Tag Archives: Healthcare

‘India Taskforce’ takes the first step in an arduous task to bridge the trust deficit.

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To prepare a comprehensive long term strategy to unleash the growth potential of the Pharmaceutical Industry of India considering all its current issues, the Ministry of Health and Family Welfare announced constitution of a taskforce on March 15, 2011 involving all the stakeholders, as mentioned below. As per reports, the first meeting of the committee was held on June 6, 2011 to deliberate on the mandated goals.

Within 3 months the taskforce, under the chairmanship of V.M. Katoch, Secretary, Department of Health Research and Director-General, Indian Council of Medical Research (ICMR), is expected to work out and submit a short, medium and long term strategic path and goals to the Government, highlighting the key and specific policy measures required to achieve these objectives.

The taskforce will have members drawn from:

  1. National Pharmaceutical Pricing Authority,
  2. Department of Industry Policy and Promotion,
  3. Indian Drug Manufacturers Association, Mumbai,
  4. Indian Pharmaceutical Alliance, Mumbai,
  5. Organization of Pharmaceutical Producers of India, Mumbai,
  6. Federation of Pharmaceutical Entrepreneurs, Gurgaon,
  7. Confederation of Indian Pharmaceutical Industry,
  8. Bulk Drug Manufacturers’ Association, Hyderabad,
  9. SME Pharma Industry Confederation, New Delhi
  10. Drug Controller General of India as the Member Secretary.

The focus areas:

The report has been mandated to cover the following critical areas:

  1. Evolving a short, medium and long-term policy and strategy to make India a hub for drug discovery, research and development.
  2. Evolving strategies to further the interests of Indian pharma industry in the light of issues related to intellectual property rights and recommend strategies to capitalize the opportunity of $60 to $80 billion drugs going off-patent over the next five years.
  3. Evolve policy measures to assure national drugs security by promoting indigenous production of bulk drugs, preventing takeover of Indian pharma industry by multi-national corporations, drug pricing, promotion of generic drugs
  4. Recommend measures to assure adequate availability of quality generic drugs at affordable prices.
  5. Recommend measures to tackle the problem of spurious drugs and use of anti-counterfeit technologies.

Estimates and Perspectives:

  • The pharma industry is growing at around 1.5-1.6 times the Gross Domestic Product growth of India
  • Currently, India ranks third in the world of volume of manufacturing pharmaceutical products
  • The Indian pharmaceutical industry is expected to grow at a rate of around 15 % till 2015
  • The retail pharmaceutical market in India is expected to cross US$ 20 billion by 2015
  • According to a study by FICCI-Ernst & Young India will open a probable US$ 8 billion market for MNCs selling patented drugs in India by 2015
  • The number of pharmaceutical retailers is estimated to grow from 5,50,000,  to 7,50,000 by 2015
  • At least 2,00,000 more pharma graduates would be required by the Indian pharmaceutical industry by 2015
  • The Indian drug and pharmaceuticals sector attracted Foreign Direct Investments to the tune of US$ 1.43 billion from April 2000 to December 2008 (Ministry of Commerce and Industry), which is expected to increase significantly along with the policy reform measures and increased Government investment (3%-4%) as a percentage of GDP towards healthcare, by 2015
  • The Minister of Commerce estimates that US$ 6.31 billion will be invested in the domestic pharmaceutical sector
  • Due to low cost of R&D, the Indian pharmaceutical off-shoring industry is expected to be a US$ 2.5 billion opportunity by 2012

Key growth drivers: Local and Global:

Local: • Rapidly growing middle class population of the country with increasing disposable income. • High quality and cost effective domestic generic drug manufacturers are achieving increasing penetration in local, developed and emerging markets. • Rising per capita income of the population and inefficiency of the public healthcare system will encourage private healthcare systems of various types and scales to flourish. • High probability of emergence of a robust healthcare financing/insurance model for all strata of society. • Fast growing Medical Tourism. • Evolving combo-business model of global pharmaceutical companies with both patented and generic drugs is boosting local outsourcing and collaboration opportunities. Global: Global pharmaceutical industry is going through a rapid process of transformation. The moot question to answer now is how the drug discovery process can meet the unmet needs of the patients and yet remain cost effective.

Cost containment pressure due to various factors is further accelerating this process. CRAMS business, an important outcome of this transformation process, will be the key growth driver for many Indian domestic pharmaceutical players in times to come. Bridging the ‘Trust Deficit’ is one of the key Challenges:

Like all other industries, Pharmaceutical Industry in India has its own sets of challenges and opportunities under which it operates. Some of the challenges the industry faces are:

  • Unfortunate “Trust Deficit” between the Government and the Industry to improve access to affordable modern medicines.
  • Regulatory red tape and lack of initiative towards international harmonization.
  • Inadequate infrastructure and abysmal public delivery system.
  • Lack of adequate number of qualified healthcare professionals.
  • Inadequate innovation friendly ecosystem to encourage R&D and other non-product related innovation in the pharmaceutical value chain.
  • Myopic Drug Policies have failed to deliver.
  • Addressing needs of over 350 million BPL families who cannot afford to buy any healthcare products and services.
  • ‘80% out of pocket expenditure’ of the common man towards healthcare.
  • Inadequate Public Private Partnership (PPP) initiatives in most of the critical areas of healthcare.

Urgent need to bridge the ‘Trust Deficit’ and improve public perception of the Industry:

Like many other countries of the world, in India too there is a negative public perception about the pharmaceutical industry. Recent reports on ‘clinical trials related patient’s compensation’ or the government intervention on allegedly gross ‘unethical’ marketing practices by the pharmaceutical companies, further strengthen such belief.  Unfortunately, despite meteoric success of the generic pharmaceutical industry of India in the global arena, public perception of the industry still remains as one, which is being driven by profiteering motive at the cost of the precious lives of ailing common population of the country. This is indeed acting as a strong retarding force. As a result the regulators are also compelled to introduce more of growth stifling measures at a fairly regular pace.

A new ‘Harris Poll’ conducted in the US between November 8 and 15, 2010 reports as follows:

Top industries that largest numbers of people believe should be more regulated

Industry % of respondents
Oil

47
Pharmaceuticals

46
Health Insurance

42
Tobacco

38
Banks

34
Managed Care

34

That an overwhelming 46% respondent in the US feels that the Pharmaceutical Industry should be regulated, only reflects a poor public perception of the industry in the USA.

Industries trusted by the fewest people

Industry % of respondents
Tobacco

2
Oil

4
Telecommunication

7
Managed Care

7
Life Insurance Companies

10
Pharmaceuticals

11

(Source: Harris Poll 2010) 

It is indeed an irony that a miniscule 11% respondents trust pharmaceutical industry in the USA.

Thus in the prevailing scenario globally, the Indian Pharmaceutical Industry should take more demonstrable self-regulatory measures to improve its public perception and make its growth more inclusive, in the best possible way that it can. Without active support of the government, media and other stakeholders, through conscious efforts to improve its image, all the efforts of the taskforce may ultimately get converted into a zero sum game.

Job Creation by the industry is of critical importance: Pharmaceutical sector in India has created employment for approximately 3 million people from 23,000 plus units. Accelerated growth in job creation, will not only open up more opportunities to pharmaceutical professionals, but will also fuel growth opportunities in allied business segments like Laboratory, Scientific instruments, Medical Devices and Pharma machinery manufacturing sectors.

Despite all these, it is worth noting that a major challenge still remains in getting employable workforce with the required skill sets. This issue will grow by manifold, as we move on, if adequate vocational training institutes are not put in place on time to generate employable workforce for the industry.

