similar to Indian IP rules in the TPP agreement. Besides America, other members of the TPP are Australia, Japan and New Zealand, Canada, Chile, Mexico and Peru.

TPP negotiations are generally expected to follow the overall framework of American laws. However, according to media reports, based on the leaked draft of the TPP, the data exclusivity period for biologic medicines has already been negotiated down to 7 years, from 12 years under the US Affordable Care Act.

However, on January 27, 2015, US Senator Orrin Hatch, Chairman of the Senate Finance Committee reportedly said that he would oppose Senate approval of the TPP, if it does not provide 12 years of patent protection for biologics.

The same day, at a hearing before the House Ways and Means Committee, US Trade Representative Mike Froman reportedly reiterated, “The US is insisting on 12 years of IP protections, even though the Obama administration’s budget calls for 7-year exclusivity on biologic meds.”

It is also worth noting that Nobel laureate Joseph E. Stiglitz in an op-ed titled, “Don’t Trade Away Our Health”, published in The New York Times of January 30, 2015 commented as follows:

“TPP could block cheaper generic drugs from the market. Big Pharma’s profits would rise, at the expense of the health of patients and the budgets of consumers and governments.”

Clicking on this short video clip you will be able watch another similar viewpoint on TPP, its general perspective and what it encompasses.

Thus, the closely guarded ‘turf war’ on TPP is now heating up, making negotiations increasingly tougher to arrive at a consensus on the IP rules that would be applicable to pharmaceutical products in this trade initiative. Consequently, the evolving scenario has prompted the interested groups to keenly follow, with hopes, the outcome of Presidents Obama’s recent visit to India, especially in the pharma IP areas. This is because, many emerging economies of the world are now appreciative of the prevailing well-balanced patent regime in India.

After the 12-nation TPP agreement comes into force, probably following the lines of the US IP laws, it is quite possible that India may sometime in future would prefer to be a part of this agreement for greater trade facilitation, as the country comes closer to America…Who knows?

However, in that case the bottomline is, India would have to amend relevant provisions of its Patents Act in conformance with the requirements of mainly the US pharmaceutical companies and the IP laws prevailing in America, as this will be necessary to become a new member of this treaty.

Discussion in the summit meeting:

According to the Joint Statement on the summit meeting released by the White House, President Obama and Prime Minister Modi discussed the following subjects related to IPR and Healthcare in India, as detailed below:

Reaffirmed the importance of providing transparent and predictable policy environments for fostering innovation. Both countries reiterated their interest in sharing information and best practices on IPR issues, and reaffirmed their commitment to stakeholders’ consultations on policy matters concerning intellectual property protection.

Reaffirmed their commitment to the Global Health Security Agenda (GHSA) and announced specific actions at home and abroad to prevent the spread of infectious diseases, including a CDC-Ministry of Health Ebola and GHSA preparedness training, expansion of the India Epidemic Intelligence Service, and development of a roadmap to achieve the objectives of the GHSA within three years.

Committed to multi-sectoral actions countering the emergence and spread of antimicrobial resistance (AMR), and cooperation in training of health workers in preparedness for infectious disease threats. The Leaders agreed to focus science and technology partnerships on countering antibiotic resistant bacteria and promoting the availability, efficacy and quality of therapeutics.

Welcomed further progress in promoting bilateral cooperation on cancer research, prevention, control, and management and agreed to continue to strengthen the engagement between the CDC and India’s National Centre for Disease Control.

Welcomed the upcoming completion of an Environmental Health, Occupational Health and Injury Prevention and Control MoU between the U.S. Centers for Disease Control and Prevention and the Indian Council for Medical Research to further collaborative efforts to improve the health and welfare of both countries’ citizens.

Agreed to expand the India-U.S. Health Initiative into a Healthcare Dialogue with relevant stakeholders to further strengthen bilateral collaboration in health sectors including through capacity building initiatives and by exploring new areas, including affordable healthcare, cost saving mechanisms, distribution barriers, patent quality, health services information technology, and complementary and traditional medicine.

Pledged to encourage dialogue between the U.S. Department of Health and Human Services and its Indian counterparts on traditional medicine.

Pledged to strengthen collaboration, dialogue, and cooperation between the regulatory authorities of the two countries to ensure safety, efficacy, and quality of pharmaceuticals, including generic medicines.

Agreed to accelerate joint leadership of the global Call to Action to end preventable deaths among mothers and children through a third meeting of the 24 participating countries in India in June 2015. As host, India will showcase the power of new partnerships, innovations and systems to more effectively deliver life-saving interventions.

