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With Highest Billionaire Wealth Concentration, India Tops Malnutrition Chart in South Asia: “What Future Do You Want?”

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Two recent global research reports, though on different spheres, place India at the top of the respective blocks. However, the take away messages that the studies offer are indeed poles apart in qualitative terms and worth pondering over collectively.

On January 20, 2014, just before the World Economic Forum (WEF) at Davos in Switzerland, Oxfam International released a report warning that by 2016, the world’s wealthiest 1 percent will control almost half of the global assets. Since 2009, the world’s billionaires have seen their share of the asset pie grow from 44 percent to 48 percent.

Before that, a World Bank Report of October 2014 titled, “Addressing Inequality in South Asia”, highlighted that India has the highest billionaire wealth concentration in South Asia.

Billionaire wealth to gross domestic product ratio in India was 12 percent in 2012. This was was higher than other economies with similar development level, namely, Vietnam with its ratio at less than two percent, and China with less than five percent.

This report also clarifies that inequality in South Asia appears to be moderate when looking at standard indicators such as the Gini index, which are based on consumption expenditures per capita. But other pieces of evidence reveal enormous gaps, from extravagant wealth at one end to lack of access to the most basic services at the other.

Stark realities: 

Wealth creation by no means is bad and in fact, is essential for economic growth of any nation, if read in isolation. This is mainly because, as the Oxfam report says, some economic inequality is essential to drive growth and progress, rewarding those with talent, hard earned skills, and the ambition to innovate and take entrepreneurial risks.

Unfortunately, at the same time, as the same World Bank report highlights, the stunted growth of children under fiver years of age, due to malnutrition, has been 60 percent of the total number of children born in the poorest households of India, as compared to 50 per cent in Bangladesh and Nepal.

Moreover, According to UNICEF, every year 1 million children again below the age of five years die due to malnutrition related causes in India. This number is worrisome as it is far higher than the emergency threshold, according to W.H.O classification of the severity of malnutrition.

Highlighting stark inequality in India, the report says, “The net worth of a household that is among the top 10 per cent can support its consumption for more than 23 years, while the net worth of a household in the bottom 10 per cent can support its consumption for less than three months.”

Some poor moved above the poverty line, though grossly inadequate:

According to the same report, from 2004-05 to 2009-10 when India’s GDP registered the highest ever average growth, about 40 percent of poor households moved above the poverty line and around 11 percent of poor population even moved into the middle class. Unfortunately, during the same period around 14 percent of the non-poor population also slipped below the poverty line.

Thus, what needs to be addressed soonest is the issue of vast difference in income between the richest and the poorest leading to an equally huge difference in the access to basic human developmental needs such as, education, healthcare and nutrition.

Adverse impact on expected ‘demographic dividend’ of India:

As legendary Bill Gates said in a recent media interview, “India has got far more kids that are malnourished and whose brains are not developed, way more than any other country. That’s really the crisis.”

If this trend of inequality continues, the ‘demographic dividend’ of India that the country has factored in so intimately in its future GDP growth narrative, could well be no more than a myth.

As US Supreme Court Justice Louis Brandeis once famously said, “We may have democracy, or we may have wealth concentrated in the hands of the few, but we cannot have both.”

The Oxfam report also emphasizes, the extreme levels of wealth concentration occurring today threaten to exclude hundreds of millions of people from realizing the benefits of their talents and hard work.

Social inequality and healthcare challenges:

Health of an individual is as much an integral contituent of the socio-economic factors as it is influenced by a person’s life style and genomic configurations. Important research studies indicate that socio-economic disparities, including the educational status, lead to huge disparity in the space of healthcare.

As stated in another report, ‘About 38 million people in India (which is more than Canada’s population) fall below the poverty line every year due to healthcare expenses, of which 70 percent is on purchase of drugs’.

Thus, reduction of social inequalities ultimately helps to effectively resolve many important healthcare issues. Otherwise, mostly the minority population with adequate access to knowledge, social and monetary power will continue to have necessary resources available to address their healthcare needs, appropriately.

Regular flow of newer and path breaking medicines to cure and effectively treat many diseases has not been able to eliminate either trivial or dreaded diseases alike. Otherwise, despite having effective curative therapy for malaria, typhoid, cholera, diarrhea/dysentery and venereal diseases, why will people still suffer from such illnesses? Similarly, despite having adequate preventive therapy, like vaccines for diphtheria, tuberculosis, hepatitis and measles, our children still suffer from such diseases. All these continue to happen mainly because of socio-economic inequalities related considerations, including poor level of awareness.

A paper titled, “Healthcare and equity in India”, published in The Lancet (February, 2011) identifies key challenges to equity in service delivery, healthcare financing and financial risk protection in India.

These include: 

- Imbalanced resource allocation

- Limited physical access to quality health services and inadequate human resources for health

- High out-of-pocket health expenditures

- High health spending inflation

- Behavioral factors that affect the demand for appropriate healthcare

Research studies vindicate the point:

Following are some research studies, which I am using just as examples to vindicate the above argument on inequality adversely impacting healthcare:

• HIV/AIDs initially struck people across the socio-economic divide. However, people from higher socio-economic strata responded more positively to the disease awareness campaign and at the same time more effective and expensive drugs started becoming available to treat the disease, which everybody cannot afford. As a result, HIV/AIDS are now more prevalent within the lower socio-economic strata of the society.

• Not very long ago, people across the socio-economic strata used to consume tobacco in many form. However, when tobacco smoking and chewing were medically established as causative factors for lung and oral cancers, those coming predominantly from higher/middle echelon of the society started giving up smoking and chewing of tobacco, as they accepted the medical rationale with their power of knowledge. Unfortunately the same has not happened with the poor people of lower socio-economic status. As a consequence of which, ‘Bidi’ smoking and ‘Gutka’/tobacco chewing have not come down significantly among the population belonging to such class, with more number of them falling victim of lung and oral cancers.

Thus, in future, to meet the unmet needs when more and more sophisticated and high cost disease treatment options will be available, mostly people with higher socio-economic background will be benefitted more due to their education, knowledge, social and monetary power. This widening socio-economic inequality will consequently widen the disparity in the healthcare scenario of the country.

Phelan and Link in their research study on this subject had articulated as under:

“Breakthroughs in medical science can do a lot to improve public health, but history has shown that, more often than not, information about and access to important new interventions are enjoyed primarily by people at the upper end of the socioeconomic ladder. As a result, the wealthy and powerful get healthier, and the gap widens between them and people who are poor and less powerful.”

Recent deliberations at Davos:

In the last two decades, socio-economic inequality in India has been fuelled by rapid, but unequal economic growth of the nation. Though the overall standard of living has been rising, there still remain a large number of populations living in pockets of intense deprivation and abject poverty.

One of the Davos sessions of this year deliberated on “What Future Do You Want?” The session, among others, reportedly felt the important need to ensure people’s well being and put in place effective measures such as a social safety net and universal healthcare.

At the same WEF annual meet at Davos, United Nation’s Secretary General Ban Ki-Moon also reiterated, “All policies must be people centric. We should make a world where nobody is left behind.”

Conclusion:

Assuming the above approach as a sincere realization of the current policy makers and more importantly the powerful influencers of those policies, the key question that comes up is: In which direction would India now chart its course to address this critical issue?

One may possibly hazard a guess on the shape of the future policies to come in India from the BJP party President Amit Shah’s recent address to crème de la crème of Mumbai businessmen in a function organized by a business news channel. In this event Mr. Shah reportedly said to them that the BJP does not agree with their definition of “reforms” and will strive to build a welfare state.

Will this approach of the new political dispensation get reflected in the forthcoming union budget as well, to effectively translate the new National Health Policy of India into reality, at least this time?

I deliberated on the National Health Policy of India in my Blog Post of January 12, 2015, titled “India’s National Health Policy 2015 Needs Wings To Fly”

That said, if it really so happens, a strong signal would go to all stakeholders that India is now well poised to chart on an uncharted frontier to significantly reduce the impact of inequality, particularly in the space of healthcare.

In that process, despite the highest billionaire wealth concentration, India would set a pragmatic course to place itself at the top of the healthcare chart, not just in South Asia, but probably also within the BRIC countries, to expect the least.

By: Tapan J. Ray

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

India’s ‘National Health Policy 2015′ Needs Wings To Fly

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Ensuring ‘access to healthcare for all’ has remained a key well-articulated good intent of all the successive Governments in India, cutting across the political regimes, since 1983.

The Union Ministry of Health & Family Welfare published the first “National Health Policy (NHP)”, in 1983, which was endorsed by the Indian Parliament in the same year. The policy categorically enunciated the following:

“India is committed to attaining the goal of ‘Health for All by the Year 2000 A.D.’ through the universal provision of comprehensive primary healthcare services”.

For the first time after independence, this document captured the key directions and dimension of the national health policy such as, the creation of infrastructure for primary healthcare; close co-ordination with health-related services and activities (like nutrition, drinking water supply and sanitation); active involvement and participation of voluntary organizations; provision of essential drugs and vaccines; qualitative improvement in health and family planning services; provision of adequate training; and medical research aimed at the common health problems of the people. However, it did not elaborate much about the Universal Health Care (UHC).

Abysmal public expenditure to meet the key goal of NHP 1983:

The NHP 1983, which was revised in 2002, recommended an increase in public health expenditure to 2.0 percent of GDP in 2010.

The 12th Fiver Year Plan of the Government of India again acknowledged that the health sector expenditure by the central and state governments, both plan and non-plan will have to be substantially increased during the plan period. It also stated that the health expenditure was increased from 0.94 per cent of GDP in the 10th Plan to 1.04 per cent in 11th Plan and it should be increased to 2.5 per cent of GDP by the end of 12th Five Year Plan period.