Government Initiatives, thus far, are still less than adequate: The government of India has started working out some policy and fiscal initiatives, though grossly inadequate, for the growth of the pharmaceutical business in India. Some of the measures adopted by the Government are follows:

  • Pharmaceutical units are eligible for weighted tax reduction at 175% for the research and development expenditure obtained.
  • Two new schemes namely, New Millennium Indian Technology Leadership Initiative and the Drugs and Pharmaceuticals Research Program have been launched by the Government.
  • The Government is contemplating the creation of SRV or special purpose vehicles with an insurance cover to be used for funding new drug research
  • The Department of Pharmaceuticals is mulling the creation of drug research facilities which can be used by private companies for research work on rent

Pharmaceutical Export going North: In recent years, despite economic slowdown in the global economy, pharmaceutical exports in India have registered a commendable growth. Export has emerged as an important growth driver for the domestic pharmaceutical industry with over 50 % of their total revenue coming from the overseas markets. For the financial year 2008-09 the export of drugs is estimated to be around US $8.25 billion as per the Pharmaceutical Export Council of India (Pharmexil). A survey undertaken by FICCI reported 16% growth in India’s pharmaceutical export during 2009-2010.

This trend needs to be encouraged and be given further boost.

Conclusion:

The newly formed taskforce will hopefully be able to address all these issues in an integrated way to guide this life-line industry to a much higher growth trajectory  to compete effectively not only in the global generic space, but also with the global innovator companies, sooner than later.

So the ball game for the taskforce is to recommend strategy and policy measures to improve access to modern medicines by reducing ‘out of pocket’ expenses significantly through public/private health insurance initiatives, protect public health interest and foster a climate for innovation, simultaneously, and certainly not one at the cost of the other.

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.

Missing the woods for the trees – Yet another golden opportunity to rewrite the Drug Policy of India

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Long overdue the new ‘Drug Policy’ of India, since a long while, has been languishing as the ‘prisoner of indecision’ of the policy makers, while the outdated ‘1995 Drug Policy’ continues to remain operational since over a decade and half, by now.

The need for putting a new, robust, comprehensive, holistic  and reform oriented ‘Drug Policy’ in place, sooner, is absolutely critical for the fast evolving pharmaceutical industry of India.
The ‘Drug Policy 1986’ clearly enunciated the basic policy objectives relating to drugs and pharmaceuticals in India, as follows:-

  • Ensuring abundant availability of medicines at reasonable price and quality for mass consumption.
  • Strengthening the domestic capability for cost effective, quality production and exports of pharmaceuticals by reducing barriers to trade in the pharmaceutical sector.
  • Strengthening the system of quality control over drug and pharmaceutical production and distribution.
  • Encouraging R&D in the pharmaceutical industry in a manner compatible with the country’s needs and with particular focus on diseases endemic or relevant to India by creating an conducive environment.
  • Creating an incentive framework for the pharmaceutical and drug industry which promotes new investment into pharmaceutical industry and encourages the introduction of new technologies and new drugs.

After having completed around 25 years since then, it is high time for the government to ponder and assess whether the successive drug policies have delivered to the nation the desirable outcome, as enunciated above.
‘Missing the woods for the trees’:

The overall objective of the ‘Drug Policy’ is indeed to help accelerating the all-round inclusive growth of the Indian pharmaceutical industry to make it a force to reckon with in the global pharmaceutical arena. At the same time, the policy should help creating an appropriate ecosystem to improve access to quality medicines at an affordable price to the entire population of the nation.

Just one pronged approach of drug price control mechanism for drugs and pharmaceuticals is in no way can be considered as a holistic approach to achieve the set objectives. Isolated initiative of price regulation could at best be treated as just one such important measures, out of very many, at the very best. This initiative may justifiably be construed as ‘missing the woods for the trees’.

Financial cover towards medical expenses for all, is very important: 

One of the major issues in the healthcare space of the country is high out of pocket expenses by majority of the population. Financial protection against medical expenditures is far from universal in India with around 15% of the population having some sort of medical financial cover.

January 11, 2011 edition of ‘The Lancet’ in its article titled, “Financing health care for all: challenges and opportunities” commented as follows:

“India’s health financing system is a cause of and an exacerbating factor in the challenges of health inequity, inadequate availability and reach, unequal access, and poor-quality and costly health-care services. The Government of India has made a commitment to increase public spending on health from less than 1% to 3% of the gross domestic product during the next few years…. Enhanced public spending can be used to introduce universal medical insurance that can help to substantially reduce the burden of private out-of-pocket expenditures on health.”

A comparison of private (out of pocket) health expenditure:

1. Pakistan: 82.5% 2. India: 78% 3. China: 61% 4. Sri Lanka: 53% 5. Thailand: 31% 6. Bhutan: 29% 7. Maldives: 14%

(Source: The Lancet)

Food prices impact health more than medicine costs:

Year

Pharma Price Increases

Food Inflation

2008

1.1%

5.6%

2009

1.3%

8.0%

2010

0.5%

14.4%

Source: CMIE

The key affordability issue still remains unresolved: 

The above edition of ‘The Lancet’ highlighted that outpatient (non-hospitalization) expenses in India is around 74% of the total health expenses and the drugs account for 72% of this total outpatient expenditure. The study has also pointed out that 47% and 31% hospitalization in rural and urban areas respectively, are financed by loans and sell of assets.

Around 35% of Indian population can’t afford to spend on medicines:

While framing the ‘Drug Policy’, the government should keep in mind that a population of around 35% in India, still lives below the poverty line (BPL) and will not be able to afford any expenditure towards medicines.

Adding more drugs in the list of essential medicines and even bringing them all under stringent price control will not help the country to resolve this critical issue.

Successive ‘Drug Policies’ of India focused on affordability and access just through ‘price control’:

There is no ‘One Size Fits All’ type of definition for affordability of medicines, just like any other essential commodities, especially when around 80% of healthcare expenditure is ‘out of pocket’ in India.  Any price point, thus, may be affordable to some and unaffordable to some others.

The initiatives taken by the government in the successive drug policies, since the last four decades, have certainly been able to make the drug prices in India one of the lowest in the world.

However, very unfortunately, despite such price control, even today, 47% and 31% of hospitalization in rural and urban areas, respectively, are financed by private loans and selling of assets by individuals, as stated earlier. 

Multi-dimensional approach to improve access to healthcare and affordable medicines:

Access to healthcare and affordable medicines can be improved through an integrated and comprehensive approach of better access to doctors, diagnostics and hospitals, along with price monitoring mechanism for each component of healthcare cost, including medicines.

Healthcare infrastructure in India is now constrained by a lack of trained healthcare professionals, limited access to diagnostics and treatment and availability of quality medicines. Moreover, while around 80% of Indians pay out of pocket for healthcare, the Government of India spends less than 1% of GDP on health.

Consequently, the supply of healthcare services falls significantly short of demand. The current figure of 9 beds per 10,000 in India is far from the world average of 40 beds per 10,000 people. Similarly, for every 10,000 Indians, there are just 6 doctors available in the country, while China has 20 doctors for the same number of Chinese population.

Access to affordable medicines still remains a key challenge for the ‘Drug Policy’ makers:

Over 46% of patients in India travel beyond 100 km. to seek medical care.

(Source: Technopak & Philips (2010) Accessible Healthcare: Joining the Dots Now, New Delhi).

Many places in rural India, lack of availability of good quality medicines such as antibiotics poses even a greater challenge than their affordability. The national immunization program provides 6 vaccines free of cost, yet just around 60% of the country’s population is covered by it. The National AIDS Control Organization (NACO) provides free ARV (Anti-Retroviral) treatment to the poor, yet the drugs do not reach more than 10% of those in need of the same.

Without proper equipment and doctors to diagnose and treat patients, medicines are of little value to those who need them most.  Drug price regulation alone, though important, cannot increase access to healthcare without creation of adequate infrastructure required to ensure effective delivery and administration of the medicines, together with appropriate financial cover for health.

The Government won’t be able to do it all alone:

The Government needs to partner with the private sector to address India’s acute healthcare challenges through Public-Private-Partnership (PPPs) initiatives.