Also lauded the highly successful collaboration on a locally produced vaccine against rotavirus, which will save the lives of an estimated 80,000 children each year in India alone, and pledged to strengthen the cooperation in health research and capacity building through a new phase of the India-U.S. Vaccine Action Program.

As stated earlier, during this summit meeting, US lobbyists were reportedly nurturing a hope that Prime Minister Modi would eventually agree, at least in principle, to jettison section 3(d) on the patentability criteria enshrined in the Indian Patents Act 2005 and significantly water down the country’s Compulsory License (CL) provisions. This expectation increased, when the US President made the investment promise of U$4 billion in India.

That said, from the above points of discussion in the joint statement, it appears that no breakthrough on the part of the US was achieved especially in the IPR space, during the summit.

However, in other areas of bilateral healthcare co-operation, such as, science and technology partnerships in countering antibiotic resistant bacteria; cancer research and traditional medicines; the reaffirmations made by the two leaders are encouraging.

US pressure on IP to continue:

Going by India’s reaffirmation during the summit meeting of its commitment to consultations with America on policy matters related to IPR protection and US Trade Representative Mike Froman’s reported affirmation of the following to the US lawmakers during a Congressional hearing held on January 27, 2015, it is construed by the IP activists that the kettle has possibly started boiling:

- “We have been concerned about the deterioration of the innovation environment in India, and we have engaged with the new government since they came into office in May of last year about our concerns,”

- “We held the first Trade Policy Forum in four years in November. I just returned from India yesterday as a matter of fact … and in all of these areas, we have laid out a work program with the government of India to address these and other outstanding issues.”

- “We are in the process of providing comments on that draft policy proposal on IPR, and we are committed to continuing to engage with them to underscore areas of work that needs to be done in copyright, in trade secrets as well as in the area of patents,”

- “We’ve got a good dialogue going now with the new government on this issue, and we’re committed to working to achieve concrete progress in this area,”

Media reports also indicate that US pressure on IPR would continue, as they highlight:

“Threatened by free trade of high-quality and affordable medicines, US-based pharmaceutical companies and politicians friendly with the industry are using prominently placed op-eds, large advertisements on Washington, D.C. buses, and letters to President Obama to spread false information -claiming India’s rules are not legal or discourage innovation. The companies have been threatening to withhold investment if India does not adopt weaker patent laws that would extend pharmaceutical monopolies and stymie the country’s generic industry.”

I discussed some of these issues in my blog post of January 19, 2015, titled “New National IPR Policy of India – A Pharma Perspective”.

Conclusion:

Irrespective of whatever the US-India Joint Statement says on IPR, some experts do apprehend that Indian Government may now wilt under continuous intense pressure from the American Government. This is mainly because, India’s Commerce and Industry’s Minister has reportedly sought America’s inputs in the finalization process of the new National IPR policy of the country.

On this score, let me hasten to add that it may not be prudent to read too much into it, as seeking stakeholders’ comments on such matter is a practice that India has been following since long on various issues and policies.

However, at the same time, other groups of experts nurture a quite different viewpoint. They are confident that the nationalist Modi Government, under no circumstances would concede its long nurtured strategic ground on IPR to the US power play.

Emerging countries across the globe are keenly watching this intense game of ‘Power Chess’, as they plan to emulate India in many of the pharmaceutical IP areas to uphold the public health interest, providing affordable healthcare to all.

These are still early days. Thus, in my view, on January 25, 2015, what President Barack Obama and Prime Minister Narendra Modi discussed on the IPR regime in India may not be as important as what they would eventually decide to agree, disagree or agree to disagree in this area, moving on from here.

Only time would prove…not just who is right, that is pretty obvious to many, but who wilts at the end of the day…and more importantly, why?

By: Tapan J. Ray

PILMAN

A Tapan Ray Website

Tag Archives: Exclusivity

Reaping Rich Harvest With Orphan Drugs

Protect Generic Drug Margin Moving Up The Value Chain

Dwindling Drug Innovation: Declining Image: Unchanged Business And Advocacy Models

At The Indian IPR Front: ‘Ground Control, There’s No Major Storm’

Biosimilar Drugs: First Indian Foot Print In An Uncharted Frontier

Ease of Doing Pharma Business in India: A Kaleidoscopic View

‘Data Protection’: Needs A Clear Direction…But Is It An IPR Issue?

What President Obama And Prime Minister Modi Discussed On IPR And Healthcare In India