That said, the bottom-line is, the current public spending on health is stagnating around 0.9 percent of the GDP. Leave aside implementation of the 1983 NHP goal of providing “Health for all by the year 2000 A.D”, even in 2015, India continues to grapple with the challenges for ensuring availability, accessibility, affordability and quality of comprehensive healthcare to all, though various governments have come and gone during this period. India’s rank in the Human Development Index (HDI) also remains at pitiful 136 out of 187 countries and despite improvements, India is likely to miss some key MDG targets in 2015.

Pockets of improvements – mostly grossly inadequate:

In the midst of gloom and doom in the health space of India, the 57 page draft NHP 2015 captures some of commendable improvements, as well, and very rightly so, which I am not going to repeat in this article.

A June 2013 report of IMS Institute also acknowledges that the extent of change and improvement in India’s healthcare system over the past decade is remarkable. The Government of India’s initiatives, as well as private sector actions and public-private-partnership programs, have contributed to this progress. Yet a lot more remains to be done.

The report highlights the following areas, which are worth taking note of:

  • The physical accessibility of public or private healthcare facilities is a challenge in rural areas. By contrast, in urban areas, accessibility is less of a challenge due to more facilities being available.
  • An increasing proportion of the population is using private healthcare 
facilities for both in-patient and out-patient treatments. Long waiting times and absence of diagnostic facilities are among the main reasons private healthcare facilities are chosen over public centers for in-patient treatment. For out-patient treatment, the availability or doctors and quality of care are cited as reasons for selecting a private healthcare facility. However, patients would readily switch to public healthcare centers if these issues were addressed, the research report states.
  • The cost of treatment at a public healthcare facility is much more affordable than at a private center. However, due to lack of physical reach, availability of quality treatment and other practices, patients are forced to use more expensive private facilities, thus exacerbating affordability challenges. The majority of Out of Pocket (OoP) expenses are due to medicines.
  • Overall, while there are pockets of improvements, significant healthcare access challenges continue to exist for the Indian population, especially in rural areas.

OoP expenses on health is one of the highest in India:

Out of Pocket (OoP) expenditure on health is one of the highest in India at 61.7 percent, as acknowledges by the draft NHP 2015, as well. This is against 35.3 of China, 30.6 of Brazil, 44.6 of Sri Lanka, 61.3 of Bangladesh, 14 of Thailand, 8.9 of United Kingdom and 11.8 of the United States. The reason being, due to lack of access to cheaper and quality public health facilities, a vast majority of the Indian population is forced to turn to expensive private healthcare providers, as confirmed by the IMS Institute in its above report..

Suggested framework for a comprehensive view of healthcare access:

The same June 2013 report of IMS Institute states that healthcare access has varying meaning in different countries, especially across developing and developed economies. In the developed economies, it is often equated to the access status of healthcare insurance, whereas in the developing economies, it is viewed primarily across two dimensions: the physical reach of a healthcare facility, and affordability to the patient.

Thus, it is important to build a framework that would provide a comprehensive view to healthcare access. The framework should be able to define healthcare access in the Indian context, aided by other parameters that are key in ensuring quality treatment to a patient.

The framework also allows understanding of each component of healthcare access separately, including inter-dependencies.

According to IMS Institute, healthcare access has 4 key dimensions as follows:

Physical Reach:

This component defines physical accessibility of a requisite healthcare facility, i.e. availability of a healthcare facility having an out-patient department (OPD) for common ailments, and an in-patient department (IPD) for hospitalization. These facilities may either be public or private in nature. Physical reach is defined as the ability to enter a healthcare facility within 5 kilometers (5km) from the place of residence or work.

Availability/Capacity:

This component defines availability of the requisite healthcare resources to provide patient treatment, i.e. doctors, nurses, in-patient beds, diagnostics, consumables, etc. The availability is governed by minimum specifications defined by the Government of India for public healthcare facilities, and international organizations such as W.H.O.

Quality/Functionality:

This component defines the quality of the healthcare resources available at the point of patient treatment.

Affordability:

This component defines the ability of a patient to afford complete treatment for the illness or disease.

Draft NHP 2015 – ‘Health is a fundamental right’:

Though the above parameters were not quite considered, as such, to define access to healthcare, the new government has done a good job with the draft NHP 2015, while updating NHP 2002. The new draft has evoked good interest among the stakeholders as healthcare has become very costly in India and continues to go north, steadily, as mentioned above.

The draft has covered lots of ground related to health, spanning across the change in the nature of the nation’s disease burden from communicable to non-communicable diseases, shortage of human resources in health sector and right up to the use of information and communication technology. It’s a hard fact that low investment in public health has been placing India consistently at the lower rungs of the development indices.

Against the backdrop of paltry public expenditure on health, the Union Ministry of Health and Family Welfare through its draft National Health Policy, 2015 (NHP 2015) has proposed making health a fundamental right, similar to denial of health an offence.

The draft policy reiterates, “Many industrialized nations have laws that do so. Many of the developing nations that have made significant progress towards universal health coverage, such as Brazil and Thailand, have done so, and … such a law is a major contributory factor. A number of international covenants to which we [India] are joint signatories give us such a mandate – and this could be used to make a national law. Courts have also rulings that, in effect, see health care as a fundamental right — and a constitutional obligation flowing out of the right to life.”

The draft NHP 2015 even states, “The Centre shall enact, after due discussion and on the request of three or more states a National Health Rights Act, which will ensure health as a fundamental right, whose denial will be justiciable.”

The new draft policy acknowledges that primary healthcare of date covers not more than 20 per cent of the health needs and that a very high OoP health expenditure (over 61 percent on medicines) is pushing nearly 63 million people into poverty every year.

One of the key features of the new draft policy is an universal medical insurance scheme that will be virtually free for the poor and affordable for the rest. The government expects the stakeholders to send their comments and suggestions on the draft policy by February 28, 2014.

However, the draft NHP 2015 does not deliberate on some other important areas, such as specific time-bound commitments on public investments, insurance cover on outpatient treatments & care and appropriate regulations for the private sector to contain healthcare costs.

Cut on current year health budget raises may eyebrows:

In the midst of the prevailing lackluster public healthcare scenario, just in the last month (December 2014), the government has reportedly ordered a US$ 948 million (20 percent) cut in its 2014-15 healthcare budget due to fiscal constraints.

It is worth mentioning that at 0.9 percent of GDP, India’s public health expenditure is already among the lowest in the world, as compared to compared to 2.7 percent in China, 4.2 percent in brazil, 1.4 percent in Bangladesh, 1.6 percent in Sri Lanka, 2.9 percent in Thailand and 8.5 percent in the United States.

In addition to the healthcare budget, the finance ministry has reportedly also ordered a spending cut this year for India’s HIV/AIDS program by about 30 percent to US$ 205.4 million.

A report from Reuters, quoting one of the health ministry officials, stated that this budget cut could crimp efforts to control the spread of diseases. More newborns die in India than in poorer neighbors such as Bangladesh, and preventable illnesses such as diarrhea kill more than a million children every year.

Needs wings to fly:

The draft NHP 2015 has come thirteen years after the previous NHP 2002 and following a 20 percent cut even on the paltry budgetary allocation on public health of this financial year. Thus, many skeptics ponder whether this well drafted NHP 2015, pregnant with many great promises, would ever see the light of the day.

The skepticism gets further reinforced, when the draft NHP 2015 says that to achieve its objectives the budgetary allocation on health would be increased to 2.5 percent of the GDP. The Government proposes to rely mostly on general taxation, besides creating a health cess similar to that of education cess, for effective implementation of this health policy. The draft indicates that 40 percent of this budget would come from central expenditure.

A quick reading of the following text from the Reuter’s report makes the scenario even more intriguing:

“The retrenchment (budget cut) could also derail an ambitious universal healthcare program that Modi wants to launch in April. The plan aims to provide all citizens with free drugs and diagnostic treatments, as well as insurance benefits.

The cost of that program over the next four years had been estimated at 1.6 trillion rupees (US$ 25 billion). The health ministry officials had been expecting a jump in their budget for the coming year, in part to pay for this extra cost.

‘Even next year we don’t think we’ll get a huge amount of money,’ said one official, adding that it was now unclear how the new program would be funded.”

Thus, the key point to ponder now: Would the NHP 2015 have wings to fly?

Is India just producing various documents on health without action?

Not too long ago, in October 2010, the Government of India constituted a ‘High Level Expert Group (HLEG)’ on Universal Health Coverage (UHC) under the chairmanship of the well-known international medical expert Prof. K. Srinath Reddy. The HLEG was mandated to develop a framework for providing easily accessible and affordable health care to all Indians.

The HLEG Report defined UHC as follows:

“Ensuring equitable access for all Indian citizens, resident in any part of the country, regardless of income level, social status, gender, caste or religion, to affordable, accountable, appropriate health services of assured quality (promotive, preventive, curative and rehabilitative) as well as public health services addressing the wider determinants of health delivered to individuals and populations, with the government being the guarantor and enabler, although not necessarily the only provider, of health and related services”.

I discussed this subject in my blog post of December 12, 2011, titled “Health being a basic human right, the proposal for Universal Health Coverage augurs well for India”

Most probably, this excellent HLEG report on UHC has already become an archival material for the posterity to refer, if and when required.

Interestingly, despite governments of different political dispensation ruling the country since 1983, the key goal of the NHP 1983 to ‘provide healthcare to all by the year 2000’ continues to haunt us over the last three decades.

Public healthcare infrastructure, especially in rural India, still remains grossly inadequate.

In most of the villages in India, primary health facilities, if available, (except in some progressive states), continue to be shoddy, fragile and is gasping for breath, as it were. Recent examples of Bilaspur (Chhattisgarh) sterilization tragedy in November 2014, when 15 women died or the incident of last week in Chatra district of Jharkhand, where about 40 women allegedly underwent sterilization under torchlight, would vindicate this point.