Recent examples of successful PPPs in the health sector include outsourcing ambulance services, mobile medical units, diagnostics and urban health centers in several states to private NGOs, hospitals and clinics.  PPPs in India should adequately cover primary and specialty healthcare, including clinical and diagnostic services, insurance, e-healthcare, hospitals and medical equipment.

A golden opportunity for a new beginning:

Many of us may know that the modified Drug Policy of 2002 was challenged under a Public Interest Litigation (PIL) in the Karnataka High Court in the same year. The honorable High Court in its order had directed the Central Government to consider and formulate appropriate criteria to ensure that the essential and lifesaving drugs do not fall out of price control. The court, at that time, also directed the Government to review the drugs which are essential and lifesaving in nature.

The above matter came up before the honorable Supreme Court of India on March 31, 2011, when the Union of India made a statement that the Central Government has not implemented and is not going to implement the 2002 Policy and a new Drug Policy is being framed.

In view of the submissions made on behalf of Government of India, the appeal was disposed of as infructuous by the Supreme Court of India.

Expectations from the ‘New Drug Policy’:

In view of the above and especially when a new Drug Policy is being worked out, adequate and immediate policy measures, with an absolutely fresh look, are essential to address the root cause of the country’s failure to ‘Improve Access to Quality Medicines at Affordable Prices’ to ensure ‘Health for all’.

The Government has already signaled increasing allocation of resources towards the health sector by doubling the funding available for the National Rural Health Mission (NRHM) along with plans to extend ‘Rashtriya Swasthya Bima Yojna (RSBY)’ scheme to provide out-patient coverage to low income groups.

As has been demonstrated by many countries of the world, healthcare financing offers an enduring mechanism for reducing the out-of-pocket expenses of the poor and improve access to healthcare. Government and the private sector need to pool resources to expand health insurance coverage initially to at least 40% of the population who are below the poverty line. Positive developments are being reported in this area, as well, albeit slowly.

Allocating resources from national welfare schemes towards health insurance coverage is a step in the right direction.  For example, a portion of the MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act) funds could be spent on health insurance premia for labors engaged in such work.

Thus to achieve the objective of ‘Improving Access to Quality Medicines at Affordable Prices’, there is a pressing need for the policy makers to put in place a robust healthcare financing model for all strata of the society, sooner than later. This initiative will significantly reduce high overall ‘out of pocket expenses’ towards healthcare in India by the common man.

Encourage healthy competition among healthcare providers:

Simultaneously, by encouraging tough competition within healthcare providers, like health insurance companies, all elements of healthcare expenditure like physicians’ fees, diagnostic tests, hospital beds, medicines etc. will be kept under tight leash by themselves, just to be more cost-effective in their businesses along with ensured patients’ satisfaction.

In such a competitive environment, the patients will be the net gainers, as we have seen in other knowledge based industries, like in the telecom sector with incredible increase in teledensity within the country.

Effective penetration of various types of innovative health insurance schemes will thus be one of the key growth drivers not only for the Indian pharmaceutical industry, but also for its inclusive growth, as desired by many in India.

The policy should also include an equally transparent system to ensure that errant players within the healthcare sector, who will be caught with profiteering motives, under any garb, at the cost of precious lives of the ailing patients, are brought to justice with exemplary punishments, as will be defined by law.

Conclusion:

I have no doubt that the presence of an effective drug price regulator in the country is absolutely necessary to keep a careful vigil on the drug prices.

At the same time one should realize that the good old routine approach in formulating the long overdue ‘New Drug Policy’, even if it includes all drugs featuring in the ‘National List of Essential Medicines (NLEM)’, would not suffice anymore to ‘improve access to quality medicines at an affordable price’ to the common man.

The real answer to affordable healthcare in India, including medicines, unlike the developed countries of the world, lies in the expertise of the policy makers in innovatively addressing the vexing issue of  ‘around 80% out of pocket expenses towards healthcare’ by the ordinary citizens of the country.

This factor itself, in case of just one or couple of serious illnesses, could make a middle class household in India poor and a poor could be pushed even Below the Poverty Line (BPL).

Inadequate access to modern medicines in India, after 40 years of stringent drug price control and despite essential medicines being available in the country at the lowest price even as compared to Sri Lanka, Pakistan, Bangladesh and Nepal, will vindicate this critical point.

However, ‘The Economic Times’ dated May 23, 2011 has reported yet again, quoting Shri Srikant Jena, the Minister of State for Chemicals and Fertilizers, who oversees the pharmaceutical sector, that the Government ‘is putting together a host of policy changes to reduce the cost of medicines’.

This time around, let us sincerely hope that the drug policy makers do not repeat the same old folly of ‘missing the woods for the trees’.

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.

In the quagmire of Pharmaceutical Pricing

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

It is widely believed that invaluable pharmaceuticals products, which play a central role in keeping the population of a nation healthy and disease free to the extent possible, should not be exploited in efforts to make unreasonable profits by anyone.

Pharmaceutical companies are often criticized in this area by those stakeholders who are concerned with the well-being of ailing poor and underprivileged population globally. The debate of access to medicines continues to revolve round pharmaceutical pricing in almost all countries of the world. India is no exception.

Current scenario in some major countries:

Early April, 2009, China, a nation of 1.3 billion people, unfolded a plan for a new healthcare reform process for the next decade to provide safe, effective, convenient and affordable healthcare services to all its citizens. A budgetary allocation of U.S $124 billion was made for the next three years for this purpose.

Similarly, 2010 is also be remembered as yet another significant year in recent times to improve access to medicines to a large number of population by encouraging usage of low cost generics. In this year:

- With contentious new healthcare reform, President Obama expanded access to Health Insurance to additional around 40 million Americans and encouraged prescription of low cost generic medicines.

- The Governments in UK and European Union, including the largest market in the EU – Germany, introduced stringent cost containment measures for pharmaceutical products.

India and Japan signed a Comprehensive Economic Partnership Agreement (CEPA) in February 2011 where Japan will gain access to low cost Indian generic medicines by extending similar facilities, like Japanese, for drug registration and release to the Indian pharmaceutical players.

How much to charge for a brand of medicine?

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

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

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

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

If this trend continues, a win-win situation could be created, when unmet needs of a large number of patient groups could be met with innovative medicines, paving the way for the innovator companies to register a healthy, both top and bottom line, business growth in these emerging markets of the world to effectively fund their R&D projects, besides other areas of business. 

Four common pharmaceutical pricing models:

Following are the four common methods, which are usually followed to decide prices of medicines.

  • Cost-plus pricing (CPP):  This is a method of arriving at a selling price where a pre-determined percentage is added to the cost price to cover profit.
  • Target return pricing (TRP): This method of pricing estimates the desired return on investment to be achieved from the fixed and working capital investment and includes the same in the price of a product.
  • Reference Pricing:  In this method a product is sold at a price close to its main competing brand. The idea behind “reference pricing” is that certain drugs are interchangeable in terms of their therapeutic effectiveness within a disease group and reimbursement is based on the least expensive option. The concept started taking hold in Europe and has driven down pharmaceutical prices significantly in Germany.

Both the governments and patients save money in ‘Reference Pricing’ mechanism. However, all patients are free to choose a more expensive brand within the therapeutic group by paying the difference between the cost of those two drugs for reimbursement purpose.

  • Pharmacoeconomics based or Value-based pricing (PBP/VBP): Pharmacoeconomics, as we know, is a scientific model of setting price of a medicine commensurate to the economic value of the drug therapy.  Pharmacoeconomics principles, therefore, intend to maximize the value obtained from expenditures towards medicines through a structured evaluation of products costs and disease outcomes.

PBP/VBP basically offers the best value for money spent. It ‘is the costs and consequences of one treatment compared with the costs and consequences of alternative treatments’.

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

PBP/VBP concept is gaining ground: The concept of ‘evidence-based medicine’, is gaining ground in the developed markets of the world, prompting the pharmaceutical companies generate requisite ‘health outcome’ data using similar or equivalent products. Cost of incremental value that a product will deliver is of key significance. Some independent organizations like, the National Institute for Health and Clinical Excellence (NICE) in the UK have taken a leading role in this area. PBP/VBP could help in ‘freeing-up’ resources to go to front-line healthcare: On November 11, 2010 ‘Pharma Times’ in a news item titled, “Government (UK) to consult on drug pricing in December” reported that newly-published business plan of the Department of Health for 2011-15 sets out the coalition government’s structural reform priorities for healthcare as follows:

  • Create a patient-led NHS
  • Promote better healthcare outcomes
  • Revolutionize NHS accountability
  • Promote public health
  • Reform social care

As per the Department of Health, UK, these reforms ‘will help to create a world-class NHS that saves thousands more lives every year by freeing up resources to go to the front line, giving professionals power and patients choice, and maintaining the principle that healthcare should be delivered to patients on the basis of need, not their ability to pay’. Global pharmaceutical companies using more ‘health outcomes’ data to set pricing strategies: Some global pharmaceutical companies have already taken pro-active measures on the subject. In early 2009, reported agreements between Sanofi-Aventis, Procter & Gamble and Health Alliance, as well as between Merck and Cigna, vindicate this point. These agreements signify a major shift in the approach of the global pharmaceutical industry to gather and use ‘health outcomes’ data.

In the Sanofi-Aventis/Procter & Gamble-Health Alliance agreement, concerned companies reported to have agreed to reimburse the expenses incurred by the Health Insurance companies for patients suffering from non-spinal bone fracture, while undergoing treatment with their drug Actonel.

In the Merck/Cigna agreement, Cigna will have the flexibility to price two diabetes drugs based on ‘health outcomes’ data. ‘Outcomes-based’ pricing strategies are expected to become the order of the day, in not too distant future, across the world.

The ground realities in India are very different: Medicines are very important and constitute a significant cost component of modern healthcare systems, globally. In India, overall healthcare system is fundamentally different from many other countries, including China. In many of those countries around 80% of expenses towards healthcare including medicines are reimbursed either by the Governments or through Health Insurance or similar other mechanisms.

However, in India the situation is just the reverse, about 80% of overall healthcare costs including medicines are private or out of pocket expenses incurred by the individuals/families. The corresponding figures for the same in China is 61%,  Sri Lanka 53%, Thailand 31% and Bhutan 29% (Source: TOI, May 8, 2011).

What’s happening in India now?

Currently in India CPP is being followed by the Government for all those pharmaceutical products which are under ‘Price Control’. However, for products which are outside price control, pharmaceutical manufacturers, by and large, follow the TRP model.

National Pharmaceutical Pricing Authority (NPPA) of the country still remains far behind in this respect and is almost groping in the dark to appropriately address this critical issue.

Many believe that NPPA has been taking arbitrary, non-pragmatic, non-transparent and populist pricing decisions since decades and has not been able to improve access to medicines significantly to a vast majority of population of the country even today. A pragmatic and modern approach in this area is the crying need of the time.

Conclusion:

PBP/VBP pricing models will be able to help yielding true benefits to the civil society only when its healthcare system and pharmaceutical coverage are integrated and made universally available to all, without any exception.

In India, before considering this approach, long overdue healthcare reform process should first be initiated to ensure universal healthcare coverage, together with a robust and comprehensive health insurance model for all strata of society, without further delay.

It is widely believed, without universal coverage of healthcare supported by clearly assigned, organized and well-integrated healthcare providers, the use of PBP/VBP models could prove to be counterproductive with further aggravation of inequities and inefficiencies in the healthcare system of the country.

By: Tapan J Ray

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

e-healthcare: A new vista to improve access to quality and affordable healthcare in India

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The concept of e-healthcare started germinating in India since 1999, when the ‘Indian Space Research Organization (ISRO)’ initiated its pioneering step towards telemedicine in the country by deploying a SATCOM-based telemedicine network. This network is currently playing a key role in the evolution and development of e-healthcare in the country. ISRO, with its fine blending of application of world class satellite communication technology with modern medical science and information technology (IT), has engaged itself very seriously to ensure availability of quality and affordable specialty healthcare services right at the doorsteps of a vast majority of population living even in the distant and remote places of the rural India.

However, despite telemedicine gaining slow momentum in India, there is no law in place for ethical, affordable and patient friendly use of e-healthcare facilities in the country.  Considering its vast scope of improving access to healthcare, cost effectiveness and a convenient ways to deliver e-healthcare services to a very large number of patients, especially, located in the distant locations of the country, the law makers should urgently ensure that this important healthcare service is not misused or abused by unscrupulous elements, in any way.

Very recently, taking into consideration this critical legal requirement the Medical Council of India (MCI) has decided to soon forming a panel to address the ethical issues related to e-healthcare in India.

Delivery of e-healthcare through telemedicine:

The World Health Organization (WHO) has defined telemedicine as follows: “The delivery of healthcare services, where distance is a critical factor, by all healthcare professionals using information and communication technologies for the exchange of valid information for diagnosis, treatment and prevention of disease and injuries, research and evaluation, and for continuing education of healthcare providers, all in the interests of advancing the health of individuals and their communities.”

As stated above, telemedicine is gradually gaining popularity in India, like in many other countries of the world. This emerging e- healthcare service has the potential to meet the unmet needs of the patients located in the far flung areas, by providing access to medical specialists for treatment of even tertiary level of their ailments, without requiring traveling outside their villages or small towns where they reside.

The key objectives of e-healthcare:

1. To provide affordable quality healthcare services even to those places where these are not available due to lack of basic healthcare infrastructure and delivery issues.

2. Speedy electronic transmission of clinical information of both synchronous and asynchronous types, involving voice and data transfer of patients to distantly located experts and get their treatment advice online.

3. To effectively train the medics and the paramedics located in distant places and proper management of healthcare delivery/service systems.

4. Disaster management.

The Process:

The process can be: – ‘Real time’ or synchronous when through a telecommunication link real time interaction between the patients and doctors/experts can take place. This technology can be used even for tele-robotic surgery. – ‘Non-real time’ or asynchronous type when through a telecommunication link, stored diagnostics/medical data and other details of the patients are transmitted to the specialists for off-line assessment and advice at a time of convenience of the specialists.

These processes facilitate access to specialists’ healthcare services by the rural patients and the medical practitioners alike by reducing avoidable travel time and related expenses. At the same time, such interaction would help upgrading the knowledge of rural medical practitioners and paramedics to hone their skill sets.

The Promise:

e-healthcare is capable of taking modern healthcare to remote rural areas using Information Technology (IT), as specialists are mostly located in the cities. As majority of the diseases do not require surgery, e-healthcare would prove to be very conducive to such patients and economical too.

Relevance of e-healthcare in India:

With its over 1.2 billion population and equally huge disease burden, spreading across distant semi-urban and rural areas, where over 70 per cent of the population of the country lives, India should focus on e-healthcare to meet unmet healthcare needs of the common man, at least, located in far-flung areas. e-healthcare, therefore, is very relevant for the country, as it faces a scarcity of both hospitals and medical specialists. In India for every 10,000 of the population just 0.6 doctors are available.

According to the Planning Commission, India is short of 600,000 doctors, 1 million nurses and 200,000 dental surgeons. It is interesting to note that 80 percent of doctors, 75 percent of dispensaries and 60 percent of hospitals, are situated in urban India.

Progress of e-healthcare in India:

Equitable access to healthcare is the overriding goal of the National Health Policy 2002. e-healthcare has a great potential to ensure that the inequities in the access to healthcare services are adequately addressed by the country.

Very encouragingly, a good number of even super-specialty hospitals like, Apollo Group of Hospitals have unfolded the launch plan of ‘Healthcare India Pharmaceutical Registry (HIPAAR)’, which is an electronic drug database for reference by the doctors and patients.  Apollo Group feels that HIPAAR module will enable the patients to know whether right medications have been used or not to treat the ailment that the concerned patient is suffering from along with the information of possible adverse effects of the medicines prescribed to them.