Much hyped program of “free essential drugs for all, from the government hospitals” has not been universally implemented, just yet…again due to financial resource constraints and paucity of other wherewithal.

Conclusion:

Currently, none of the newer constitutional rights, such as right to food, education and employment, enacted by the lawmakers for the well being of the concerned people of the country, is functioning as desired for various financial and administrative reasons. Even making adequate budgetary provisions for all these projects continue to pose a great challenge, both for the central and the state Governments.

Overall, NHP 2015 is a well-drafted and comprehensive policy document. It analyses the successes and failures of the past quite well, with a proposal of making health as a fundamental right. However, the status and experience with the other fundamental right-based legislations in India, do not fuel much optimism in this critical area, at least, as of now.

Consequently, the draft NHP 2015 does not appear to be more than a lucid narration of good intents, just what the NHP 1983 and 2002 did. Next month’s Union budget allocation for the financial year 2015-16 for health, calculated as a percentage of India’s GDP, would hopefully bring more clarity in this area.

Additionally, other important areas such as, specific time-bound commitments on public investments for health; extensions of medical insurance cover to even outpatient treatments & care and appropriate regulations for the private sector to contain healthcare expenditure, are worth considering in the NHP 2015.

Shorn of all these, would the National Health Policy 2015 have its wings to fly?

By: Tapan J. Ray

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

 

Pharma & Healthcare: Where The Healers Turn Looters?

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Two news reports of the last week, though no longer shocking, made me think exactly the same way as the headline of this article epitomizes.

These reports are not just two isolated instances, but an integral part of a similar chain of events that I partly addressed in one of my earlier blog posts titled, “Is The Core Purpose of Pharma Business Much Beyond Profit Making?” of November 10, 2014.

With the fist clenching media reports of just the last week, I shall try to dwell upon that in absence of good governance how two of the greatest healers and the medical care givers in the arena of healthcare – the doctors and the hospitals, are being increasingly perceived by the common citizens as nothing less than looters.

The doctors:

A November 21, 2014 report highlights that the Medical Council of India (MCI) has summoned over three hundred doctors from various parts of India, based on an anonymous complaint, for taking lakhs of rupees as bribes from an Ahmedabad based pharmaceutical company. All those 300 doctors have been told to bring copies of their Income Tax returns and bank statements.

Just a year ago, in September 2013, the Chief Vigilance Commissioner reportedly received a letter alleging that doctors were taking bribes from Pharma companies. The complaint was forwarded to the Health ministry. The MCI took over the case in December 2013 and formed a subcommittee to investigate the doctors.

The complaint details that the Ahmedabad-based pharma company has been paying to the doctors not just huge cash, but also gifting them cars and flats, besides sponsoring foreign trips for the family.

In return, the involved doctors are allegedly prescribing that Ahmedabad based pharma company’s products that are priced 15 to 30 percent higher than those of well-established other pharma players.

In addition, according to reports, the doctors would also air on the Television sets placed at their respective clinics, advertisements of the pharma company products against hefty cash or equivalent in kind.

Although, the allegations of unholy nexus between pharma players and the doctors are continuity of a good old saga, the risk taking incentives that it provides to the wrong doers are very significant. The anonymous letter alleged that the concerned pharma company’s profit zoomed from zero to Rs. 400 Crore in a period of just 5 years.

According to available reports, the MCI has already questioned 166 doctors, out of which 7 are senior doctors from Maharashtra, including 3 physicians from Mumbai.

The hospital:

Another report on the subject that appeared yesterday is related to overcharging for an oncology medicine of Novartis – Sandostatin LAR, over the last nine months by the well-known Tata Memorial Hospital of Mumbai.

According to the report, even when Novartis revised the price of Sandostatin LAR from Rs. 65,499 for a 20mg vial to Rs 32,000 during Oct-Dec 2013 and the chemists in the hospital’s vicinity were selling the same vial for Rs 32,000, Tata Memorial continued to sell it at Rs 48,296.

The report also states that patients could have saved much more, if the hospital had prescribed an Octreotide generic of the same strength, Octride Depot 20mg by Sun Pharma with an MRP of Rs 17,800 is sold at Tata Memorial for Rs 12,157, instead of Sandostatin LAR 20mg.

However, the newspaper claims, “DNA was the first to report about the price disparity at the hospital on Nov 5. Tata Memorial Hospital has decided to reimburse cancer patients who were overcharged for a Novartis-branded oncology medicine over the last nine months.”

Interestingly, we get to know only about a few of such instances, only when these are reported either anonymously or by some employees or through rare impartial investigative journalism of international standard.

Treatment of dreaded diseases like Cancer also not spared:

The above hospital case assumes immense importance, as it is related to a dreaded disease and an expensive cancer drug. In real every day life, many such cases of various hues and colors are taking place in India incognito, at the cost of patients.

A scary scenario:

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

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

A recent report of ‘Evaluate Pharma (EP)’ has estimated that the worldwide sales of prescription drugs would reach US$ 1,017 Bn. by 2020 with a Compounded Annual Growth Rate (CAGR) of 5.1 percent between 2013 and 2020.

Interestingly, oncology is set to record the highest sales growth among the major therapy categories with a CAGR of 11.2 percent during this period, accounting for US$ 153.4 Bn. of the global pharmaceutical sales.

High incidence of cancer in India:

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

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

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

Experts do indicate that one of the main barriers of cancer care is its high treatment cost that is out of reach for millions of Indians.

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

Cancer drug price – a global issue to address:

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

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

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

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

After rejecting Roche’s breast cancer drug Kadcyla as too expensive, NICE reportedly articulated in its statement: “A breast cancer treatment that can cost more than US$151,000 per patient is not effective enough to justify the price the NHS is being asked to pay.”

In October 2012, three doctors at Memorial Sloan-Kettering Cancer Center announced in the New York Times that their hospital wouldn’t be using Zaltrap. These oncologists did not consider the drug worth its price. They questioned, why prescribe the far more expensive Zaltrap? Almost immediately thereafter, coming under intense stakeholder pressure Sanofi reportedly announced 50 percent off on Zaltrap price.

Similarly, ASCO in the United States has reportedly launched an initiative to rate cancer drugs not just on their efficacy and side effects, but prices as well.

Developments in India:

India has already demonstrated its initial concern on this critical issue by granting Compulsory License (CL) to the local player Natco to formulate the generic version of Bayer’s kidney cancer drug Nexavar and make it available to the patients at a fraction of the originator’s price. As rumors are doing the rounds, probably some more patented cancer drugs would come under Government scrutiny to achieve the same end goal.

I indicated in my earlier blog post that the National Pharmaceutical Pricing Authority (NPPA) of India by its notification dated July 10, 2014 has decided to bring, among others, some anticancer drugs too, not featuring in the National List of Essential Medicines 2011 (NLEM 2011), under price control. These prices have already in force.

Not too long ago, the Indian government reportedly contemplated to allow production of cheaper generic versions of breast cancer drug Herceptin in India. Roche – the originator of the drug ultimately surrendered its patent rights in 2013, apprehending that it would lose a legal contest in Indian courts, according to media reports.

Biocon and Mylan thereafter came out with biosimilar version of Herceptin in the country with around 40 percent lesser price.Herceptin,

Hence, affordable pricing of cancer drugs would continue to remain a key pressure point, as it just happened yet again.

The government to intervene again:

According to a media report of the last week, the new government in India is planning to control prices of anti-cancer drugs to address this critical issue.

As the current National List of Essential Medicines (NLEM) does not include many important anti-cancer medication, Tata Memorial Centre of Mumbai has recommended to the government that oncology drugs, such as Trastuzumab, Erlotinib, Irinotecan, Lenalidomide, Capecitabine, All Trans Retinoic Acid (ATRA), Bendamustine, Rituximab, Temozolomide (TMZ), Zoledronic acid, Megestrol acetate and Letrozole, should be added to the NLEM.

As a first step towards this direction the National Pharmaceutical Pricing Authority (NPPA) has invited comments on the same from the pharmaceutical industry and other stakeholders to bring these drugs under price control.

Quoting NPPA the report states, “the recommendations are based on factors such as the ability of the drug to improve the overall survival chances of the patient. The other factors include higher priority to drugs that have the potential to cure a fraction of patients versus those that have been proven to only prolong lives; the number of patients potentially impacted in India based on data from population based cancer registries of the National Cancer Registry Program; the non-availability of alternative medications of the same or other pharmacological class that can act as a reasonable ‘substitute’; and price of the drug to patients and the differential in price between various brands.”

Although this is a welcome move to most of the patients, the pharma industry would certainly not be happy with this development, because of very obvious reasons and is expected to strongly oppose this initiative of the government. Let us wait and watch how this scenario unfolds further.

Conclusion:

In pursuit of the Eldorado to generate more and more wealth, shorn of least concerns for majority of patients, quite a few companies are not sparing even the dreaded diseases, such as cancer, pushing many patients to abject poverty, if not untimely death.

Increasingly, many healthcare players across the world are reportedly being forced to pay heavily for ‘unethical behavior and business practices’ by the respective governments. Unfortunately, no such steps are being taken in India, not just yet.

At least on paper, for errant doctors and hospitals there is MCI to take prompt remedial measures. For implementation of Drug Price Control Order (DPCO) there is NPPA, though effectiveness of these two seemingly powerful bodies are far from the expectations of the stakeholders, occasional reported jingoism notwithstanding.

Currently in India, there are no legally binding ‘codes of pharma marketing practices’ in place. Even the Department of Pharmaceutical does not seem to have any legal jurisdiction for taking penal action against the errant pharma players for marketing malpractices or misdemeanor.

In this chaotic scenario, is it not quite challenging to fathom how would the government possibly discourage any healthcare or pharma player from turning looter instead of playing the expected role of a healer, ensuring beyond doubt that there is no wolf in sheep’s clothing?

By: Tapan J. Ray

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

 

 

Pharma And Healthcare: Mounting ‘Trust Deficit’ In Post Halcyon Days

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Although a radical transformation in the field of medicine and path breaking advances of medical sciences are in progress, the healthcare system as whole, including the pharma industry, as voiced by many, is fast losing its human touch and values. This is mainly because a large number of patients feel that they are being financially exploited in the entire medical treatment chain, as their ailments become primary means of making money…more money by many others .

A new and interesting book, authored by a practicing cardiologist, titled “Doctored: The Disillusionment of an American Physician”, which has just been released in August 2014, also unfolds with self-example a dysfunctional healthcare system and stark realities of practicing medicine even in the ‘Mecca’ of medicine – the United states.

The author eloquently highlights the malaise and cronyism affecting a sizeable number within the medical profession, being hand in gloves with a large constituents of the pharma industry. Medical practice seems to have now become just as any other ‘make-money’ endeavor; not quite different from what the pharma business has metamorphosed into, over a period of time.

A heartless game played by shrewd minds:

In a situation like this, a heartless game is being played by shrewd business savvy minds, at the cost of patients, making healthcare frightfully expensive to many.

As the above new book narrates, many pharmaceutical companies are coming to the fore to exploit the situation for commercial gain. In the book the author confesses, to make extra cash, he too accepts speaking fees from a pharmaceutical company that makes a cardiac drug he prescribes. He candidly admits enjoying the paid speeches on that specific pharma company’s drugs to influence other doctors, usually arranged at exotic places over fancy dinners. The author does not fail in his part to admit that the drug he touts on behalf of the pharma company turns out to be no better than other cheaper alternatives.

In this beautifully written memoir, the author Dr. Sundeep Jauhar tries to bring to light many complex problems of the healthcare system and alleged involvement of global pharma companies to drive the medical treatment costs up at a galloping pace. All these are being driven by various malpractices in pursuit of making quick bucks.

There are some compelling health policy, public spending on health and infrastructure related issues too, specifically for India, which are not the subject of my today’s discussion.

In this article, I shall neither dwell on the above book any further, but briefly deliberate on how all these, much too often repeated instances, are giving rise to mounting ‘Trust Deficit’ of the stakeholders, involving both the pharma industry and the medical profession at large and yet, quite intriguingly, they seem to remain unbothered.

The Halcyon days and after:

When we take a glimpse into the recent history of pharma and healthcare industry, it would be quite possible to convince ourselves that the overall situation, focus and mindset of the drug industry honchos and members of the medical profession were quite different, even a few decades ago. Those were the ‘Halcyon Days’.

At that time, pharmaceutical industry used to be one of the most admired industries of the world and people used to place the doctors almost in the pedestal of God.

Unlike today, when the drugs meant for the treatment of even widely prevalent dreaded diseases, such as, Cancer, Hepatitis C and HIV are not spared from maximum stretch pricing, the grand vision of the Global Chief Executives, in general, used to extend much beyond of just making profits. So were the doctors christened by the Hippocratic Oath. Yes, I repeat, those were the ‘Halcyon Days’.

Just to cite an example, in 1952, George Wilhelm Herman Emanuel Merck, the then President of Merck & Co was quoted on the front cover of the ‘Time Magazine’, epitomizing his following vision for the company:

“Medicine is for people, not for the profits”.

Having articulated this vision with so much of passion and clarity, Merck did not just walk the talk, in tandem, he steered an up swing in the company’s valuation over 50 times, proving beyond an iota of doubt that it is possible to give shape to his vision, if there is a will.

Today, in post ‘Halcyon Days’, for many of those who follow the history and development of the knowledge driven pharma and healthcare industry, this grand vision is no more than a sweet memory. Though the bedrock of pharma industry is innovation, is it inclusive? Is it benefitting the majority of the global population? No one believes now that “Medicine is for people, not for the profits”.

Thus, it was no surprise to many, when in 2012 while vocalizing its anguish on specific pharma mega malpractices ‘The Guardian’ came out with a lashing headline that reads as follows:

‘Pharma Overtakes Arms Industry To Top The League Of Misbehavior.’

Ignoring the reality:

Many people believe that all these are happening, as the global pharma industry refuses to come out of its nearly absurd arrogance created by spectacular business successes, over a very long period of time, with a large number of blockbuster drugs and the massive wealth thus created.

It appears, the pharma industry, by and large, cannot fathom just yet that its business model of 1950 to perhaps 1990, has lost much of relevance at the turn of the new millennium with changing aspirations and values of people, governments and the civil society at large.

Key reasons of distrust:

If we make a list from the global and local reports, the following are some of the key examples:

  • Media reports on pharmaceutical companies directly paying to doctors for writing prescriptions of high priced drugs to patients.
  • A growing belief that the pharma industry spends disproportionately more on sales & marketing than on R&D, which eventually increases the drug prices.
  • Unabated reports in the media of various pharma malpractices from across the world, including hefty fines amounting to billions of dollars, paid by many global pharma players.
  • A widespread belief that for commercial gain, the industry often hides negative clinical trial results, which go against patients’ health interest.

A recent survey:

According to a recent ‘Healthcheck Survey’ of the drug business by ‘Eye for Pharma’:

  • 42 percent of the respondents indicated that image of pharma is not getting any better among average people.
  • More than one-third said they are not sure or remained neutral on the subject.
  • 19 percent within the group are optimistic about improving image of pharma.

Though, it was reported that almost half of the respondents believe the industry knows what to do to gain standing and only 24 percent think pharma is clueless about how to regain its reputation, the commentators on the survey results are skeptical that companies are willing to do what it takes. This is predominantly because the pharma players do not know what would be the immediate financial impact, if the corrective measures were taken.

2014 developments in India:

In August 2014, a premier television news channel of India – NDTV exposed some blatant violations of medical guidelines involving both the doctors and the pharmaceutical companies in the country. The crew of NDTV carried out a sting operation (video), pretending to be medical representatives of a Delhi based new pharma company. The video clipping showed three doctors resorting to malpractices for which the pharma companies pay them heavily, though illegally.

This particular sting operation by NDTV could arrest the attention of the new Union Minister of Health Dr. Harsh Vardhan, whose reaction on tweeter was:

“One more sting operation on doctors exposing greed and readiness to shed professional ethics. I again appeal to brother doctors – show spine!”

Based on this public expose, the Medical Council of India (MCI), which is supposed to serve as the watchdog for doctors and overall medical practices, was compelled to conduct an enquiry on professional misconduct against those three doctors through its Ethics Committee. MCI has the power to cancel licenses of the erring medical practitioners.

Soon thereafter, one of the three Delhi doctors, who were caught on camera taking bribes in exchange of prescribing drugs, was reportedly arrested and the other two doctors were summoned by MCI for further investigation.

Just before this incident an article published in the well-reputed British Medical Journal (BMJ) on 08 May 2014 highlighted, “Corruption ruins the doctor-patient relationship in India”. The author David Berger wrote, “Kickbacks and bribes oil every part of the country’s healthcare machinery and if India’s authorities cannot make improvements, international agencies should act.”

I deliberated a part of this issue in one of my earlier blog posts titled “Kickbacks And Bribes Oil Every Part of India’s Healthcare Machinery”.

Interestingly, a couple of months earlier to this BMJ report, the Competition Commission of India (CCI) issued notices for various illegal practices in the pharma industry. These notices were served, among others, to pharma industry associations, chemists associations, including individual chemists & druggists, stockists, wholesalers and even to some local and global pharma majors.

In February 2014, the CCI reportedly issued a warning of severe penalties and prosecution to various bodies in the pharmaceutical industry indulging in anti-competitive practices even after giving undertakings of stopping the illegal practices, for which they were summoned for deposition before the commission earlier.

The CCI has now called upon the public through a public notice to approach it for curbing the malpractices that amount to anti-competitive in nature, adversely impacting interests of the consumer.

I reckon, all these actions are fine, but the bottom-line is, pharma and healthcare malpractices still continue unabated at the cost of patients, despite all these. Unable to garner adequate resources to pay for the high cost of treatment, which is fuelled by virtually out of control systemic malfunctioning, the families of a large number of patients are reportedly embracing abject poverty each year.

Pharma and healthcare continue to remain unbothered:

It is also not surprising that despite global uproar and all these socio-commercial issues, including pressure on drug prices, pharma and healthcare continue to march on the growth path, without any dent in their business performance particularly on this count.

Just to give an example, Moody Investor Services have highlighted just last week that India’s pharmaceutical market is set to experience continuing double-digit growth, faster than most other markets of the industry.

Lack of significant financial impact on the overall business performance on account of the alleged misconducts, barring USFDA imports bans, further reduces the possibility of a sense urgency for a speedy image makeover of the industry by doing the right things, in an organized manner.

The reason behind this inertia is also understandable, as expenditure on healthcare is not discretionary for the patients. To save lives of the near and dear ones, almost everybody, irrespective of financial status, try to garner resources to the maximum possible, whatever it costs.

Urgent remedial measures necessary:

Effective remedial measures to allay public distrust in all the above areas, in tandem with working out well-networked and inclusive innovation models, I reckon, would prove to be more meaningful today. This would facilitate not just in increasing the market access, but also for cost-effective innovation of new products leveraging the complex science of evolving biology. Let me reiterate, all these should be woven around the center piece of patients’ interest, without an exception.