Currently, in the dedicated e-healthcare centers of ‘Narayana Hrudayalaya group’ pioneered by Dr Devi Shetty, patients from far-flung areas can have consultations with doctors in Bangalore.

Similarly, Asia Heart Foundation (Kolkata) and Regional Institute of Medical Science (Imphal, Manipur) are currently providing multi-specialty e-healthcare through telemedicine to 10 district hospitals, which will be extended to 75 District Hospitals, shortly. At the same time, some Government hospitals also have started extending e-healthcare through telemedicine facilities, which among others will handle e-transfer of medical data of patients like, X-ray, CT scan and MRI for not only diagnosing the disease, but also for treatment and medical consultation. Department of telemedicine of Sir Ganga Ram Hospital of New Delhi is one such example.

Well reputed cancer hospital of India, Tata Memorial Hospital (TMH) of Mumbai is now well connected with B.Barooah Cancer Institute of Guwahati, Assam and K.L Walawalkar Cancer Center of Chiplun, Maharashtra. Over a short period of time TMH plans to connect with 19 such regional cancer institutes.

Today the Center for Health Market Innovations (CHMI), a global network of partners that seeks to improve the functioning of health markets in developing countries to deliver better results for the poor, profiles more than 55 telemedicine programs globally including 24 in India.

Public Private Partnership:

As the Ministry of Health and Family welfare has now constituted a ‘National Telemedicine Taskforce’, some private healthcare institutions, as mentioned above, and various State Governments like, Tamil Nadu, Andhra Pradesh, Kerala and West Bengal have started taking admirable initiatives to translate the concept of e-healthcare into reality, especially for the rural India. Subsequently, private e-healthcare solution providers have also started coming-up, though in a sporadic manner.  Active participation of the civil society and meaningful Public Private Partnership (PPP) projects are essential not only to get engaged in creating awareness for e-healthcare within India, but also to ensure that required blend of a high quality technical and medical manpower that the country currently possesses are effectively utilized to establish India as a pioneering nation and a model to emulate, in the field of e-healthcare.

The market of e-healthcare in India:

Frost & Sullivan (2007) estimated the e-healthcare (telemedicine) market of India at US$3.4 million is expected to record a CAGR of over 21 percent between 2007 and 2014.

More fund required for e-healthcare:

e-healthcare shows an immense potential within the fragile brick and mortar public healthcare infrastructure of India to catapult rural healthcare services, especially secondary and tertiary healthcare, to a different level altogether. Current data indicate that over 278 hospitals in India have already been provided with telemedicine facilities. 235 small hospitals including those in rural areas are now connected to 43 specialty hospitals. ISRO provides the hospitals with telemedicine systems including software, hardware, communication equipment and even satellite bandwidth. The state governments and private hospitals are now required to allocate adequate funds to further develop and improve penetration of Telemedicine facilities in India.

Issues with e-healthcare in India:

– Telemedicine will not be immune to various complicated legal, social, technical and consumer related issues.

- Some government doctors could feel that for e-healthcare they need to work extra hours without commensurate monetary compensation

- The myth created that setting up and running any e-healthcare facility is expensive, needs to be broken, as all the related costs can be easily recovered by a hospital through nominal charges to a large number of patients, who will be willing to avail e-healthcare facilities, especially from distant parts of India.

- Inadequate and uninterrupted availability of power supply could limit proper functioning of the e-healthcare centers.

- High quality of telemedicine related voice and data transfer is of utmost importance. Any compromise in this area could have a significant impact on the treatment outcome of a patient.

- Lack of trained manpower for e-healthcare services needs to be addressed quickly by making it a part of regular medical college curriculum, just as the University of Queensland in Australia has it for their Graduate Certificate in e-Healthcare (GCeH). A pool of competent professionals for e-healthcare services in the country will be a step in the right direction.

- Reimbursement procedure of e-healthcare treatment costs by the medical insurance companies needs to be effectively addressed.

Conclusion:

For an integrated and sustainable healthcare delivery model covering the entire population of the country, a robust e-healthcare strategy is absolutely essential.  Three critical success factors for e-Healthcare initiatives may be considered as follows:

  1. A comprehensive government policy
  2. Increasing level of literacy
  3. Power and telecommunications infrastructure

Unlike common perception, for greater effectiveness and better acceptance of any sustainable e-healthcare service project, the focus should be the same or rather a little more on non-technological areas like consumer mindset and competent healthcare providers than technological factors such as biomedical engineering or information technology.

A very large rural population of India living in remote areas could get access to affordable and quality health related services through e-healthcare facilities, which, I reckon, should be made to play a very special and critical role to address the healthcare needs of the common man. With its gradually increasing coverage, it is imperative that required regulatory standards and guidelines for e-healthcare are put in place across the country, sooner. Technological expertise to make e-healthcare successful is already available in India. The pioneering role that ISRO has been playing in this field is still not known to many.

Thus, to make e-healthcare successful, the country needs to create an appropriate groundswell for the same. All powerful and effective ‘Fourth Estate’ of the country should demonstrate greater interest to initiate a healthy discussion on e-healthcare by all stakeholders and play the role of a facilitator to ensure access to quality and affordable healthcare to all the people of India.

By: Tapan J Ray

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

‘Frugal Innovation’ in Healthcare: Ahoy!

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Patented new products have been the prime growth driver of the research based pharmaceutical companies, the world over. Probably because of this reason the world has seen over a period of time about four different molecules of H2 Blockers and six different molecules of proton pump inhibitors to treat peptic ulcers, nine varieties of statins to treat lipid disorders, ten variants of calcium channel blockers to treat hypertension, three new compounds of similar drugs to address erectile dysfunction and the list could go on. Most of these molecules attained the blockbuster status, backed by cutting edge innovative marketing strategies.

Whether all these patented molecules met significant unmet needs of the patients could well be a contentious point. However, the key point is that all these drugs did help fueling growth of the global pharmaceutical industry very significantly, including our own Indian Pharmaceutical companies, though through immaculate copying during pre-product patent regime of before January, 2005.

Since last few years, because of various reasons, the number of market launch of such patented products has greatly reduced. To add fuel to the fire, 2011-12 will witness patent expiries of many blockbuster drugs, including the top revenue grosser of the world, depleting the growth potential of many large research-based global pharmaceutical companies.

Blockbuster drug ‘Business Model’ is no longer sustainable:

The blockbuster model of growth engine of the innovator companies effectively relies on a limited number of ‘winning horses’ to achieve the business goal and meeting the Wall Street expectations. In 2007, depleting pipeline of the blockbuster drugs hit a new low in the developed markets of the world. It is estimated that around U.S. $ 140 billion of annual turnover from blockbuster drugs will get almost shaved-off due to patent expiry by the year 2016.  IMS reported that in 2010 more than U.S. $ 30 billion was adversely impacted because of patent expiry.  Another set of blockbuster drugs with similar value turnover will go off patent in 2011.  It will not be out of context to mention, that the year before last around U.S. $ 27 billion worth of patented drugs had reportedly gone off-patent.

Decline in R&D productivity with a thin silver lining though:

The decline in R&D productivity has not been due to lack of investments.  It has been reported that between 1993 and 2004, R&D expenditure by the pharmaceutical industry rose from U.S. $ 16 billion to around U.S. $ 40 billion.  However, during the same period the number of applications for New Chemical Entities (NCEs) filed annually to the U.S. FDA grew by just 7%.

It was reported that total global expenditure for pharmaceutical R&D reached U.S. $ 70 billion in 2007 and is estimated to be around U.S $ 90 billion by the end of the year just gone by.  75% of this expenditure was incurred by the U.S alone. It is interesting to note that only 22 NMEs received marketing approval by the US FDA during this period against 53 in 1996, when expenditure was almost less than half of what was incurred in 2007 towards R&D.

The silver linings:

There seem to be following two silver linings in the present scenario, as reported by IMS:

  1. Number of Phase I and Phase II drugs in the pipeline is increasing.
  2. R&D applications for clinical trials in the U.S. rose by 11.6% to a record high of 662 last year.