I hasten to add here that some green shoots in this area have already started becoming visible, as some global industry constituents, though small in number, are articulating their new vision and the uncharted path that they intend to follow. Keeping a tab on the speed of spread of these green shoots would be important.

It is really a matter of conjecture now, whether the visible green shoots, as seen today would perish or not over a period of time. Nonetheless, that possibility is always there, if the concerned companies decide afresh that the efforts required for a long haul are not sustainable due to intense short-term performance pressure. Hence, it is not worth the financial risk taking.

In that scenario, they would continue with their existing business model of achieving the financial goals by selling the high priced medicines to the privileged few of the rich countries and to affluent people living in the other parts of the world, depriving millions of patients who desperately need those drugs, but are unable to afford.

Conclusion: 

Alleged malpractices in pharma and healthcare business operations, might not have hit any of the constituents really hard in financial terms just yet. However, the humongous ‘Trust Deficit’ of stakeholders, including the government, is gradually compelling them to face tougher resistance in operating the key business levers. Such resistance is increasingly coming in drug pricing, clinical trial requirements and related disclosure, marketing practices and even in the arena of Intellectual Property Rights (IPR).

On the part of the government, it is important to realize that self-regulations of various business and marketing practices have miserably failed in India for the pharmaceutical industry, just as it has failed in many other parts of the world, self-serving hypes often created by the global pharma associations in this regard notwithstanding. Besides the China saga and other reported scandals, billions of dollars of fines levied to the global pharma players, since last so many years, for a large number of malpractices would vindicate this point. It is worth noting that even these hefty fines are pittance, as compared to mind-boggling profits that these companies make on patented drugs with the adopted means. Hence, many of them would possibly feel that this risk is worth taking.  Similarly, lackadaisical implementation of MCI guidelines for the medical profession brings shame to the country, as evidenced by the article in the BMJ.

As self-regulation by the industry has proved to be nothing more than an utopia, it is about time for the new government to come out with strict, yet transparent and fair regulation, ensuring its effective implementation, to kill all these malpractices, once and for all, writing an apt epitaph to draw the final curtain to this chronicle.

That said, conscious efforts towards a mindset-changing approach for inclusive progress and growth by majority of pharma players and a sizeable number within the medical profession, would surely help reducing the ‘Trust Deficit’ of the stakeholders.

This much desirable transformation, if materializes, would enable both the pharma and healthcare industry to retrieve, at least, a part of the past glory. The constituents of the industry undoubtedly deserve it, just for the very nature of business they are engaged in.

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.

 

Union Budget 2014-15: Ticks The ‘Top Priority’ Boxes on Healthcare

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The Union Budget 2014-15, especially for healthcare, needs to be analyzed against the backdrop of what the common patients have been going through in the healthcare space of India, over a period of time.

In that context, I would quote new sets of data from a consumer expenditure survey carried out reportedly by the National Sample Survey Organization (NSSO) in 2011-12, capturing the following disturbing facts for a period between 2000 and 2012:

  • Total family spend on medical bills increased by 317 percent in urban areas and 363 percent in rural areas for institutional care, while ‘at-home’ medical expenses increased by about 200 percent in both urban and rural areas.
  • For institutional care in hospitals and nursing homes, costs of tests increased by a hopping 541 percent in urban areas. Even for the at-home patient, costs of diagnostic tests increased by over 400 percent in the same period.
  • Increases in doctors’ fees in hospitals were 433 percent in rural areas compared to 362 percent in urban cities,
  • Hospital charges went up by 454 percent in rural areas compared to 378 percent in urban areas.
  • Medicine costs in hospitals went up by 259 percent in rural versus about 200 percent in urban areas.
  • The number of families that reported expenditure on hospitalization dipped from 19 percent to 14 percent in urban areas and from 19 percent to 15 percent in rural areas. Lack of proper facilities at accessible distances was reported to be a key factor in dipping cases of hospitalization in rural areas.
  • Conversely, families that spent on patient care at home increased from 61 percent to 75 percent in urban areas and from 62 percent to 79 percent in rural areas.

Against the above backdrop, within 45 days after coming to power, in his maiden Union Budget Proposal for 2014-15, the Finance Minister of India has ticked most of the right boxes of national health priorities for India. It may not be a dream budget covering everything and all expectations; nonetheless, the budget reflects the intent of the government for the coming years.

Without going into minute details of the Union Budget in general, in this article, I shall dwell on its impact on the healthcare arena of India, in particular.

Key focus areas for healthcare:

Broadly speaking in the healthcare space what impacts the stakeholders most, besides others, are the following and no responsible government can afford to wish these away:

  • Access
  • Affordability
  • Capacity Building
  • Innovation
  • Ease of Doing Business

Within these five key areas, the Finance Minister appears to have focused on the four, namely – ‘Access’, ‘Affordability’, Capacity Building and overall ‘Ease of Doing Business’ in India.

I shall deliberate on each of these points briefly in a short while.

An example of pre-budget expectations of a pharma industry association:

With the current healthcare issues of India in mind and the above priority areas in the backdrop, I read recently in a business magazine, the expectations of one of the pharma industry association’s from the Union Budget 2014-15. Without being judgmental, I am now quoting those points for you to evaluate any way you would like to.

The key expectations of that pharma association were reportedly as follows:

1. Weighted Tax Deduction on Scientific Research:

“Currently there are no specific tax benefits available to units engaged in contract R&D or undertaking R&D for group companies. Benefits should be provided for units engaged in the business of R&D and contract R&D by way of deduction from profits”.

2. Clarity on taxing giveaways to doctors:

“The ambiguity of the CBDT circular in this regard has created widespread concern in the industry. As an interim measure, the CBDT may consider constituting a panel with adequate representation from the industry and Departments of Revenue and Pharmaceuticals to define expenses as ‘ethical’ or ‘unethical’ and lay down guidelines for implementation”.

3. Tax holiday for healthcare infrastructure projects:

“It is necessary to extend the tax holiday benefit to hospitals set up in urban areas to enable companies to commit the substantial investments required in the healthcare sector”.

4. FDI – Ambiguity on coverage (e.g. whether allied activities such as R&D, clinical trials are covered):

“Currently, there are no specific guidelines laid down on whether the FDI provisions are applicable to pharmaceutical companies undertaking allied activities e.g. R&D, clinical trials etc”.

5. Excise Duty on Active Pharma Ingredients (APIs):

“The excise duty rate of APIs be rationalized and brought on par with pharma goods i.e. excise duty on the inputs (API) should be reduced from 12% to 6%. Alternatively, the Government may introduce a refund mechanism to enable Pharma manufacturers to avail refund of excess CenVat Credit”.

Other issues that this particular pharma association had penned in its pre-budget memorandum of 2014-15, were as under:

  • Adoption and implementation of uniform marketing guidelines (e.g. the Uniform Code of Pharmaceutical Marketing Practices circulated by the DoP)
  • Rationalization of clinical trial guidelines
  • Updating of governing laws such as Drugs & Cosmetic Act to reflect the current industry scenario
  • Stakeholder consultation while introducing and implementing drug pricing guidelines

Interesting?

This memorandum is indeed interesting…very interesting, especially when it is taken as comprehensive and well-publicized expectations from the Union Budget of a pharma association in India. This pre-budget memorandum is just an example. Other pharma associations also had put on the table, their respective expectations from the government in the budget.

I gave this example, just to highlight what the new government has actually delivered in the charted priority areas in its warm-up maiden budget proposal, for the benefit of all concerned.

Pragmatic healthcare push in the Union Budget 2014-15:

I felt good to note, within a very short period, the new government could fathom the real healthcare issues of the country, as mentioned above, and proposed to deploy the national exchequers’ fund, probably following the good old saying “put your money where your mouth is”.

Initiates a major step towards ‘Health for All’:

In that direction, the government in its budget proposal has given a new thrust towards ‘Health for All’. For this purpose, two critical initiatives have been proposed:

Free Drug Service:

Free medicines under ‘Health for All’ would also help addressing the issue of poor ‘Access’ to medicines in the country.

Free Diagnosis Service:

Besides ‘Access’, focus on diagnosis and prevention would consequently mean early detection and better management of diseases.

Thus, free medicines and free diagnosis for everyone under ‘Health for All’ would help reducing Out of Pocket (OoP) expenditure on healthcare in India quite significantly. It is worth reiterating that OoP of over 70 percent, which is one of the highest globally, after Pakistan, pushes millions of people into poverty every year in India. This proposal may, therefore, be considered as a precursor to Universal Health Care (UHC).

Increase in FDI cap on insurance sector:

The Finance Minister has proposed an increase in the limit of Foreign Direct Investment (FDI) in the insurance sector from the current level of 26 per cent to 49 per cent. However, the additional investment has to follow the Foreign Investment Promotion Board (FIPB) route. Though this change is not healthcare sector specific, nonetheless, it would ensure deeper penetration of health insurance, improving access to healthcare.

Other key 2014-15 Union Budget proposals:

Other key proposals include:

  • Universal access to early quality diagnosis and treatment to TB patients
  • Two National Institutes of Aging (NIA) at AIIMS, New Delhi, and Madras Medical College, Chennai. NIA aims to cater to the needs of the elderly population which has increased four-fold since 1951. The number of senior citizens is projected to be 173 million by 2026.
  • Four more AIIMS-like institutions in Andhra Pradesh, West Bengal, Vidarbha in Maharashtra and Purvanchal in UP, for which Rs 500 Crore has been set aside.
  • Additional 58 government medical colleges. The proposal also includes 12 government medical colleges, where dental facilities would also be provided.
  • 15 Model Rural Health Research Centers (MHRCs) in states for better healthcare facilities in rural India.
  • HIV AIDS drugs and diagnostic kits have been made cheaper through duty rationalization.
  • For the first time, the budget proposal included central assistance to strengthen the States’ Drug Regulatory and Food Regulatory Systems by creating new drug testing laboratories and strengthening the 31 existing ones.

Focus on biotechnology:

The Finance Minister proposed a cluster-led biotech development in Faridabad and Bangalore, as well as agro-biotech clusters in Mohali, Pune and Kolkata.  It is a well-established fact that a cluster approach ensures that academia, researchers and the companies engage closely to create strong synergies for innovation and growth.

The announcement of Rs 10,000 Crore funds for ‘startups’ is also expected to help ‘startups’ in the biotech space.

Withdrawal of exemption of a service tax:

As a part to widen the service tax net, the Finance Minister has proposed withdrawal of exemption on service taxes in case of technical testing of newly developed drugs on humans. This has attracted ire of the pharma industry, just as any withdrawal of tax exemption does.

Re-arranging the proposals under high impact areas:

As indicated above, if I now re-arrange the Union budget proposals 2014-15 under each high impact areas, the picture would emerge as follows:

Access improvement:

- “Health for All” – Free drugs and diagnostic services for all would help improving ‘Access’ to healthcare by manifold.

- Universal access to early quality diagnosis and treatment to TB patients would again help millions

- Deeper penetration of health insurance and its innovative usage would also help a significant number of populations of the country having adequate ‘Access’ to healthcare.

Affordability:

- HIV AIDS drugs and diagnostic kits have been made cheaper through duty rationalization.

- “Health for All” – Free drugs and diagnostic services for all would help answering the issue of ‘Affordability’, as well.

Capacity building:

- Two National Institutes of Aging (NIA) at AIIMS, New Delhi, and Madras Medical College, Chennai.

- Four more AIIMS-like institutions in Andhra Pradesh, West Bengal, Vidarbha in Maharashtra and Purvanchal in UP, for which Rs 500 Crore is being set aside.

- Additional 58 government medical colleges, including 12 colleges where dental facilities would also be provided.

- 15 Model Rural Health Research Centers (MHRCs) in states for better healthcare facilities in rural India.

- Central assistance to strengthen the States’ Drug Regulatory and Food Regulatory Systems by creating new drug testing laboratories and strengthening the 31 existing state laboratories.

Innovation:

- Cluster-led biotech development

Ease of doing business:

- Numbers of common pan-industry initiatives have been enlisted in the general budget proposals, many of which would improve overall ‘Ease of Doing Business’ in the healthcare sector too.

A concern:

Despite all these, there is a concern. In the Union Budget proposals 2014-15, the health sector attracted a total outlay of Rs 35, 163 Crore, which is an increase from the last year’s Rs 33, 278 Crore. I wonder, whether this increase would be sufficient enough to meet all healthcare commitments, as it does not even take inflation into account.

Conclusion:

Taking all these into consideration, the Union Budget proposals for 2014-15, in my view, are progressive and reformists in nature. I am quite in sync with the general belief that the idea behind any financial reform of a nation is not to provide discretionary treatment to any particular industry.

With that in mind, I could well understand why this budget has not pleased all, including the constituents of the healthcare industry and would rather consider it only as a precursor to a roadmap that would follow in the coming years.

However, given the monetary and fiscal constraints of the country, the Union Budget 2014-15, with its key focus on healthcare ‘Access’, ‘Affordability’, ‘Capacity Building’ and overall ‘Ease of Doing Business’ in India, sends right signals of moving towards a new direction, for all. Opportunities for ‘Innovation’ and growth in the biotechnology area have also been initiated, which expectedly would be scaled up in the coming years.

Currently, the general belief both globally and locally is that, this new government has the enthusiasm, will and determination to ‘Walk the Talk’ to make India a global force to reckon with, including its healthcare space.

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. 

“Kickbacks And Bribes Oil Every Part of India’s Healthcare Machinery” – A National Shame?

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“Corruption ruins the doctor-patient relationship in India” - highlights an article published in the well-reputed British Medical Journal (BMJ) on 08 May 2014. The author David Berger wrote, “Kickbacks and bribes oil every part of the country’s healthcare machinery and if India’s authorities cannot make improvements, international agencies should act.”

The author reiterated the much known facts that the latest in technological medicine is available only to those people who can pay for its high price. However, the vast majority of the population has little or no access to healthcare, and whatever access they have is mostly limited to substandard government care or to quacks, which seem to operate with near impunity. He further points out that “Corruption is rife at all levels, from the richest to the poorest”. It is a common complaint both from the poor and the middle class that they don’t trust their doctors from the core of hearts. They don’t trust them to be competent or to be honest, and live in fear of having to consult them, which results in high levels of doctor shopping.

Dr. Berger also deliberated on the widespread corruption in the pharmaceutical industry, with doctors bribed to prescribe particular drugs. Common stories usually doing the rounds that the decision makers in the hospitals are being given top of the range cars and other inducements when their hospitals sign contracts to prescribe particular expensive drugs preferentially.

The article does not fail to mention that many Indian doctors do have huge expertise, are honorable and treat their patients well. However, as a group, doctors generally have a poor reputation.

Until the profession along with the pharma industry is prepared to tackle this malady head-on and acknowledge the corrosive effects of medical corruption, the doctor-patient relationship will continue to lie in tatters, the paper says.

The saga continues through decades – unabated:

The above worrying situation in the space of medical treatment in India refuses to die down and continues since decades.

The article published in the British Medical Journal (BMJ) over a decade ago, on January 04, 2003 vindicates this point, when it brings to the fore, “Health care is among the most corrupt services in India”.

This article was based on a survey released by the India office of the international non-governmental organization ‘Transparency International’. At that time, it ranked India as one of the 30 most corrupt countries in the world. The study covered 10 sectors with a direct bearing on people’s lives, where the respondents rated the police as the most corrupt sector, closely followed by healthcare.

Medical Council of India (MCI) is responsible for enforcing the regulations on medical profession. Unfortunately, the MCI itself is riddled with corruption, fueled by the vested interests. As the first BMJ article indicates,   Subsequently, there has been controversy over the surprise removal, on the day India was declared polio-free, of the health secretary Keshav Desirajus, possibly in response to his resistance to moves to reappoint Desai to the reconstituted MCI.

Another point to ponder: Quality of Doctor – MR interactions

It is a well-established fact that the ethics, values and belief in pharmaceutical sales and marketing are primarily derived from the ethics, values and belief of the concerned organization.  Field staff systems, compliance, accountability, belief, value and culture also flow from these fundamentals. Thus, considering the comments made in the BMJ on the pharma companies, in general, let me now also deliberate on the desired roles of the Medical Representatives (MR) in this area.

It is well known that MRs of the pharma players exert significant influence on the prescribing practices of the doctors and changing their prescribing patterns too. At the same time, this is also equally true that for a vast majority of, especially, the General Practitioners (GPs), MRs are the key source of information for various drugs. In tandem, several research studies also indicate that doctors, by and large, believe that pharma companies unduly influence them.

Theoretically, MRs should be properly trained to convey to the target doctors the overall profile – the efficacy, safety, utility, precautions and contra-indications of their respective products. Interestingly, the MRs are trained by the respective pharma companies primarily to alter the prescribing habits of the target doctors with information heavily biased in favor of their own drugs.

As a result, range of safety, precautions and contra-indications of the products are seldom discussed, if not totally avoided, putting patients at risks by creating an unwarranted product bias, especially among GPs, who depend mainly on MRs for product information. Thus, the quality of product communication is mainly focused on benefits rather than holistic – covering all intrinsic merits/demerits of the respective brands in a professional manner.

Considering the importance of detailing in delivering the complete product information primarily to the GPs, there is a critical need for the pharma companies to train and equip the MRs with a complete detailing message and yet be successful in winning the doctors’ support.

This issue also needs to be properly addressed for the interest of patients.

“Means” to achieve the goal need to change: 

Globally, including India, many pharma players have not been questioned, as yet, just not on the means of their meeting the financial goals, but also the practices they follow for the doctors. These often include classifying the physicians based on the value of their prescriptions for the specific products. Accordingly, MRs are trained to adopt the respective companies’ prescribed ‘means’ to influence those doctors for creating a desirable prescription demand. These wide array of so-called ‘means’, as many argue, lead to alleged ‘bribery’/’kickbacks’ and other malpractices both at the doctors’ and also at the pharma companies’ end.

To address this issue, after the Chinese episode, GlaxoSmithKline (GSK) has reportedly announced that by the start of 2016 it will stop paying doctors to speak on its behalf or to attend conferences, to end undue influence on prescribers.

The announcement also indicated that GSK has planned to remove individual sales targets from its sales force. This means that MRs would no longer be paid according to the number of prescriptions they solicited from the doctors met by them.

Instead, GSK introduced a new performance related scheme that will reward the MRs for their technical knowledge, the quality of the service they deliver to support improved care of patients, and the overall performance of GSK’s business. The scheme is expected to start in some countries effective January 2014 and be in place globally by early 2015.

Further, GSK underscored that the latest changes were “designed to bring greater clarity and confidence that whenever we talk to a doctor, nurse, or other prescriber, it is patients’ interests that always come first.”

This is indeed a refreshing development for others to imbibe, even in India.

Capturing an Indian Example:

Just to cite an example, a couple of years ago Reuters in an article titled “In India, gift-giving drives drug makers’ marketing” reported that a coffee maker, cookware and vacuum cleaner, were among the many gifts for doctors listed in an Abbott Healthcare sales-strategy guide for the second quarter of 2011 in India, a copy of which was reviewed by Reuters.

It is interesting to note from the report, even for an antibiotic like Nupod (Cefpodoxime), doctors who pledge to prescribe Abbott’s branded drugs, or who’ve already prescribed certain amounts, can expect some of these items in return, the report mentioned.