Funding high cost R&D will be a challenge:

Patent expiry of so many blockbusters during this period will obviously fuel the growth of generic pharmaceutical business, especially in the large developed markets of the world. The market exclusivity for 180 days being given to the first applicant with a paragraph 4 certification in the U.S. is, indeed, a very strong incentive, especially for the generic pharmaceutical companies of India.

In a scenario like this, funding of high cost R&D projects is becoming a real challenge.

Cut in R&D Expenditure has already begun:

Following its acquisition of Wyeth in 2008, Pfizer announced plans to reduce their R&D budget from the US $11 billion to between $8 and $8.5 billion by 2012. Similarly, GSK also announced a reduction of £500 million from its costs by 2012 and half of these costs are from their R&D budget.

As reported by Chemistry World in January 2010, “AstraZeneca announced its plans to reduce around 1800 R&D positions as part of a restructuring process that will see 8000 jobs go as it looks to reduce its costs by $1 billion a year by 2014”.

The time for ‘Frugal Innovation’:

In a new and fast evolving scenario when the erstwhile ‘Blockbuster Drugs Business Model’ with commensurate huge R&D spends does no longer seem to be a practical proposition. Unmet needs in the healthcare space should now be met with cost efficient ‘Frugal Innovation’, which has already dawned in the healthcare space of India.

April 15, 2010 issue of ‘The Economist’ in an article titled, “First break all the rules – The charms of frugal innovation” has described some of health related ‘Frugal Innovations’ as follows:

  • Bangalore Center of General Electric (GE) has come out with a low cost hand-held electrocardiogram (ECG) called ‘Mac 400’, which has reduced the cost of an ECG test to just US $1 per patient.
  • Tata Consultancy Services (TCS) has come out with lower-tech, yet robust, portable and relatively cheap water filter, which uses rice husks to purify water. This water filter could provide even to a large family an abundant supply of bacteria-free water for an initial investment of about US $24 and a recurring expense of about US $4 for a new filter every few months. Tata Chemicals, which is making the devices, is planning to produce 1m over the next year and hopes for an eventual market of 100m.

11th Five Year Plan of India and ‘Frugal Innovation’:

The panel set up for the appraisal of the 11th Five Year Plan of India observed that innovation needs to be “inclusive” and “frugal”.

To accelerate growth of the nation and to meet the unmet needs particularly in healthcare and education, besides others, India needs more ‘frugal innovation’ that produces more ‘frugal cost’ and high quality products and services, quite affordable to the common man of the country.

It also highlighted that a paradigm which bases its assessment of innovativeness on the quantum of expensive inputs deployed, like the numbers of scientists, expenditures on R&D etc. will always tend to produce expensive innovations because the cost of innovation must be recovered in the prices of the products it produces.

The above appraisal report goes on saying:

“This is indeed the dilemma of the ‘innovative’ companies in the pharmaceutical industry. They find it economically difficult to justify development of low cost solutions for ailments that affect poor people.”

‘National Innovation Council’ moots ‘inclusive growth’ through innovation:

To encourage the culture and process of ‘inclusive growth’ through innovation in India, Mr. Sam Pitroda , the Chairman of the ‘National Innovation Council’ had mooted a proposal for creation of a Rs 1,000 Crore corpus in the country, where the Government of India should initially take 10% to 20% share of the corpus and then its equities will be bought by the public. 

Conclusion:

The R&D model of companies like GE and TCS, as mentioned above, are taking the affordability of the common man as a starting point and then working backwards to satisfy unmet needs of the people, just as what Tata Motors did for the ‘Nano Car’ in India.

In an environment of continuous diminishing return from the big ticket R&D expenditure of the global pharmaceutical companies, across the world, I sincerely hope and pray that the world witnesses increasing number of cost effective ‘Frugal Innovation’ in healthcare, including medicines, sooner than later…just for the sake of humanity.

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.

A Disruptive Innovation in Healthcare – Personalized Medicines

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Tufts Center for the Study of Drug Development (Tufts University) in its publication named ‘Impact Report’, November/December 2010 articulated, “Biopharmaceutical companies are committed to researching and developing personalized medicines and within their development pipelines, 12%-50% of compounds are personalized medicines.”

Thus the disruptive innovation process towards ‘Personalized Medicines’ have already begun. Over a period of time ‘Personalized Medicines’ will be targeted to the biological/genomic profile of an individual to significantly improve the quality of healthcare to the patients.

This paradigm shift in the healthcare space would prompt similar changes in various disease diagnostic technologies, which will not only be able to detect a disease well before the appearance of symptoms, but would also  indicate which patients will best respond to or be adversely affected by which medications.

‘Personalized Medicines’ will in that process ensure a critical shift from the disease oriented treatment to a patient oriented treatment, which can be initiated much before the clinical manifestations of a disease are detected.

The technological march towards this direction is indeed risky and arduous one. However, the benefits that the humanity will accrue out of this disruptive innovation will far outweigh the risks in all forms.

Personalized Medicines:

Rapid strides in pharmacogenomics bring in a promise of radically different ways of treating diseases, as major pharmaceutical companies of the world make progress in developing much more effective medicines designed to target smaller populations.

The above ‘Impact Report’ defines Personalized Medicines as:

“Tailoring of medical treatment and delivery of health care to the individual characteristics of each patient—including their genetic, molecular, imaging and other personal determinants. Using this approach has the potential to speed accurate diagnosis, decrease side effects, and increase the likelihood that a medicine will work for an individual patient.”

‘Personalized Medicines’ are expected to be an effective alternative to quite unwieldy current ‘blockbuster drugs’ business model.

What is then the aim of ‘Personalized Medicines’?
The aim of ‘personalized medicines’ is, therefore, to make a perfect fit between the drug and the patient. It is worth noting that genotyping is currently not a part of clinically accepted routine. However, it is expected to acquire this status in the western world, very shortly.

Some interesting recent developments:

  1. The Economist, March 12-18, 2011 in its article titled “Toward the 15-minute genome” reported that ‘nanopore sequencing’ of human genome is now gaining momentum. This could make sequencing of entire genomes of cancerous and healthy cells possible to accurately point out what has exactly changed in individual patients, enabling the oncologists to determine patient specific drugs for best possible results in each case, separately.
  2. New cancer marker has been reported to aid earlier detection of the disease, where repetitive stretches of RNA are found in high concentrations in cancer cells.
  3. A new blood test will accurately detect early cancer of all types with an accuracy of greater than 95%, when repeated the accuracy will even be even greater than 99%.
  4. ‘Breast On A Chip’ will test nano-medical detection and treatment options for breast cancer
  5. A brain scan will detect the telltale “amyloid plaques,” the protein fragments that accumulate between nerves in Alzheimer’s disease

In what way ‘Personalized Medicines’ will be different?