Since decades, media reports have highlighted many more of such instances. Unfortunately, the concerned government authorities in India refused to wake-up from the deep slumber, despite the alleged ruckus spreading like a wild fire.

Self-regulation by the industry ineffective:

This menace, though more intense in India, is certainly not confined to the shores of this country. As we all know, many constituents of Big Pharma have already been implicated in the mega pharma bribery scandal in China.

Many international pharmaceutical trade associations, which are primarily the lobbying bodies, are the strong votaries of self-regulations by the industry. They have also created many documents in these regards since quite some time and displayed those in their respective websites. However, despite all these the ground reality is, the charted path of well-hyped self-regulation by the industry to stop this malaise is not working.

The following are just a few recent examples to help fathom the enormity of the problem and also to vindicate the above point:

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

Pricing is also another important area where the issue of both ethics and compliance to drug regulations come in. The key question continues to remain, whether the essential drugs, besides the patented ones, are priced in a manner that they can serve the needs of majority of patients in India. I have deliberated a part of this important issue in my earlier blog post titled “Is The New Market Based Pricing Model Fundamentally Flawed?”

There are many more of such examples.

Stakeholders’ anguish:

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

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

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

Let us now wait and see what action the new minister of the Modi Government takes on this issue.

A prescription for change:

Very recently, Dr. Samiran Nundy, Chairman of the Department of Surgical Gastroenterology and Organ Transplantation at Sir Ganga Ram Hospital and Editor-in-Chief of the Journal of Current Medicine Research and Practice, has reportedly exposed the widespread (mal) practices of doctors in India taking cuts for referrals and prescribing unnecessary drugs, investigations and procedures for profit.

Dr. Nundy suggested that to begin with, “The Medical Council of India (MCI), currently an exclusive club of doctors, has to be reconstituted. Half the members must be lay people like teachers, social workers and patient groups like the General Medical Council in Britain where, if a doctor is found to be corrupt, he is booted out by the council.”

Conclusion:

Efforts are now being made in India by some stakeholders to declare all malpractices related to pharma industry illegal through enactment of appropriate robust laws and regulations, attracting exemplary punishments to the perpetrators.

However, enforcement of MCI Guidelines for the doctors and initiatives towards enactment of suitable laws/regulations for the pharma industry, like for example, the ‘Physician Payments Sunshine Act’ of the United States, have so far been muted by the vested interests.

If the new Modi government too, does not swing into visible action forthwith, this saga of international disrepute, corruption and collusion in the healthcare space of India would continue in India, albeit with increasing vigor and probably in perpetuity. This would, undoubtedly, sacrifice the interest of patients at the altar of excessive greed and want of the vested interests.

This new government, as most people believe, has both the will and wherewithal to hold this raging mad bull of pharma malpractices by the horn, ensuring a great relief and long awaited justice for all.

By: Tapan J. Ray

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

Higher The Healthcare Spend, Better The Healthcare Performance: A Myth?

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It is generally believed, higher the per-capita expenditure of healthcare, better is the overall ‘healthcare performance’ of a nation.

However, this myth has recently been busted by a new study, the take-home message of which would be quite relevant for India too. It flags a very important point, just as too low per-capita expenditure on healthcare fails to deliver an optimal healthcare performance to the target population, higher health expenditure, on the other hand, does not have any linear relationship with commensurately better healthcare performance either.

The question, therefore, comes up: What then would be the optimal per-capita spending on healthcare to offer quality healthcare performance in a country like India?

The study:

According to this recent Commonwealth Fund report , per-capita expenditures on healthcare in 2011 of eleven wealthy nations were as follows:

Per-Capita Healthcare Spend in 2011

Rank Country US $
1. United States 8,508
2. Norway 5,669
3. Switzerland 5,643
4. Netherlands 5,099
5. Canada 4,522
6. Germany 4,495
7. France 4,111
8. Sweden 3,925
9. Australia 3,800
10. United Kingdom 3,405
11. New Zealand 3,182

Against the above spend, the ‘Healthcare Performance’ rankings of the same 11 nations were as under, showing no linear relationship between higher per-capita healthcare expenditure and better healthcare performance:

Performance of Healthcare System

Rank Country
1. United Kingdom
2. Switzerland
3. Sweden
4. Australia
5. Germany
6. Netherlands
7. New Zealand
8. Norway
9. France
10. Canada
11. United States

The basis of ranking:

Interestingly, though the healthcare expenditure of the United States of America at 17.4 percent of Gross Domestic Product (GDP) is the highest in the world, according to this report, America ranks worst among all these nations, namely, France, Australia, Germany, Canada, Sweden, New Zealand, Norway, the Netherlands, Switzerland and the United Kingdom.

The ranking was made based various factors, which include quality of care, access to doctors and equity throughout the country.

The U.K. ranked best, with Switzerland following a close second, though their respective per-capita expenditures on healthcare were much less than the United States.

Holds good in BRIC perspective too:

Coming to the BRIC nations’ perspective, though India’s per-capita healthcare spend has been the lowest among these 4 countries, the following quick example would clearly establish that here also the healthcare performance does not have any linear relationship with the per-capita healthcare spend:

Per capita Healthcare expenditure in 2011: Country Comparison

Country US $ World Rank Physician/1000 people Hospital/1000 people Life expectancy at birth (years)
Brazil 1120.56   41 1.76 2.3 73.4
Russia 806.7   55 4.31 9.6 69.0
India 59.1 152 0.65 0.9 67.08
China 278.02   99 1.82 3.8 73.5

(Source: WHO data)

Taking the United States as an example:

To illustrate the point further, let me take the US details as an example, as it incurs the highest per-capita expenditure on healthcare. When that is the fact, does high healthcare spending of the US help the patients commensurately? 

Going by these reports, it does not appear so, as:

  • The Commonwealth Fund report also states, “Moreover, US patients were the most likely to find it very difficult to get after-hours care without going to an emergency room – 40 percent said it was very difficult, compared with only 15 percent in the Netherlands and Germany, the lowest rates of any country on this measure.”
  • The 2008 Commonwealth Fund survey, of 7,500 chronically ill patients in Australia, Canada, France, Germany, the Netherlands, New Zealand, the UK and the USA, reportedly also found that: “More than half (54 percent) of the US patients did not get recommended care, fill prescriptions, or see a doctor when sick because of costs, compared to 7 percent – 36 percent in other countries. About a third of the US patients – more than in any other country – experienced medical errors or poorly-coordinated care, while 41 percent spent more than US$ 1,000 in the past year on out-of-pocket medical costs, compared with 4 percent in the UK and 8 percent in the Netherlands.”

The study also highlighted the following for the United States with the highest health expenditure:

  • Lesser number of doctors and hospital beds among developed nations:

The US has fewer physicians per 100,000 populations than any of the other countries apart from Japan, and the fewest doctor consultations (3.9 per capita) than any except Sweden. Relative to the other countries in the study, the US also had few hospital beds, short lengths of stay for acute care and few hospital discharges per 1,000 populations.

  • Highest rates of potentially preventable deaths from asthma and amputations due to diabetes:

While the US performs well on breast and colorectal cancer survival rates, it has among the highest rates of potentially preventable deaths from asthma and amputations due to diabetes, and rates that are no better than average for in-hospital deaths from heart attack and stroke.

  • Individual payers negotiate prices with health care providers:

In the US, individual payers negotiate prices with health care providers, a system that leads to complexity – and varying prices for the same goods and services, says the study.

Where is the high healthcare spending of US going?

High health costs in the United States are mostly due to higher prices driven by free-market economy and not quality of care, says the study. Some of the key characteristics of the US healthcare space in the areas under discussion are as follows:

High and totally decontrolled drug prices:

The drug prices are totally decontrolled in the US, unlike most other developed nations, where price negotiations for reimbursed drugs are the common norms.

The above study highlights that US prices for the 30 most commonly-used branded prescription drugs are more than double the prices paid in Australia, France, the Netherlands, New Zealand and the UK, and they are a third higher than in Canada and Germany. In contrast, prices of generic drugs are lower in the US than in any of the other 12 nations due to very high competition. This reinforces the point that any delay in the entry of generics after patent expiry would impact the patients and the payor very adversely

Expensive hospital stays:

US hospital stays are far more expensive than in other countries, at more than US$18,000 per discharge compared with about US$13,000 in Canada and under US$10,000 in Sweden, Australia, New Zealand, France and Germany.

Conclusion:

In 1999, according to a WHO Study, per capita healthcare expenditure in India was just US$ 18.2. The figure rose to US$ 28.7 in year 2004 and US $ 59.1 in 2011, which reflects a double digit Compounded Annual Growth Rate (CAGR) in per capita healthcare expenditure of the country from the 2004 study to 2011. The absolute numbers may be far from adequate; nevertheless, the trend is ascending. This needs to be accelerated, possibly by the new health minister with the prime minister’s direct help and intervention.

There is a lot to learn from the US healthcare model too, especially from its pitfalls and regulatory structure, as deliberated above.

Finally, taking a cue from all these, India should decide at what per-capita spend, with all necessary regulatory measures being firmly in place, the country would be able to ensure quality ‘access’ to healthcare for all its citizens.

Mere comparison of per-capita healthcare spend of each country, I reckon, may not mean much now. India needs to ‘reinvent the wheel’ in this area, as it were, to arrive at its own health expenditure model for quality healthcare service delivery to all in the country. This is more important than ever before, as higher healthcare spends do not necessarily mean commensurately better healthcare performance.

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.

Leading Through The Challenge Of Change: Is Pharma Leadership Too Archaic?

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A recent major global survey titled “Testing The Health Of The Pharmaceutical Industry” has revealed that a sizable majority of executives polled, though believe the sector is in good shape, are concerned of its reputation. Interestingly, 73 percent of respondents believe that pharma companies should become “Genuine Healthcare Providers”.

From many other reports, as well, one gets to know that the overall image of the global pharmaceutical industry, despite the high profile personas being on the saddle, is currently as good or as bad as the same of, say, Tobacco or Alcoholic beverages sectors. Lamentably, the common perception is that the industry is hugely self-serving, problem making, largely exploitative and mostly surreptitious in its dealings.

This perception prevails, despite the fact that pharma industry exists to help mankind fighting against diseases continuously, thus improving the quality of life, quite unlike the other two industries, as indicated above.

Media reports on ignoble acts of this otherwise noble industry keep coming in tidal waves regularly and unabated, from many parts of the world, the latest being the alleged mega bribery scandal involving the large global majors in China, besides many others.

While industry leadership is generally smooth articulators, ‘Talking the Talk’ and ‘Walking the Walk’ slogans in the frontiers of ethics, values and shared goals of many of these much reported companies, are probably used to run expensive global ‘Public Relations (PR)’ campaigns, lobbying and advocacy initiatives in the corridors of power.

What then could possibly be the reason of such perception gap that this great industry is allowing to increase, over a long period of time? Could it be that pharma collective leadership has not been able to adequately adapt itself with the demands of changing healthcare environment and the needs of various nations in this space, across the globe? Is the leadership, therefore, too archaic?

Is Pharma leadership too archaic?

In this context, an interesting article titled, “Healthcare Leadership Must Shift From Cottage Industry To Big Business”, published in one of the latest issues of Forbes, though deals with issues pertaining to the ‘Healthcare Industry’ in America, nevertheless makes some interesting observations, which are relevant to India as well, just as many other countries of the world.

It states that the ‘Healthcare Leadership’ has not kept up with the industry’s evolution to big business over the past 25-30 years – nor does it possess the required change management competencies to effectively lead and rapidly turn-around an adaptive healthcare business model.

As a result, unlike many other knowledge industries, pharma sector is still struggling hard to convert the tough environmental challenges into bright business opportunities.

Inward looking leadership?

From the available details, it appears that today, mostly inward looking pharma leadership tends to ignore the serious voices demanding access to medicines, especially for dreaded diseases, such as, Cancer. Instead of engaging with the stakeholders in search of a win-win solution, global pharma leadership apparently tries to unleash yet another barrage of mundane and arrogant arguments highlighting the importance of ‘Drug Innovation’ and hyping how expensive it is. The leaders do it either themselves or mostly through their own funded trade associations.

In tandem and unhesitatingly, the leadership and/or their lobbyists reportedly exert all types of pressures even to get the relevant laws of sovereign countries amended or framed to further their business interests. The leadership continues to demonstrate its insensitivity to the concerns of a vast majority of patients, other stakeholders and their respective governments, further reinforcing its self-serving image.

Does anyone really talk against ‘Drug Innovation’?

The moot question, therefore, is: Why is this hype? Who on earth really talks against drug innovation? None, I reckon. On the contrary, drug innovation is considered by all as absolutely fundamental in the continuous combat of mankind against a galore of ailments. It should certainly be encouraged, protected and rewarded all the way, following a win-win pathway for providing access to these innovative drugs for all. There is no question about and no qualms on it.

Insensitive comments do matter:

Insensitive comments from the leadership further widens the perception gap. Let me give two examples:

I. Recently while justifying the price of US$ 1000/tab of the Hepatitis C drug Sovaldi of Gilead, the CEO of Sanofi reportedly highlighted, “Unprecedented innovation comes at a price.” This is of course true, but at what price…US$ 1000/tablet? If this comment is not insensitive and outrageous, does it at least not smack of arrogance?

II. Another such insensitivity was expressed through reported proclamation in public of the Global CEO of Bayer, not so long ago, which clarified that: “Bayer didn’t develop its cancer drug, Nexavar (sorafenib) for India but for Western Patients that can afford it.” Incidentally, the above comment came from the same Bayer whose research chemists synthesized Prontosil, the first antibiotic, in 1932, more than a decade before penicillin became commercially available. Prontosil and subsequent “Sulfa” drugs – the first chemicals used to treat bacterial infections, ushered in a new era for medicine, saving millions of lives of patients globally. At that time, the then Bayer CEO probably did not say that Prontosil was developed “just for the Western Patients that can afford it.”

‘Inclusive Innovation’ for greater access:

Any innovation has to have an impact on life or life-style, depending on its type. Each innovation has a target group and to be meaningful, this group has to have access to the innovative product.

So far as drugs and pharmaceuticals are concerned, the target group for innovation is predominantly the human beings at large. Thus, to make the drug innovation meaningful, the new medicines should be made accessible to all patients across the globe, with social equity, as per the healthcare environment of each country. This underscores the point that drug innovations would have to be inclusive to make meaningful impacts on lives.

New age pharma leadership should find out ways through stakeholder engagement that innovative drugs are made accessible to majority of the patients and not just to a privileged few…fixing a price tag such as US$ 1000/tab for Sovaldi, Sanofi CEO’s above comment notwithstanding.

Leadership lessons to learn from other industries:

Traditional pharma leadership has still got a lot to learn from other industries too. For example, to speed up development of electric cars by all manufacturers, the Co-Founder and Chief Executive Officer Elon Musk of Tesla Motors has reportedly decided to share its patents under ‘Open Source’ sharing of technologies with all others. Elon Musk further reiterated:

“If we clear a path to the creation of compelling electric vehicles, but then lay Intellectual property (IP) landmines behind us to inhibit others, we are acting in a manner contrary to that goal.”

In the important ‘green’ automobile space, this is indeed a gutsy and exemplary decision to underscore Tesla Motor’s concern on global warming.

Why such type of leadership is so rare in the global pharma world? Besides some tokenisms, why the global pharma leaders are not taking similar large scale initiatives for drug innovation, especially in the areas of dreaded and difficult diseases, such as, Cancer, Alzheimer’s, Multiple Sclerosis and Metabolic disorders, just to name a few?

Finding cost-effective ways for even ‘Unprecedented’ drug innovation:

Taking a lesson from the Tesla example and also from my earlier blog post, ‘Open Source’ model of drug discovery, would be quite appropriate in the current scenario not just to promote more innovative and intensive approaches in the drug discovery process, but also to improve profit.

According to available reports, one of the key advantages of the ‘Open Source’ model would be substantial reduction of cost even for ‘Unprecedented’ innovations, besides minimizing the high cost of failures of several R&D projects. These, coupled with significant savings in time, would immensely reduce ‘mind-to-market’ span of innovative drugs in various disease areas, making these medicines accessible to many more patients and the innovation inclusive.

Indian Pharma – promoter driven leadership:

Back home in India, fast growing India Pharma businesses predominantly consist of generic drugs and are family owned. A 2011 study conducted by ‘ASK Investment Managers’ reported, “Family Owned Businesses (FOB)” account for 60 percent of market cap among the top 500 companies in India and comprise 17 percent of the IT Industry, 10 percent of refineries, 7 percent of automobiles and 6 percent of telecom, in the country. In the domestic pharmaceutical sector, almost hundred percent of the companies are currently family owned and run, barring a few loss making Public Sector Units (PSUs).

As most of these companies started showing significant growth only after 1970, we usually see the first or second-generation entrepreneurs in these family run businesses, where the owners are also the business leaders, irrespective of size and scale of operations.

However, it is unlikely that the pharma business owners in India would be willing, just yet, to go for a regime change by hiring professional leaders at the helm of a business, like what the IT giant Infosys announced the week last or Cipla did sometime back. Nevertheless, they all should, at least, attune themselves with the mindset of the new age pharma leaders to reap a rich harvest out of the opportunities, at times veiled as threats.

New leadership to be ethically grounded and engage everyone:

Unlike what is happening with the current pharma leadership today, the new age leadership needs to be ethically grounded and engage all stakeholders effectively in a transparent manner with impeccable governance.

Quoting Dr. Michael Soman, President/Chief Medical Executive of Group Health Physicians, the above Forbes article states that in the new age healthcare leadership model, the leader may not have to have all of the answers to all the problems, but he would always have a clear vision of where we wants to lead the company to.

This new leadership should create a glorious future of the pharma industry together with all other stakeholders by asking: “How can we all be part of healthcare solutions?”

Conclusion:

Unfortunately, despite so much of good work done by the pharmaceutical industry in various fields across the world, including in India, the general public perception on the leadership of the pharma world, is still very negative for various reasons. Pharma industry also knows it well.

Thus, around the close of 2007, the Chairman of Eli Lilly reportedly said publicly what many industry observers have been saying privately for some time. He said: “I think the industry is doomed, if we don’t change”.

The available statistics also paints a grim picture of the traditional big pharma business model going from blockbuster to bust with the mindset of the leadership, by and large, remaining unchanged, barring some cosmetic touch-ups here or there.

The old business model – sprawling organizations, enormous capital investments, and spiraling costs, underwritten by a steady stream of multibillion blockbuster products – is simply a pipe dream today.

Has anything much changed even thereafter? May be not. Thus, to meet the new challenge of change in the healthcare space, doesn’t the new age pharma leadership still look too archaic, at least, in its mindset and governance pattern?

Is it, therefore, not high time for them to come out of the ‘Ostrich Mode’ collectively, face the demanding environmental needs squarely as they are, try to be a part of healthcare solutions of a nation in a win-win way and avoid being perceived as a part of the problem?

Effective leadership learning process has always been eclectic, borrowing ideas and experiences from other disciplines. In case of pharma, it could well be from other knowledge industries, such as, Information Technology (IT), Telecommunications etc. But change it must. Not just for business growth creating shareholders’ value, but for long-term survival too, basking in glory.

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.