With ‘Personalized Medicines’ the health of a patient will be managed based on personal characteristics of the individual, including height, weight, diet, age, sex etc. instead of defined “standards of care”, based on averaging response across a patient group. Pharmacogenomics tests like, sequencing of human genome will determine a patient’s likely response to such drugs.
These are expected to offer more targeted and effective treatment with safer drugs, and presumably at a lesser cost. Such medicines will also help identify individuals prone to serious ailments like, diabetes, cardiovascular diseases and cancer and help physicians to take appropriate preventive measures, simultaneously. ‘Personalized medicines’ in that process will focus on what makes each patient so unique, instead of going by the generalities of a disease.
To give a quick example, genetic differences within individuals determine how their bodies react to drugs such as Warfarin, a blood thinner taken to prevent clotting. It is of utmost importance to get the dosing right, as more of the drug will cause bleeding and less of it will not have any therapeutic effect.
‘Personalized medicines’, therefore, have the potential to bring in a revolutionary change the way patients are offered treatment by the medical profession. Genomic research will enable physicians to use a patient’s genetic code to arrive at how each patient will respond to different types of treatments.
In the field of cancer, genetic tests are currently being done by many oncologists to determine which patients will be benefitted most, say by Herceptin, in the treatment of breast cancer.
Expected benefits from ‘Personalized Medicines’:

The expected benefits from the ‘Personalized Medicines’, besides very early diagnosis as stated above, are the following:
1. More Accurate dosing: Instead of dose being decided based on age and body weight of the patients, the physicians may decide and adjust the dose of the medicines based on the genetic profiling of the patients.
2. More Targeted Drugs: It will be possible for the pharmaceutical companies to develop and market drugs for patients with specific genetic profiles. In that process, a drug needs to be tested only on those who are likely to derive benefits from it. This in turn will be able to effectively tailor clinical trials, expediting the process of market launch of these drugs.
3. Improved Health care: ‘Personalized Medicines’ will enable the physicians to prescribe ‘the right dose of the right medicine the first time for everyone’. This would give rise to much better overall healthcare.
Role of Pharmaceutical and Biotech companies:
Many research based pharmaceutical and biotechnology companies have taken a leading role towards development of ‘personalized medicines’ in line with their key role as healthcare enterprises. India is also taking keen interest in this science.
Some important issues:
However, there are some ethical and social issues in the development of ‘personalized medicines’ primarily in the area of genetic testing and consideration of race in the development of such medicines, which need to be effectively addressed, sooner.
Can it replace the ‘Blockbuster Drugs’ business model?
Realization of deficiencies in the economics of ‘block buster drugs’ R&D business model has made ‘personalized medicines’ a reality today.
Better efficacy and safety profile of ‘personalized medicines’ will prove to be cost-effective in the overall healthcare systems. Smaller and exclusive markets for ‘personalized medicines’ are also expected to be quite profitable for the pharmaceutical companies. However, such smaller segmentation of the market may not leave enough space for the conventional ‘blockbuster model’, which is the prime mover of the global pharmaceutical industry, even today.
Reports indicate that some renowned global pharmaceutical companies like, Roche, AstraZeneca, GlaxoSmithKline are making good progress towards this direction through collaborative initiatives.
Approximate cost of ‘Genome Sequencing’:
When human genome was first sequenced, the reported cost was staggering U.S$ 3 billion. However, with the advancement of technology, it came down to U.S$ 1 million, last year. Currently, the cost has further come down to U.S$ 60,000. With the rapid stride made in the field of biotechnology, combined with the economies of scale, cost of such genetic tests is expected to be around U.S$ 1,000 in near future, making it possible for people to obtain the blue print of their genetic code.
Savings on cost of Clinical trials with ‘Personalized Medicines’:
Genome sequencing will help identifying a patient population, which will be far more likely to respond positively to the new treatment. In that process, if it reduces costs of clinical trial by even 5%, expected net savings for the industry towards clinical trial have been reported to be around U.S$ 5 billion.
With ‘personalized medicines’ the innovator companies will be able to significantly reduce both time, costs and the risks involved in obtaining regulatory approvals and penetrating new markets with simultaneous development of necessary diagnostic tests. Such tests will be able to identify patients group who will not only be most likely to be benefitted from such medicines, but also will be least likely to suffer from adverse drug reactions.
Therefore, considerable cost advantages coupled with much lesser risks of failure and significant reduction in the lead time for clinical trials are expected to make ‘personalized medicines’ much more cost effective, compared to conventional ‘blockbuster drugs’.
Innovative and cost effective way to market ‘Personalized Medicines’:
With ‘personalized medicines’ the ball game of marketing pharmaceuticals is expected to undergo a paradigm shift. Roche’s model of combining necessary diagnostic tests with new drugs will play a very important role in the new paradigm.
Roche is ensuring that with accompanying required diagnostic tests, the new oncology products developed at Genentech can be precisely matched to patients.
Can ‘Personalized Medicines’ be used in ‘Primary Care’ also?
To use ‘personalized medicines’ in a ‘primary care’ situation, currently there is no successful model. However, it has been reported that in states like, Wisconsin in the U.S, initiative to integrate genomic medicines with ‘primary care’ has already been undertaken. Scaling-up operations of such pilot projects will give a big boost to revolutionize the use of ‘personalized medicines’ for precision and targeted treatment of the ailing population.

Conclusion:

In my view, there does not seem to be any possibility of looking back now. The robust business model of ‘personalized medicines’, will now be the way forward, as much to the industry as to the patients. It is a win-win game.

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.

Dissapointing: No proposal of ‘Healthcare Reform’ in the Union Budget of India for 2011-12: China rolled it out in 2009.

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January 15, 2011 issue of ‘The Lancet’ in an article titled, “Learning from others” states the following:

“Having universal coverage through a public commitment does have costs, including public costs. The proportion of national expenditure on health that is met by the government is 26% in India and 45% in China. Or, to look at a related contrast, while government expenditure on health care in India is only around 1·1% of its GDP, it is around 1·9% in China. One need not be a genius to see that if the government of a country is ready to spend more on health, it could expect better results in terms of the health of the people.”

While comparing India with China, I reckon, one should take into account of larger disease burden in India as compared to China and the cost that India pays due to slow progress of reform processes in a democratic framework with open and free society and the vibrant outspoken media in the country. Further, the healthcare reform processes in China started over a decade earlier than India, resulting in a significant difference in the healthcare infrastructure, healthcare delivery and the healthcare financing systems of both the countries, over a period of time.

Access to safe drinking water and sanitation:

Access to safe drinking water in India may be comparable to other emerging economies, but sanitation condition in India needs radical improvement. According to World Health Organization (WHO, 2009) the Access to potable water and improved sanitation in those countries are as follows:

Country Drinking Water  (% population) Sanitation                     (% population)
India 89 28
Brazil 91 77
China 88 65
Mexico 95 81
South Africa 93 59

Key issues in the Public Hospitals:

The ethical issues, which the patients face, especially, in the hospitals of India, I reckon, have not been reported for China by the Transparency International.

Transparency International India (2005) had reported the following seven key issues and irregularities experienced by the patients at the Government Hospitals in India:

  1. Medicines unavailable: 52%
  2. Doctors suggest a visit to their private clinic: 37%
  3. Doctors refer to private diagnostic centers: 31%
  4. Over-prescription of medicines: 24%
  5. Bribes demanded by staff: 20%
  6. Diagnostics tests done even when unnecessary: 18%
  7. Doctors are absent: 13%

All these continue to happen in India, with no respite to patients, despite ‘Hippocratic Oath’ being taken by the medical profession and the new MCI guidelines for the doctors being in place within the country. Moreover, a miniscule spend of 1% of the GDP by the Government of India towards public healthcare of the nation, is indeed a shame.

Healthcare Reform in China:

Early April, 2009, China, a country with 1.3 billion people, unfolded a plan for a new healthcare reform process for the next decade to provide safe, effective, convenient and affordable healthcare services to all its citizens. A budgetary allocation of U.S $124 billion has been made for the next three years towards this purpose.
China’s last healthcare reform was in 1997:
China in 1997 took its first reform measures to correct the earlier practice, when the medical services used to be considered just like any other commercial product. Very steep healthcare expenses made the medical services unaffordable and difficult to access to a vast majority of the Chinese population.
Out of pocket expenditure towards healthcare services also increased in China:
The data from the Ministry of Health of China indicates that out of pocket spending on healthcare services more than doubled from 21.2 percent in 1980 to 45.2 percent in 2007. At the same time the government funding towards healthcare services came down from 36.2 percent in 1980 to 20.3 percent in the same period.
Series of healthcare reforms were effectively implemented since then like, new cooperative medical scheme for the farmers and medical insurance for urban employees, to address the situation  prevailing at that time.
The core principle of the new phase of healthcare reform in China:
The core principle of the new phase of the healthcare reform process in China is to provide basic health care as a “public service” to all its citizens, where more government funding and supervision will assume a critical role.
The new healthcare reform process in China will, therefore, ensure basic systems of public health, medical services, medical insurance and medicine supply to the entire population of China. Priority will be given to the development of grass-root level hospitals in smaller cities and rural China and the general population will be encouraged to use these facilities for better access to affordable healthcare services. However, public, non-profit hospitals will continue to be one of the important providers of medical services in the country.
Medical Insurance and access to affordable medicines in China:
Chinese government plans to set up diversified medical insurance systems. The coverage of the basic medical insurance is expected to exceed 90 percent of the population by 2011. At the same time the new healthcare reform measures will ensure better health care delivery systems of affordable essential medicines at all public hospitals.
Careful monitoring of the healthcare system by the Chinese Government:
Chinese government will monitor the effective implementation and supervision of the healthcare operations of not only the medical institutions, but also the planning of health services development, and the basic medical insurance system, with greater care.
It has been reported that though the public hospitals will receive more government funding and be allowed to charge higher fees for quality treatment, however, they will not be allowed to make profits through expensive medicines and treatment, which is a common practice in China at present.
Drug price regulation and supervision in China:
The new healthcare reform measures will include regulation of prices of medicines and medical services, together with strengthening of supervision of health insurance providers, pharmaceutical companies and retailers.
As the saying goes, ‘proof of the pudding is in the eating’, the success of the new healthcare reform measures in China will depend on how effectively these are implemented across the country.

Besides Democracy, China has something to learn from India too:

The article, as mentioned above, from ‘The Lancet’ concludes by saying that unlike China, the real progress in India has come out of public discussion and demonstration within the democratic set-up in India. One such program is distribution of cooked mid-day meals to school children and selected interventions in child development in pre-school institutions. Such programs are currently not available in China for development of proper physical and mental health of, especially, the children of the marginalized section of the society

Conclusion:
There exists a sharp difference between India and China in the critical healthcare delivery system. The Chinese Government at least guarantees a basic level of public funded and managed healthcare services to all its citizens. Unfortunately, the situation is not quite the same in India, because of various reasons.
High economic growth in both the countries has also led to inequitable distribution of wealth, making many poor even poorer and the rich richer, further complicating the basic healthcare issues involving a vast majority of poor population of India.
To effectively address the critical issues related to health of its population, the Chinese Government has already announced a blueprint outlining its new healthcare reform measures for the next ten years. How will the Government of India respond to this situation for the new decade that has just begun?

It was very dissapointing to learn from the Union Budget speech of the Finance Minister of India for 2011-12 that the perspective of our Government on the importance of healthcare for the fellow citizens of India, still remains indifferent.

By: Tapan J Ray

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

The top two reasons for not seeking medical treatment, across the population, are not poor ‘Access to Healthcare’ in India

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“About 1.8 million children under age of 5 die in India every year; 68,000 mothers die due to maternal causes, and 52 million children in the country are stunted”.

“With 70% people living in more than 600,000 villages across rural India, not more than an estimated 30% have access to modern medicine”.

Such sensational headlines could be fallacious at times and may tend to divert the attention of all concerned from some of the key healthcare issues in India. We are indeed too negative in our approach towards a problem solution process. All stakeholders interested in improved healthcare facilities are continuously engaged in an eternal blame game. Government blames the industry and the industry blames the government and so on. In this unfortunate logjam scenario since last several decades, any possibility of breaking it will require active interference by a ‘Cerebral Braveheart”

Moreover, taking advantage of this situation, some groups of people want to progress their vested interests by projecting a ‘Weaker India’ and pontifying with crocodile tears.

Let me now try to explore these issues with hard facts.

Access to ‘round the year’ healthcare facilities in India:

As reported by the Government of India in 2004, access to healthcare infrastructure and services for the rural villages in terms of percentages were as follows (Source:India Health Report 2010) :

  1. Primary Health Centers: 68.3
  2. Sub-Centers: 43.2
  3. Government Dispensaries: 67.9
  4. Government hospitals in urban areas: 79
  5. Private Clinics: 62.7
  6. Private Hospitals: 76.7

I reckon, after implementation of National Rural Health Mission (NRHM) and National Urban Health Mission (NRUM), this situation prevailing in 2004 has improved. However, the scope for further improvement in all these areas still remains very high.

Hence, the shrill voice highlighting around 65% of population of India does not have access to healthcare or medicines seem to be motivated and highly misplaced.

‘Access to Modern Medicines’ is improving in India:

In addition to the above facts, CAGR (volume) of the pharmaceutical industry since the last ten years has been over 10%, leaving aside another robust growth factor being contributed through the introduction of new products, every year. Encouraging growth of the Indian Pharmaceutical Market (IPM), since the last decade, both from the urban and the rural areas certainly signals towards significant increase in the domestic consumption of medicines in India.

IPM maintained a scorching pace of 16.5% growth in 2010. A recent forecast of IMS highlights similar growth trend in 2011, as well.

In addition, extension of focus of the Indian pharmaceutical Industry, in general, to the fast growing rural markets clearly supports the argument of increasing ‘Access to Modern Medicines’ in India. The improvement in access may not exactly be commensurate to the volume growth of the industry during this period, but a major part of the industry growth could certainly be attributed towards increase in access to medicines in India.

For arguments sake, out of this rapid growth of the IPM, year after year consistently, if I attribute just 5% growth per year, for the last nine years over the base year, to improved access to medicines, it will indicate, at least, 57% of the population of India is currently having access to modern medicines and NOT just 35%, as I wrote in this blog earlier.

Unfortunately, even the Government of India does not seem to be aware of this gradually improving trend. Official communications of the government still quote the outdated statistics, which states that 65% of the population of India does not have ‘Access to Modern Medicines’ even today. No wonder, why many of us still prefer to live on to our past.

Be that as it may, around 43% of the population will still not have ‘Access to Modern Medicines’ in India. This issue needs immediate attention of the policy makers and can be resolved with a holistic approach. A robust model of healthcare financing for all socio-economic strata of the population, further improvement of healthcare infrastructure and healthcare delivery systems are the needs of the hour.

So called ‘Diseases of the Poor’ are no longer the ‘Leading Causes of Death’ in India:

Unlike popular belief that diseases of the poor are the leading causes of death in India. The office of the Registrar General of India (2009) highlights a totally different scenario, where the top five leading causes of death in terms of percentage, have been reported as follows:

  1. Cardiovascular diseases: 24.8
  2. Chronic Obstructive Pulmonary Disease (COPD): 10.2
  3. Tuberculosis: 10.1
  4. Cancer: 9.4
  5. Ill-defined conditions: 5.3

Thus the diseases of the developed world like cardiovascular diseases, COPD and Cancer cause over 45% of the total deaths in India, whereas Tuberculosis, Malaria, Diarrheal and digestive diseases cause around 23% deaths in the country.

The key reasons for not seeking medical treatment are not poor ‘Access to Healthcare’:

As I wrote before, the key reasons for not seeking medical treatment across socio-economic status in the country are not predominantly ‘Poor Access to Healthcare ‘. The following data will vindicate this point:

Reason Rural Poorest 20% Rural Richest 20% Urban Poorest 20% Urban Richest 20%
Financial Reasons 39.7 21.2 37.2 2.3
Ailments not considered serious 27.2 45.6 44.3 84.4
No Medical facilities 12.8 10.0 1.6 _
Others 20.3 23.2 16.9 13.3
Total 100 100 100 100

(Source: India Health Report 2010)

Conclusion:

Thus even if the government ensures ‘Access to Healthcare’ to 100% of the population of India by taking all drastic infrastructural, policy and delivery measures, still a large section of the population both rich and poor and from urban as well as rural India will not seek medical treatment assuming many of their ailments are not serious enough. Such a situation will definitely not materially improve the healthcare scenario of India, adversely affecting the economic progress of the country by a robust productive population.

This necessitates continuous disease awareness campaigns with active participation of all stakeholders, including the civil society across the country, sooner rather than later, in tandem with all measures as will deem necessary.

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.